The Chancellor of the Exchequer issued a financial package targeted at those who derive the majority of their income from self-employment who are facing hardship due to the Covid-19 pandemic, called the Self-Employed Income Support Scheme (SEISS). The self-employed includes partners in a partnership.
The most recent announcements from the Government include checks on previous claims and how to apply for the next grant. Some taxpayers not previously eligible, may now be eligible as the latest grant takes into account figures from the 2019/20 tax return.
SELF EMPLOYED CORONAVIRUS RELIEF
LATEST UPDATE ON THE SELF EMPLOYED INCOME SUPPORT SCHEME (SEISS) grant extension
How do I qualify?
- To make a claim for this fifth grant your business must have traded in both 2019/20 and 2020/21.
- You will have to declare that you intend to continue to trade in 2021/22
- You reasonably believe that there will be a significant reduction in your trading profits due to the impact of COVID-19 between 1 May 2021 and 30 September 2021
- You must have submitted your 2019/20 return on or before 2 March 2021
- Your trading profits must not exceed £50,000
- Your trading profits must at least equal your non-trading income
If you are not eligible based on the trading profits in your 2019/20 tax return, HMRC will look back at previous years.
HMRC have confirmed that they expect you to make an “honest assessment” about whether you reasonably believe your business will have a significant reduction in profits. They will expect you to keep evidence to support this claim.
What do I need to make a claim?
To make your claim, you’ll need to have 2 different turnover figures. You’ll need to work out your turnover for:
- A 12 month period beginning between 1 April 2020 and 6 April 2020
- Either 2019/20 or 2018/19. You would use 2018/19 figures only if 2019/20 was not a normal year for you and will need to show how 2019/20 was not a normal year for you.
HMRC will then compare the figures to see how much you will get.
HMRC have confirmed they will not request turnover figures if you started in 2019/20and did not trade in the three previous tax years.
How much will I get?
The level of this grant will be calculated by looking at how much the turnover has been reduced
- 80% of 3 months’ average trading profits, capped at £7,500, for those with a turnover reduction of 30% or more
- 30% of 3 months’ average trading profits, capped at £2,850, for those with a turnover reduction of less than 30%
- If you do not need turnover figures you will get 80% of 3 months average trading profits to a maximum of £7,500
This will represent taxable income and need to be reported on future tax returns.
DEADLINE FOR APPLICATIONS
The online service for applying for the fifth grant will be available from the end of July and the closing date for this application is 30 September 2021.
There is, however, still the following help available to those that are self-employed who are not eligible for the grant:
- Deferral of self-assessment and VAT payments
- Grants for businesses that pay little or no business rates
- Business Interruption Loan Scheme
- Bounce Back Loan
Any grant paid will be subject to income tax as well as National Insurance and will need to be reported on a future tax return.
DO YOU QUALIFY FOR THE FIFth grant?
To qualify, the individual must be self-employed or a member of a partnership and you must have submitted your 2019/20 tax return by 2 March 2021
Firstly HMRC will look at the 2019/20 Tax Return, where the following tests must be passed:
TTaxable trading profits for the individual in 2019/20 of less than £50,000 and these profits constitute at least half of your total taxable income; OR
Average taxable trading profits for the individual in 2016/17, 2017/18, 2018/19 and 2019/20 of less than £50,000 and these profits constitute more than half the average taxable income in the same period.
Where the individual has not been trading for all the previous years, HMRC will only use the relevant tax years.
Finally, HMRC have confirmed that you can only claim if your trade has been adversely affected by Covid-19. Examples have been provided, and include instances where:
- You are shielding, self-isolating, on sick leave because of coronavirus, have caring responsibilities because of coronavirus; or
- You had to scale down or temporarily stop trading because:
- your supply chain has been interrupted
- you have fewer or no customers or clients
- your staff are unable to come in to work
How to submit your SEISS Claim
If you are eligible, HMRC have said that they will contact you in mid-April to give you your personal claim date, this will be either by phone, email, letter or SMS. This will be the date you will be able to make your claim from. Any applications made before your personal claim date will not be processed.
How will the grant process work?
It will only be possible to claim using the GOV.UK online service. If you have not set up a Government Gateway Account, please contact us at the earliest opportunity and we can provide a help sheet to walk you through the process.
If you receive texts, calls or emails claiming to be from HMRC, offering financial help or a tax refund and requesting you to click on a link or to give personal information, we suspect it will be a scam.
Once the taxpayer has lodged a claim with HMRC, the SEISS grant will be paid within 6 working days.
What if I no longer qualify?
HMRC will also be contacting previous claimants for the SEISS Grants but are no longer eligible due to either :
- Not filing their 2019/20 tax return before 2 March 2021, or
- Not meeting the criteria when their filed 2019/20 tax return is taken into account