This blog is for people who have income from self employment whether that be as a sole trader or partnership.
On Thursday, the Chancellor announced a further support package for the Self-Employed, the Self-employment Income Support Scheme (SEISS). We have tried to summarise the information provided as much as possible, and we understand that there will still be many questions from clients.
We believe that the main reason for the delay in this information being delivered is because it has been so difficult to devise a scheme that is fair to all, and a solution that could be implemented quickly and as efficiently as possible.
Firstly, we must clarify that being a Limited Company director does NOT mean that you are self-employed. Self-employed is defined as follows (taken from the HMRC website);
“A person is self-employed if they run their business for themselves and take responsibility for its success or failure.
Self-employed workers aren’t paid through PAYE, and they don’t have the employment rights and responsibilities of employees.”
Here are the main points of the scheme:
- You must be self-employed or a member of a partnership to qualify, and STILL be trading now
- Your loss in trading profits MUST be because of the Covid-19 pandemic
- Your trading profits MUST be under £50,000 for 18/19 OR the average (under £50,000) over years 16/17, 17/18 and 18/19 (they are the only 2 options, you cannot pick and choose years)
- This grant is available for 3 months and maybe extended
- The maximum payment per month is £2,500
- Self-employment needs to be the majority of your overall income to qualify.
Individuals who have registered as self-employed from 6th April 19 will NOT qualify
Access to the scheme will be available no later than the beginning of June and HMRC will contact those that qualify directly, guidance specifies that you should NOT contact HMRC to check eligibility. A form will be completed, and the payments will be paid directly into your bank account. 3 months payments (for March, April and May) will be made in June. The scheme may be extended.
Some of the questions that we have had so far:
What if I haven’t filed my 18/19 tax return? – You have until 26th March 20 to file it – without penalty.
Will I have to pay tax on the money I receive? – Yes, the amount MUST be disclosed on your 20/21 tax return.
I haven’t made a profit in the last 3 years, what can I claim? – You will not be able to claim anything under this scheme.
How can I prove that I’ve lost income because of the Coronavirus?
Unfortunately, this is not something with a defined answer. People are being advised to take a “responsible approach”, and when your tax return for 20/21 is filed, checks will be made to find that you did make a reasonable loss. No information has been released on whether there will be penalties for any ‘inaccurate’ information submitted.
If you need help with your business in the interim, the Business Interruption Loans are available. These will need to be paid back, however they are interest free for 12 months.
We will of course help all our clients through this process however please bear with us as the details of how this will work are yet to be released. Please keep checking our Facebook page for updates.
