The self-employed have felt the financial ramifications of the coronavirus pandemic just like most small businesses. To address the situation, the Government unveiled the Coronavirus Self-Employed Income Support Scheme (SEISS) in April to help self-employed individuals and partners with a taxable grant. The details weren’t all laid out at the time and one main issue left unanswered was the application process. Last week, the Government published new guidelines revealing the details of the Coronavirus Self-Employed Scheme application process. Here is everything you need to know.
What is the scheme and who is it for?
To recap, SEISS is a taxable grant the Government is providing to self-employed individuals and partners. Under the scheme, you are entitled to 80% of your average trading profits for three months or £2,500 a month, depending on which is lower. The grant is capped at £7,500 per person.
The taxable grant is available to all those who meet the following conditions:
- You are registered with HMRC as self-employed.
- You have submitted tax returns for 2016/17 to 2018/19 which include self-employed trading income.
- You were trading in 2018/19 and 2019/20 and you are still planning to trade in 2020/21 or would be if it weren’t for COVID-19.
- You have lost trading profits due to coronavirus.
- Self-employed profits make at least half of your annual average income.
- Your average trading profits for 2018/19 do not exceed £50,000 or your average annual self-employed profits for 2016/17 to 2018/19 don’t exceed £50,000 and were more than nil.
The SEISS grant is available to members of partnerships and LLPs. You can claim on an individual basis, with HMRC taking into account the partner’s share of the partnership profits.
If the eligibility criteria seems complicated, you can now find an eligibility tool online. It will allow you or your tax agent to check if you are entitled to the grant.
It’s important to note that if you missed the 31 January 2020 deadline for your 2018/19 tax return, you can still qualify as long as your tax return was filed before midnight on 23 April 2020. However, in these instances, the eligibility tool might claim you are not eligible but you can ask for a review from HMRC.
You should also pay attention to specific circumstances for the self-employed taxpayers who have received payment as loans or other forms of credit covered by the loan charge. You could still be eligible even though you haven’t had to submit your 2018/19 tax return yet, as your deadline is 30 September 2020.
Who is excluded?
You should note that anyone who started trading on or after 6 April 2019 would not be eligible for the SEISS grant. You also won’t be allowed to apply if you have decided to stop trading altogether. In the circumstances, you can apply for universal credit.
Furthermore, the scheme is not for anyone who works through his or her own company and receives a salary through the PAYE system.
It’s also worth noting that property-letting businesses are not considered as an eligible trade. Landlords won’t qualify for the coronavirus self-employed scheme application even if half of their income comes from rental income.
How to make the Coronavirus Self-Employed Scheme application
HMRC is inviting the eligible taxpayers to apply online to the scheme. The online application is made through the government gateway account on a specific day between 13 and 18 May. The application day is allocated by HMRC. You should also note that your tax agent can’t make the SEISS grant application for you.
To get through the application process, you will need:
- Your government gateway ID and password
- Your national insurance number and self-assessment UTR number
- Your bank details (account number and sort code)
The money will be paid in one lump sum payment into your bank account. The payments will start from 25 May and they are payable within six working days of HMRC approving your application.
It’s important to remember that the money you receive is treated as taxable income. You will be required to report it on the 2020/21 tax return.
Be vigilant with any emails, texts or phone calls you receive claiming to be from HMRC. You can find out information on how to identify real letters, texts or calls from HMRC from our previous blog post.
How to show the adverse impact of COVID-19 on your income
One of the major conditions the Government included in the amended guidelines involves the adverse impact of COVID-19. As the above shows, the Government is stating that to be eligible, you will have to have been adversely impacted by the crisis. So how will this be dealt on the Coronavirus Self-Employed Scheme application?
According to the instructions, you will need to confirm to HMRC that your business has been adversely impacted and this could mean outlining reasons like:
- Your inability to work due to COVID-19 sickness or the need to self-isolate, shield or care for someone else due to coronavirus.
- Your staff has been unable to come to work, resulting in loss of income.
- You’ve had fewer or no customers.
- Your supply chains have been interrupted.
In the application, you simply need to confirm this and there won’t be any formal proof to provide. HMRC states that an applicant’s approval of the negative impact during the application means this is treated “as confirmation you’re below the state aid limits” and claims will be checked to ensure there are no dishonest or inaccurate claims. Information about state aid limits can be found here. HRMC has the right to withhold or recover wrongly made grant payments.
How to get help with your self-employed business
The current situation is challenging and you might find it hard to follow what help is available and how to receive it. You are not alone and we at Devonshire Green are working hard to assist small businesses and self-employed individuals.
If you have any questions regarding the Coronavirus Self-Employed Scheme application process or anything other related to business finances, you can contact us for help. Let’s make sure to successfully navigate these tough times together!