HMRC have released more detailed guidance on Coronavirus Self Employment Income Support Scheme (SEISS) on 14 April 2020.
- Claim a grant through the coronavirus (COVID-19) Self-employment Income Support Scheme
- How HMRC works out total income and trading profits for the Self-employment Income Support Scheme
Generally there is nothing in here that causes a surprise, and the fundamentals of the scheme haven’t changed.
Basic principles of scheme:
- Applies to Sole Traders and Partners
- Applies to trading income (rather than, say, rental income)
- Must have:
- submitted your Self Assessment tax return for the tax year 2018 to 2019
- traded in the tax year 2019 to 2020
- are trading when you apply, or would be except for coronavirus
- intend to continue to trade in the tax year 2020 to 2021
- have suffered a loss of trading profits due to coronavirus
- Your trading profits must also be no more than £50,000 and more than half of your total income for either:
- the tax year 2018 to 2019
- the average of the tax years 2016 to 2017, 2017 to 2018, and 2018 to 2019
HMRC also say “You will need to confirm to HMRC that your business has been adversely affected by coronavirus. HMRC will as usual use a risk based approach to compliance.”
In terms of claiming, HMRC say “HMRC will use data on the 2018 to 2019 tax returns already submitted to identify those eligible and will review any late returns filed before the 23 April 2020 deadline in the usual way.” and “HMRC will aim to contact you by mid May 2020 if you’re eligible for the scheme and invite you to claim using the GOV.UK online service. If you’re unable to claim online an alternative way to claim will be available”
The grant will be 80% of trading profits up to a maximum amount of £2,500 p/m (whichever is lower). As expected the guidance says “It will be available for 3 months, but may be extended.”
Its confirmed, as expected, “grant will be subject to Income Tax and National Insurance contributions but does not need to be repaid”
A few things we don’t know:
- Exactly how HMRC will expect “adversely affected by coronavirus” to be quantified
- Whether there will be any offset for the residual profits earned during lockdown – eg if you were earning £3,000/m but now £1,000/m, is that £1,000/m taken into account. Seemingly no.
- There seems to be no relaxation for the newly Self Employed. In a recent interview the Chancellor seemed to suggest the fraud risks were too great in offering grants to anyone who commenced Self Employment after April 2019 – this is disappointing as at the time of the original announcement, in response to press questions, he suggested they would “work with what was available” and implied the newly Self employed would not be left behind.