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COVID-19: Self-Employment Income Support Scheme

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By Will Macauley

In a further effort to assist businesses and individuals to ‘weather the storm’ of coronavirus, the government has extended the Self-Employment Income Support Scheme (SEISS) to allow applicants to obtain a second grant in respect of a further three months of profits.

What is the Scheme?

The Scheme, generally seen as the self-employed equivalent to the Coronavirus Job Retention Scheme allows self-employed individuals to apply to the government for a taxable grant reflecting their profits lost because of the effects of the coronavirus pandemic.

Eligibility

The Scheme is open to self-employed individuals, subject to the following criteria:

  • have traded in the 2018/19 and 2019/20 tax years at a minimum;

  • have submitted their 2018/19 tax return on or before 23 April 2020;

  • intend to continue trading in the 2020/21 tax year;

  • the individual’s average trading profits for the relevant years (see below) must be no more than £50,000

  • the individual’s trading profits must be at least half of their total income (including, for example, rental income and dividends)

  • the individual’s business must have been adversely affected by coronavirus.

Eligibility under the second grant of the Scheme is the same as for the initial grant. The second grant is not contingent on having applied for the first, though a fresh application is required to claim the second grant.

How much you will get

Before the extension, this had been capped at 80% of three average monthly trading profits, capped at £7,500 in total. The further extension to the Scheme allows a further 70% of 3 months’ profits to be claimed, capped at £6,570. Monthly profits are calculated based on the average trading profits or losses across three previous tax years - 2016/17, 2017/18 and 2018/19.

If the individual did not trade in 2016/17, only the latter two tax years are taken into account (Person B below). If the individual did not trade in 2017/18, only 2018/19 profits are taken into account (Person C below).

By way of illustration, the following individuals (if eligible) could be entitled to the following grants:

Individual 2016/17 2017/18 2018/19 Average annual profits 3 months average profits 80% grant 70% grant
Person A £25,000 £30,000 £35,000 £30,000 £7,500 £6,000 £5,250
               
Person B Did not trade £15,000 £25,000 £20,000 £5,000 £4,000 £3,500
               
Person C £35,000 Did not trade £28,000 £28,000 £7,000 £5,600 £4,900
               
Person D £30,000

- £10,000 (trading loss)

£25,000 £15,000 £3,750    
               
Person E £45,000 £45,000 £45,000 £45,000 £11,250

£7,500 (capped)

£6,570 (capped)

 

HMRC has published online guidance dealing with the relevant calculations as well as the particular implications for individuals with more complex incomes.

Application

Those who are eligible for and need to apply for the initial (80%) grant under the Scheme must do so on or before 13 July 2020. The further (70%) grant will open to applications in August 2020. Applications require the submission of certain items to the government’s online portal, including tax returns, UTR number and National Insurance details. The government has indicated that those who complete the application and are deemed eligible receive the payment within 6 working days.

The government has confirmed that further information will available on GOV.UK on 12 June 2020.

For further information, please contact will.macauley@twmsolicitors.com

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