Today Ash and I attended 2 different HMRC webinars regarding the Self-Employment Income Support Scheme (SEISS), so thought we’d do a bit of summary in case it’s helpful to anyone else. We aren’t experts in this so if you have something a bit more complicated to check, try and go along to one of these webinars yourself to see if that helps.
You can register to attend one here - last one 11th May.
It's a bit long but fingers crossed there is something useful in there,
Summary of important info:
DOWNLOAD: Handout from the webinar with lots of useful links
Am I eligible?
First up, check if you’re eligible here.
You need your National Insurance number and your Unique Tax Reference (UTR).
You should also log in to the Government Gateway and make sure that your contact details are updated.
If I’m eligible, how do I get it?
“HMRC will aim to provide eligible individuals with information about how to apply by mid May 2020, and will make payments by early June 2020.”
“The online service will be available from 13 May 2020. If you’re eligible, we will tell you the date you can make your claim from. If your claim is approved you’ll receive your payment within 6 working days.”
If I’m not eligible, what can I do?
See here for info on Universal Credit, deferral of tax and VAT payments, loans and grants.
What are my ‘Profits from Self-Employment’?
To work out what figures they will be using to create your average profit, see your past tax returns and look for the line: ‘total taxable profits from this business’. This is the amount after expenses. More info here.
How do they calculate it?
They will take your profit from eligible years of trading – 2016-17 / 2017-18 / 2018-19 – and do the following sum (for example):
Add these together = £53,000
Then divide by 3 to get the yearly average = £17,666.67
Times by 80% = £14,133.34
£14,133.34 divided by 12 to give the monthly average = £1,177.78
You would get £1,177.78 x 3 months = total payment in one lump sum of £3,533.34
(Up to maximum total payment of £7,500, whichever is the lowest.)
If you have not submitted tax returns for all 3 years, it will then calculate on:
Useful Q+A’s from the webinar
Q: When will we know if the government is extending this scheme?
A: The grants will be available for three months in the first instance. If needed the scheme will be extended.
Q: Will any other grant or support like for example an arts council covid-19 emergency fund affect the HMRC claim for self-employed?
A: The grants are taxable, and so businesses that are less affected by coronavirus will report higher taxable income when they come to do their tax returns for 2020-21. For those who abuse the system, HMRC has a wide range of statutory and common law powers to tackle fraud and criminality, which continue to apply.
Q: I was on maternity leave for one of the three financial years, receiving maternity allowance. This has significantly decreased my annual average - can another financial year be considered?
A: To work out your average trading profit HMRC add together all profits and losses for all 3 tax years (2016-17, 2017-18 and 2018-19) that you’ve had continuous trade, then divide by the number of tax years of trading. No pro-rata adjustment will be made if you started trading part way through one of the tax years [or experience a gap in trading profits due to maternity leave].
Claiming Maternity Allowance or taking maternity/paternity/adoption leave does not mean the trade has ceased and therefore should not affect a person’s eligibility for SEISS as long as the individual intends to return to the trade after maternity/paternity/adoption leave. If you’re self-employed but when you apply are taking a break from your trade because of a new baby or adoption, or have done since 6 April 2019, you may still be eligible because HMRC will treat you as still trading. If you claim Maternity Allowance this will not affect your eligibility for the grant.
Q: I’m currently on maternity leave but was going to do 72 hours of work to make ends meet which I now can’t do. Can I apply?
A: If you are claiming Maternity Allowance or taking maternity/paternity/adoption leave you will eligible for SEISS, providing you meet the other criteria and you intend to return to your trade after maternity/paternity/adoption leave.
Q: Are non-UK citizens who have been trading here for 3 years and paying tax, eligible for this support?
A: Yes, provided they meet the other eligibility conditions of the scheme.
Q: If I submit my 2019-2020 tax return before applying for the grant will this be included in the calculation of the 3 months income.
A: Unlike for employees, self-employed income is not reported monthly, but is reported for the entire year at the end of the tax year. This means that the most reliable and up-to-date record we have of self-employed income is 2018-19 tax returns. We would not be able to distinguish genuine self-employed people who started trading in 2019-20 from fake applications from fraudsters and organised criminal gangs. However, those who entered self-employment after this point will still be eligible for other support. For example, the self-employed can benefit from the Government’s relaxation of the earnings rules (known as the Minimum Income Floor) in Universal Credit. Individuals may also have access to a range of grants and loans depending on their circumstances, including the Coronavirus Business Interruption Loan Scheme and the deferral of tax payments.
Q: I work part time and am self employed part time. Will I be eligible to make a claim for the self employed work I can no longer carry out due to coronavirus?
A: If your average self-employed trading profits are no more than £50,000 and make up at least 50% of your total income you may be eligible for this scheme.
Q: If some of the work I usually do can still be done and other work not, so my income has reduced, can I still make a claim?
A: Yes, the Self-employment Income Support Scheme (SEISS) will support self-employed individuals (including members of partnerships) whose income has been negatively impacted by coronavirus (Covid-19).
Q: Is the profit Net or Gross expenses?
A: Trading profits are not exactly the same as the gross or net profit. The trading profit is worked out by taking the total trading income (turnover) and deducting any allowable business expenses and capital expenditure, but before deducting tax and National Insurance Contributions. You can find out how HMRC works out your trading profits on Gov.UK: https://www.gov.uk/guidance/how-hmrc-works-out-total-income-and-trading-profits-for-the-self-employment-income-support-scheme
Q: I am getting universal credits at the moment - can I apply for the grant?
A: Any Universal Credit claims for earlier periods will not be affected. Please be aware, if you are currently a tax credit claimant and you claim Universal Credit, your tax credit award will be closed from the day before your Universal Credit claim is made. Once you have made a Universal Credit claim it is not possible to go back to tax credits. https://www.gov.uk/universal-credit
Q: Should I apply for universal credit in the meantime?
A: For self-employed people who are struggling now some will be able to access the coronavirus business interruption loans scheme [if they have a business account]. Income tax payments due in July can be deferred until the end of January 2021. We've also temporarily relaxed the Minimum Income Floor in Universal Credit for self-employed claimants affected by the impact of COVID-19, so their award fully reflects any loss of income. Any grant you receive will be treated as part of your self-employment income and may affect the amount of Universal Credit you get. Any Universal Credit claims for earlier periods will not be affected. Please be aware, if you are currently a tax credit claimant and you claim Universal Credit, your tax credit award will be closed from the day before your Universal Credit claim is made. Once you have made a Universal Credit claim it is not possible to go back to tax credits.
Q: So you can still apply for this if you are still working technically?
A: Yes, self-employed people who receive this grant can continue to work or take on other employment including voluntary work.