After the initial announcements by the UK Chancellor on support available for business, employers and employees, there was huge concerns that HM Treasury were leaving behind a massive chunk of the UK economy in their measures to help the country to survive financially through the Coronavirus pandemic.
On Friday 27 March, the government (at last) announced a support package to help all self employed individuals with the launch of the Self Employed Income Support Scheme (SEISS).
The scheme is open to all self employed persons, sole traders and partners within a partnership subject to certain criteria.
The scheme is designed to cover an initial period of 3 months (March, April and May 2020).
The scheme will facilitate payment of a taxable grant up to £7,500 maximum to all qualifying persons (i.e. capped at £2,500 per month). The grant is not a form of debt finance (i.e. not a loan) and as such is not repayable.
The grant will be calculated on 80% of average trading profits calculated to cover the 3 month period covered by the scheme. See more details below on how the grant is calculated.
How To Claim / Apply
There will be no process to claim the grant. HMRC will administer the process of grant payments to qualifying persons using records held under Self Assessment. HMRC will contact all qualifying persons and invite them to make a claim online.
The grant will be paid into your bank account in one lump sum covering the qualifying 3 month period.
Please note – if anyone contacts you by text or email claiming to represent HMRC and inviting you to click on a link, this is likely to be a scam. We would expect HMRC to write directly to all taxpayers by post with all relevant details to access the grant available to them. Do not provide your bank details or other personal data to anyone else or in any other way.
It is estimated that grants payable under SEISS will be paid out in early June 2020. Whilst this is not ideal given that many self employed persons will have ceased trading under the health and saftety guidelines enforced by the government, the practicalities of setting up such as wide ranging scheme and infrastructure from scratch means that it will take a period of around 6 weeks to build the systems to release the grants to everyone.
The scheme is open to all self employed individuals, sole traders and partners in a partnership who:
- have submitted their Income Tax Self Assessment tax return for the tax year 2018-19
- traded in the tax year 2019-20
- are trading when you apply, or would be except for COVID-19
- intend to continue to trade in the tax year 2020-21
- have lost trading/partnership trading profits due to COVID-19
For those who have yet to submit their Tax Return for 2018-19, the Chancellor has allowed a period of 4 weeks for these tax returns to be submitted to HMRC and allow access to the scheme. You must do this by 23 April 2020.
Other criteria for the scheme:
- Trading profits must be less than £50,000
- More than half of your income comes from self-employment (i.e. at least 50%) This is determined by at least one of the following conditions being true:
- Trading profits are based on the years from 2016/17 to 2018/19 inclusive, taking the average trading profits in those years
Anyone who is newly self employed from 6 April 2019 onward are excluded from the scheme.
Mr Smith was self employed for the tax years 2016/17, 2017/18 and 2018/19. Average trading profits are £40,000 for those three years. Assuming all other criteria are met, the grant payable to Mr Smith will be:
- £40,000 per annum (average) divided by 12 = £3,333 per month x 3 months = £10,000 x 80% = £8,000.
- Maximum support available is £7,500
- Therefore, Mr Smith will receive a grant payout of £7,500
Mrs Jones was self employed for the tax years 2017/18 and 2018/19 only. Average trading profits are £20,000 for those two years. Assuming all other criteria are met, the grant payable to Mrs Jones will be:
- £20,000 per annum (average) divided by 12 = £1,667 per month x 3 months = £5,000 x 80% = £4,000.
- Maximum support available is £7,500
- Therefore, Mrs Jones will receive a grant payout of £4,000
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