Covid-19 Response: Self-Employed Income Support Scheme (last updated 13 May 2020)
The Self-Employed Income Support Scheme (SEISS) has now (13 May) opened for claims.
Over the last few days HMRC wrote to (or emailed or texted) everyone that they think is eligible, giving them a specific date (between 13 and 16 May) and time (either 8am or midday) from which they will be able to claim their grant. Claims should begin being paid out just 6 working days later. There are a few key points to note and these are in bold type immediately below.
Please note that unlike the job retention scheme HMRC are not allowing agents to submit claims on behalf of clients. Individuals must submit their own claim via their own personal Government Gateway account. If you don't have one of these please set one up now. If you do have one, please check that you can access it.
When you are ready to submit your claim, if your Government Gateway account doesn't have self-assessment activated (this can take another week or so), you don't need to wait for this. You can still submit the claim by going first through the SEISS page on HMRC's website and clicking the green CHECK NOW button; you'll find it half way down this page: HMRC SEISS Page.
During the claim process HMRC will show you your grant figure, as calculated by them, along with a summary of the figures they have used. Take a copy of this. If the grant amount isn't what you are expecting or the figures don't look right please check them with us. It's possible to ask for a review of the figure, while still claiming for the figure they have worked out. We have already helped one client with a review where HMRC relied on the figures from one year rather than three.
It's vital that you save or print the acknowledgement page at the end of the claim as the reference they quote will be needed for any queries.
There are a number of other points to note on this scheme which we'll summarise below (if you're a CMM client who qualifies for SEISS you should have already heard from us via email).
The headline is that the scheme will pay a grant equivalent to 80% of a self-employed person's average quarterly profits, capped at £7,500 per person (the official line is that monthly profits will be calculated and the payment will cover 3 months). The scheme notionally covers March to May 2020 but doesn't directly relate to income or activities in those months except as noted below.
The main conditions attached are as follows:
- The individual must be a sole trader or partner/member in a trading partnership/LLP
- The trade must have been active in 2019/20 and either continuing or intending to continue trading in the 2020/21 tax year
- The individual/business must have been adversely affected by COVID-19 (e.g. by having to shield or self-isolate, or trading being restricted/halted due to public health issues, supply chain issues, staffing, etc); please keep evidence of this as HMRC may need to see this at a later date
- The individual must have submitted their income tax return for 2018/19 by 23 April 2020
- The payments will be based on average profits for the last 3 tax years, according to filed tax returns; no allowance is being made for part-years (e.g. where a trade commenced part-way through a year that year is counted as a full year)
- The profits will be the taxable profits rather than the profits shown in the business accounts, so capital allowances claims made in those years will have an effect on the figures being used
- If the individual doesn't have 3 years' tax returns then the average will be over the last 2 or even 1 return
- If an individual's profits were less than £50,000 for 2018/19 AND were more than half of their overall taxable income they will qualify
- If they don't meet the test for 2018/19 then they will still qualify if their average profits over the 3 years to 2018/19 were less than £50,000 (or 2 years if they didn't trade in 2016/17) AND their cumulative profits made up at least 50% of their total income for the same period
- Tax losses incurred in the trade for any of the years being assessed will count towards the total (i.e. they will reduce the average profits/income)
- Use of tax losses from earlier years will not affect the calculations, just trading losses incurred between 2016/17 and 2018/19
So anyone with average annual profits of less than £37,500 over the assessed period will be due to receive a grant equivalent to 20% of that number, while anyone with average profits of £37,500 to £50,000 will receive £7,500.
Individuals covered by the scheme have been allowed to continue to trade, if they are able to do so.
HMRC have already assessed the self-employed population based on submitted tax returns and are writing to those they believe to be eligible. Many of these letters (or texts or emails) will go to traders who have ceased self-employment so are ineligible for the scheme. We have written to those clients to let them know. There are also a small number of clients who are failing HMRC's test but who meet the qualifying criteria. We are assisting those clients with reviews and one has already been resolved in the client's favour. If you believe that you qualify but HMRC's online tool is telling you that you don't, we'd advise submitting a review straight away.
Finally, please also note that scammers will be targeting this scheme in order to obtain personal data including bank details. The only time you will need to provide any such information is via your official Government Gateway online account or via the SEISS online checker on the official gov.uk website, so please do not input such details anywhere else or over the phone.