The SEISS portal opened on the 13th of May allowing the self-employed who have been adversely affected by COVID-19 to apply for a grant.
What is the Self-Employment Income Support Scheme?
The government have set up a grant for self-employed individuals or members of partnerships whose business has been adversely affected by the coronavirus. They will be able to apply for a Self-Employment Income Support Scheme (SEISS) grant worth 80% of their average monthly trading profits.
Who can make a claim?
We’ve outlined below the eligibility criteria for making a claim:
- You are a self-employed person (including members of a partnership).
- You started trading before the 2019/20 tax year.
- You are continuing to trade or would be but for the coronavirus.
- You are intending to trade in the 2020/21 tax year.
- You submitted your 2018/19 Self-Assessment Tax Return before 23rd April 2020
- Your trading profits must have been adversely affected by the coronavirus.
Note that HMRC will be carrying out risk assessment checks in this respect.
- Your ‘trading profits’ were no more than £50,000 and made up more than half of your ‘total income’ for either:
- The 2018/19 tax year
- The average of the tax years 2016/17, 2017/18 and 2018/19.
Some important information about the scheme:
- If you receive a grant you can continue to work, take on other employment or start a new trade.
- The claim, if you’re eligible, will be 80% of your ‘trading profit’ up to a maximum of £2,500 per month.
- The Scheme is at present, set to run for 3 months but may be extended.
- If you are a member of a partnership and the partnership agreement states the grant has to be paid into the partnership pot, then the grant has to be allocated to the claimant and nobody else.
- If you are a non-UK resident or are a resident and claim on a remittance basis then you may be able to claim under SEIS. You will need to confirm to HMRC that your UK trading profits are at least equal to your other worldwide income.
- The grant will need to be reflected within your self-employment accounts and will be liable to tax and NI.
How do I make a claim?
HMRC should have already contacted the ‘eligible’ self-employed. You should have received an email if they have your email address. If not, then by text assuming they have your mobile number. As a last resort, they will write to you. They will
Claims will, in most cases, need to be made using the GOV.UK online portal you must have the self-employed service activated on your digital tax account. HMRC aims to make a one-off payment into your self-employed bank account within 6 working days of your claim being made. Whilst waiting for the grant payment you can make a claim for Universal Credit. HMRC will provide details of the amount you can claim rather than you having to work it out.
The eligibility checker (ELC)
- The link to the ELC is here: https://www.tax.service.gov.uk/self-employment-support/enter-unique-taxpayer-reference
- It is not compulsory for you to use the ELC to check eligibility as HMRC will still be either emailing or texting or sending a letter to you if you are eligible.
- To check eligibility on the ELC you will need your UTR and national insurance number.
- Please note the ELC may sometimes be incorrect on the following grounds:
- The ELC is based upon the period up to and including the 2018/19 tax year so it does not factor in the scenario that you may have stopped trading during the 2019/20 tax year.
- The ELC does not take account of the fact that you may not intend to trade during the 2020/21 tax year.
- The ELC does not take account of whether your trade has not been adversely affected by the coronavirus.
- The ELC does not take account of the fact that you may have incorporated since 5th April 2019.
- The ELC also offers you the opportunity to provide HMRC with your email address using your Government Gateway ID and password. Through that HMRC will provide you with a specific day between 13th May and 18th May inclusive on when to make your claim on the portal.
- The ELC also offers you the opportunity to request a Government Gateway ID if you have not already got one.
- If the ELC states that you are not eligible and you, in conjunction with us, believe that you are, then there is a facility on there to request a review. That review will be carried out from 18th May and notification of their reasoning or ‘hopefully’ change of heart will be provided by HMRC, by 31st May 2020.
What information will you need to make the claim?
- Your Unique Taxpayers Reference number.
- Your national insurance number.
- Your Government Gateway ID and password.
- Your bank account number and sort code.
- The individual will need to confirm that they are intending to continue to trade during the 2020/21 tax year.
- You will need to confirm that your trade has been adversely affected by the coronavirus.
You will need to keep a copy of your claim reference number, the amount claimed and all relevant evidence of your eligibility.
We’ve pulled together some questions and answers to help explain things a little clearer.
What does Adversely Affected mean?
Adversely affected by coronavirus would be having to scale down or stop trading because:
- Your supply change has been interrupted
- You have fewer or no customers
- Your staff are unable to come to work.
What are ‘Trading profits’?
‘Trading profit’ will effectively be your total trading income less:
- Allowable business expenses
- Capital allowances
- Flat rate expenses
- Trading allowance
- Qualifying care relief (i.e. foster carers)
Note, personal allowances will not be deducted when working out the ‘trading profit’…
What is ‘Total income’ in this respect?
Your total income is all of the below:
- Trading profits
- Employment income
- Property income
- Savings income
- Pension income
- Miscellaneous income (including social security benefits)
What happens regarding trading losses and the interaction with averaging?
- When calculating both the eligibility for the scheme or the amount of grant to be given, you don’t take account of trading losses brought forward from tax year’s pre-2016/17.
- Trading losses arising in 2016/17, 2017/18 and/or 2018/19 do have to be taken into account when looking at both the eligibility criteria and the 80% calculation.
What happens if I amend an earlier year’s Return?
If a submitted SA Return is amended after 26th March 2020, those changes will be ignored when looking at eligibility and the grant calculation itself.
M.A.D. Accountants are based in West Bridgford, Nottingham, and are specialists in tax and accountancy assistance for businesses and individuals. We're here to make a difference to your business and your life with no-nonsense, jargon-free advice and help.