Self-employment Income Support Scheme Guidance
04 May 2020
The Self-employment Income Support Scheme (SEISS) designed to assist individuals who are classed as being self-employed through the outbreak of coronavirus is due to launch soon. Anyone intending to claim through the scheme should start to prepare now.
HMRC has issued guidance on the SEISS, which details who can claim, how much they’ll get, how to claim, what happens after they’ve claimed and other help available. As with guidance relating to the Coronavirus Job Retention Scheme (CJRS), it is highly likely that the information provided will be regularly updated, so individuals should continue to visit this page, to ensure that they remain up to date.
The scheme allows self-employed individuals to claim a taxable grant of 80% of their average monthly trading profits. This will be paid in one single figure, which will cover a period of three months. The maximum amount will be £7,500.
The scheme is temporary but may be extended.
Individuals receiving the grant are able to continue to work, start a new trade or take on other employment, including voluntary work, or duties as an armed forces reservist.
The grant will be subject to Income Tax and self-employed National Insurance (NI).
HMRC will determine the eligibility of individuals, and how much they may receive but the guidance explains how it will do this.
Who can claim
Individuals can claim if they are self-employed or a member of a partnership, and:
- Carries out a trade which has been negatively impacted by coronavirus
- They traded in the tax year 2018-19, and submitted that year’s Self-Assessment tax return on or before 23 April 2020
- They traded in tax year 2019-20
- They plan to continue trading in tax year 2020-21
Businesses can be adversely affected by coronavirus, for example, if an individual is unable to work because they’re shielding, self-isolating or are on sick-leave due to coronavirus. Similarly, they may be unable to work because they have caring responsibilities because of coronavirus. Businesses may have had to temporarily stop, or reduce trading if the supply chain has been interrupted, if they have fewer or no customers or clients or if staff are unable to attend work.
The grant should not be claimed if the business is above state aid limits or operating a trade through a trust.
To determine eligibility, HMRC will first look at the Self-Assessment tax return for tax year 2018-19. Trading profits should not exceed £50,000 and should be at least equal to non-trading income. If at this point, there is no eligibility, then HMRC will assess tax years 2016-17, 2017-18 and 2018-19. There is additional guidance available on how HMRC will make these calculations.
Grants under the SEISS are not counted as ‘access to public funds’ and can be claimed on all categories of work visa.
Tax agents and advisers cannot make the claim on behalf of an individual, and they must make the claim themselves. Individuals who do use an agent should contact them if they require assistance or support.
Different circumstances that affect the scheme
There is additional guidance on different circumstances that affect the scheme, including where:
- A return is late, amended or under enquiry
- Individuals are a member of a partnership
- Individuals are on, or have taken, parental leave
- Individuals who have loans covered by the loan charge
- Individuals claim averaging relief
- Individuals who are a non-resident, or who chose the remittance basis
- Individuals are above the state aid limits
How much can be claimed
A taxable grant will be given based on the average trading profit over the tax years 2016-17, 2017-18 and 2018-19.
The average trading profit will be calculated by adding together total trading profits or losses for the three tax years and dividing by three.
The grant will be 80% of average monthly trading profits, at a cap of £7,500 (for the three month period). This amount will be paid directly into an individual’s bank account, in one instalment.
There is further guidance available on how HMRC will calculate average trading profits.
How to claim
The online service for making claims is not yet available. HMRC will contact eligible individuals by mid-May 2020 to invite them to claim using the GOV.UK online service. If claims are accepted, payment will be made by early June 2020. An alternative method of claiming will be available to those who can’t claim online. The advice is that individuals should not contact HMRC now, as this will only serve to delay the work being carried out to introduce the scheme.
HMRC also reiterates, at this point, that everyone should be exercising caution when receiving texts, calls or emails purporting to be from HMRC. Communications that offer financial help or promise a tax refund for individuals who click on a link or provide personal information, are scams and should be emailed to email@example.com. The communication should then be deleted.
When a claim is made
Individuals will need their:
- Self-Assessment Unique Taxpayer Reference (UTR) number. If this is not known, then there is guidance on how to find it
- National Insurance (NI) number. Again, if this is not, known, there is associated guidance available detailing how to locate it
- Government Gateway user ID and password
- Bank account number and sort code for the grant to be paid into. This must be a bank account that accepts BACS payments
They will need to confirm that their business has been adversely affected by coronavirus. By making a claim, HMRC will treat this as confirmation that they are below the state aid limits. HMRC will check claims and act accordingly if the information is found to be dishonest or inaccurate.
After a claim is made
Once a claim is submitted, claimants will be automatically informed if the grant has been approved. If accepted, payment will be made into the nominated bank account within six working days.
Records must be retained, in line with standard self-employment record keeping requirements, including the amount claimed, the claim reference number and evidence that displays how the business has been adversely affected by coronavirus.
The grant will need to be reported on an individual’s Self-Assessment tax return, as self-employed income for any Universal Credit Claims and as self-employed income, and as working 16 hours a week, for any tax credits claims.
Other help available
Individuals can claim for Universal Credit while they wait for payment of the grant. The grant may affect the amount of Universal Credit they receive but will not affect claims for earlier periods.
There is also help for the self-employed in the form of:
- Deferral of Self-Assessment Income Tax and VAT payments
- Grants for businesses that pay little or no business rates
- Business Interruption Loan Scheme
- Bounce Back Loan
There is help online, in the form of videos and free webinars which will help individuals to learn more about the support measures available to help through the outbreak of coronavirus.
HMRC’s digital assistant can also be used to find more information about the coronavirus support schemes.
The information in this article is accurate at the time of publication. For all the latest information, news and resources on how the COVID-19 pandemic is affecting payroll professions, visit our Coronavirus hub.