HMRC yesterday have confirmed that they will start to contact people this week who may be eligible for the new Self-Employment Income Support Scheme. This scheme was originally due to go live at the end of June, therefore this news should come as great news to many.

HMRC will aim to contact you by mid-May 2020 if you’re eligible and invite you to claim using the GOV.UK online service. This is likely to be either email or letter. Payment will be made by early June 2020 if your claim is approved.

Eligibility

As a reminder to our previous email regarding this scheme (included below), if you are eligible, this scheme will allow you to claim a taxable grant worth 80% of their trading profits up to a maximum of £7,500.

In order to be eligible, your average self-employed trading profits must also be less than £50,000 and more than half of your income arises from self-employment. This is determined by at least one of the following conditions being true:

  • having trading profits/partnership trading profits in 2018-19 of less than £50,000 and these profits constitute more than half of your total taxable income; or
  • having average trading profits in 2016-17, 2017-18, and 2018-19 of less than £50,000 and these profits constitute more than half of your average taxable income in the same period

HMRC will use data on 2018-19 returns already submitted to identify those eligible and will risk assess any late returns filed before the updated 23 April 2020 deadline in the usual way.

Claim Details

Please note, HMRC have announced however that as agents we will unfortunately not be able to claim (through our agent portal) on your behalf and the amounts must be claimed individually using your Gov.uk login. We are therefore contacting you as early as practically possible to help you get prepared to submit this claim (Of course, if you would like us to assist you with the claim, we are more than happy to do so).

If you do not have a Gov.uk login account, we recommend that you set up an account as soon as practically possible in order to submit a claim. Please continue to read this email below where we have included a step-by-step guide of how to register for a government gateway.

If you’re unable to register online or unable to claim online (i.e. no internet access), HMRC have confirmed that an alternative way to claim will be made available. The details of this are currently unknown and HMRC are going to update their guidance on this in the next couple of days. We would assume this method to be via a paper form which although is still great, we firmly believe this will take longer for your claim to be approved and therefore would recommend the online submission method if possible.

Scheme Information

For the full, latest guidance available, please read the following HMRC weblink which should explain everything you should need to know regarding the upcoming claim process, including an online calculator which should come in useful in being able to calculate your claim:

https://www.gov.uk/guidance/claim-a-grant-through-the-coronavirus-covid-19-self-employment-income-support-scheme#claim

Who is eligible to claim?

You can claim if you’re a self-employed individual or a member of a partnership and:

  • you carry on a trade which has been adversely affected by coronavirus;
  • you traded in the tax year 2018 to 2019 and submitted your Self-Assessment tax return on or before 23 April 2020 for that year;
  • you traded in the tax year 2019 to 2020;
  • you intend to continue to trade in the tax year 2020 to 2021

Your business could be adversely affected by coronavirus, for example if:

  • you’re unable to work because you:
    • are shielding;
    • are self-isolating;
    • are on sick leave because of coronavirus;
    • have caring responsibilities because of coronavirus
  • you’ve had to scale down or temporarily stop trading because:
    • your supply chain has been interrupted;
    • you have fewer or no customers or clients;
    • your staff are unable to come in to work

Those who are ineligible

This is a very challenging time and some people may be disappointed if they are not eligible.

HMRC have tried to identify who is eligible, however if you are not contacted, you will be able to ask HMRC for a review of your circumstances. HMRC will look at your case from 18‌‌ May and explain your eligibility by the end of May.

Alternative financial support may be found via the following:

    • delay VAT payments
    • delay Self-Assessment payment on account
    • arrange to pay Self-Assessment tax bill in instalments
    • get a payment from the Small Business Grant Fund (this support is specific to rates relief)
    • get a loan from the Business Interruption Loan Scheme or Bounce Back Loan
    • get Universal Credit
    • apply for Employment and Support Allowance (ESA)
    • apply for Child Benefit.

Possible Scams

We are aware that there has been an increase in scam emails, calls and texts. Eligible customers to the above scheme will be invited to claim through GOV‌.UK – it is the only service you can use. If someone gets in touch with you claiming to be from HMRC, saying that financial help can be claimed or that a tax refund is owed, and asks you to click on a link or to give information such as name, credit card or bank details, do not respond. It is a scam.

What information do I need in order to make a claim?

You’ll only need your:

  • Self Assessment UTR – it will be printed on your tax return but if you do not have this find out how to get your lost UTR
  • National Insurance number – if you do not have this find out how to get your lost National Insurance number
  • Government Gateway user ID and password – if you do not have a user ID, you can create one when you check your eligibility online
  • bank account number and sort code you want HMRC to pay the grant into (only provide bank account details where a Bacs payment can be accepted)

You’ll have to confirm to HMRC that your business has been adversely affected by coronavirus. If you claim the grant HMRC will treat this as confirmation you’re below the state aid limits. HMRC will check claims and take appropriate action to withhold or recover payments found to be dishonest or inaccurate.

What do I do once I have made a claim?

Once you’ve submitted your claim, you will be told straight away if your grant is approved. HMRC will pay the grant into your bank account within 6 working days.

You must keep a copy of all records in line with normal self-employment record keeping requirements, including:

  • the amount claimed
  • the claim reference number for your records
  • evidence that your business has been adversely affected by coronavirus.
    • HMRC haven’t specifically detailed what this evidence may entail so we set out some possible examples below;
      • Reduced levels of sales invoices and income in to the bank
      • Reduced mileage / subsistence expenses indicating a reduction in work
      • Correspondence with accountants / banks / insurers to inform them of reduced activity
      • Correspondence with customers informing you of cancelled jobs
      • Proof of confirmed work / tenders which fell through due to Covid-19
      • Proof that you sought work elsewhere or claimed universal credit to cover the shortfall in income

You will need to report the grant:

  • on your Self-Assessment tax return
  • as self-employed income for any Universal Credit claims
  • as self-employed income and that you’re working 16 hours a week for any tax credits claims

You will also need to have a Government Gateway, if you do not have one of these then please follow this link.

Detailed below is our previous email regarding Self Employment Income Support Scheme.

Following on from our previous email updates regarding the support that the UK Government are putting in place, please find below an update specifically focusing on anyone who is self-employed or a partner of a partnership. The Government have announced a financial support package also known as ‘Self-employment Income Support Scheme’ (SEISS).

Please note that before reading the below, this does not apply to you if you’re a director of your own company and pay yourself through a mix of salary and dividends, but you may be able to get support using the Job Retention Scheme. Please refer to our previous email update on this with the email subject named ‘Coronavirus Job Retention Scheme’. Limited Company Directors and Shareholders do not qualify for SEISS unless they have other qualifying self-employed income.

Please see an outline of the guidance that the Government have released to date on how this will work; we have tried to set out what we know and answer as many of your questions as possible.

What is it?

This financial assistance is designed to help if you’re self-employed or a partner of a partnership and have lost income due to coronavirus.

This scheme will allow you to claim a taxable grant worth 80% of your trading profits up to a maximum of £2,500 per month for the next 3 months. This may be extended if needed.

Who can apply?

You can apply if you’re a self-employed individual or a member of a partnership and you:

  • have submitted your Income Tax Self-Assessment tax return for the tax year 2018-19, and
  • traded in the tax year 2019-20, and
  • are trading when you apply, or would be except for COVID-19, and
  • intend to continue to trade in the tax year 2020-21, and
  • have lost trading/partnership trading profits due to COVID-19

In order to be eligible, your average self-employed trading profits must also be less than £50,000 and more than half of your income arises from self-employment. This is determined by at least one of the following conditions being true:

  • having trading profits/partnership trading profits in 2018-19 of less than £50,000 and these profits constitute more than half of your total taxable income; or
  • having average trading profits in 2016-17, 2017-18, and 2018-19 of less than £50,000 and these profits constitute more than half of your average taxable income in the same period

HMRC will use data on 2018-19 returns already submitted to identify those eligible and will risk assess any late returns filed before the updated 23 April 2020 deadline in the usual way.

I didn’t complete a tax return in 2018-19 / I have only just started out as self-employed – what do I do?

If you have not submitted your Income Tax Self-Assessment tax return for the tax year 2018-19, the government have reopened the window to file a tax return. You must do this by 23 April 2020.

The Chancellor has stated in his announcement that the only way he could implement this support was to do it through historic HMRC tax returns. If you are only recently self-employed then unfortunately you will not be eligible for this income support.

Please see below for a summary of the other ways the government are providing support for the self-employed.

How much you’ll get

You’ll get a taxable grant which will be 80% of the average profits from the tax years (where applicable):

  • 2016 to 2017
  • 2017 to 2018
  • 2018 to 2019

If you started trading between 2016-19, HMRC will only use those years for which you filed a Self-Assessment tax return.

It will be up to a maximum of £2,500 per month for 3 months. HMRC will pay the grant directly into your bank account, in one instalment.

Is the grant taxable?

The Chancellor stated that the grant is taxable.

How to apply

You cannot apply for this scheme yet.

HMRC will contact you if you are eligible for the scheme and invite you to apply online. Once you are invited, we can help you to prepare your claim.

Individuals do not need to contact HMRC now and doing so will only delay the urgent work being undertaken to introduce the scheme.

The Chancellor has said that the aim for payments to be made is June. However this will be backdated to March 1 so could potentially be a sum of £7,500.

You will access this scheme only through GOV.UK. If someone texts, calls or emails claiming to be from HMRC, saying that you can claim financial help or are owed a tax refund, and asks you to click on a link or to give information such as your name, credit card or bank details, it is a scam.

After you’ve applied

Once HMRC has received your claim and you are eligible for the grant, they will contact you to tell you how much you will get and the payment details.

If you claim tax credits you’ll need to include the grant in your claim as income.

I’m struggling for cash flow at the moment – what other options are there available for?

Until the above scheme is in place and the money is backdated, please see a summary of the other ways the government are providing support for the self-employed:

  • Universal credit
    • the treasury had made universal credit more generous and that a family could receive as much as £1,800 a month in support.
    • A faster payment could be paid within days of an application.
    • You apply for universal credit online at www.universal-credit.service.gov.uk/postcode-checker.
    • You’ll need a form of identification, as well as your bank details, an email address, information about your housing and income, as well as details about savings and investments, plus how much you pay for childcare.
  • Deferral of July self-assessment payment on account
    • If you’re due to pay a self-assessment payment on account by 31 July 2020 but the impact of the coronavirus causes you difficulty in making payment by that date, then you may defer payment until January 2021.
    • This is an automatic offer with no applications required. No penalties or interest for late payment will be charged if you defer payment until 31 January 2021.
    • During the deferral period you can set up a budget payment plan to help you pay the deferred payment on account when it comes due.
    • The deferment is optional. If you are able to pay / want to continue to pay your second payment on account on 31 July then you can continue to do this as normal
  • Support for businesses through deferring VAT payments
    • If you’re a UK VAT registered business and have a VAT payment due between 20 March 2020 and 30 June 2020, you have the option to defer the payment until 2020/21.
    • If you pay your VAT liability by direct debit, please note that any liabilities may still come out automatically, therefore to preserve cash you should temporarily cancelling your direct debit.
    • This is an automatic offer with no applications required.
    • Any VAT refunds due will still be processed in the usual way
  • Grants for business that pay little or no business rates
    • Please see our earlier emails for further details.
  • Business interruption Loan Scheme
    • Please see our earlier emails for further details.

We have been working with a number of you already with particular regard to this scheme and although there is still a number of unanswered questions, we thought it would be useful to provide a bit more detail on it.