Self-Employed Income Support Scheme

On what we and many others are calling Lockdown#2 was announced by the Prime Minister on Sunday 1st November and the Self-Employed Income Support Scheme (SEISS) was immediately changed and made more generous.

The SEISS provides two grants, each available for three month periods covering November 2020 to January 2021 and February 2021 to April 2021 with increased benefits for the first grant period. 

"Grants will be paid in two lump sum instalments each covering a three-month period.

The first grant will cover a three-month period from 1 November 2020 until 31 January 2021. The Government will provide a taxable grant covering 55% of average monthly trading profits, paid out in a single instalment covering 3 months’ worth of profits, and capped at £5,160 in total.

The Government are providing broadly the same level of support for the self-employed as is being provided for employees through the Job Support scheme.

The second grant will cover a three-month period from 1 February 2021 until 30 April 2021. The Government will review the level of the second grant and set this in due course.

The grants are taxable income and also subject to National Insurance contributions." Gov.uk

On 26th March 2020, Chancellor, Rishi Sunak announced "world-leading Self-Employed Income Support Scheme (SEISS) to support the UK’s self-employed affected by the Coronavirus outbreak." 

On 29th May 2020, the SEISS was extended by the Chancellor in line with other changes that he also made to the Coronavirus Job Rentention Scheme. Under the extension, those eligible can claim a second and final grant. The grant will be worth 70% of their average monthly trading profits, paid out in a single instalment covering three months’ worth of profits, and capped at £6,570 in total. 

• Individuals can continue to apply for the first SEISS grant until 13th July. Under the first grant, eligible individuals can claim a taxable grant worth 80% of their average monthly trading profits, paid out in a single instalment covering three months’ worth of profits, and capped at £7,500 in total. Those eligible have the money paid into their bank account within six working days of completing a claim.
• Applications for the second grant opened on 17th August. Individuals will be able to claim a second taxable grant worth 70% of their average monthly trading profits, paid out in a single instalment covering three months’ worth of profits, and capped at £6,570 in total.
• The eligibility criteria are the same for both grants, and individuals will need to confirm that their business has been adversely affected by coronavirus. An individual does not need to have claimed the first grant to receive the second grant: for example, they may only have been adversely affected by COVID-19 in this later phase. Further guidance on the second grant will be published on Friday 12th June.

Check on availability for SEISS grant.

HMRC have updated their detailed guidance on the SEISS. This says:

• The scheme is now closed to new claims for the first grant.
• People eligible for the first grant who can confirm to HMRC that their business has been adversely affected on or after 14th July 2020, will be able to make a claim for a second and final grant from 17th August 2020.
• The scheme allows claim for a second and final taxable grant worth 70% of average monthly trading profits, paid out in a single instalment covering 3 months’ worth of profits, and capped at £6,570 in total.
• As with the first grant HMRC will contact eligible persons. 
• Eligibility for the second grant will be worked out in the same way as the first grant.
• Claims can be made for the second grant even if people didn't make a claim for the first grant. 
• If grants are received recipients can continue to work, start a new trade or take on other employment including voluntary work, or duties as a military reservist.
• The grant does not need to be repaid but will be subject to Income Tax and self-employed National Insurance.

The summary details are as follows and need to be read in the light of the changes announced on 29th May:

• A first direct cash grant was of 80% of self-employed's average monthly trading profits over three years, up to £2,500 per month
• Scheme applicable where trading profit is less than £50,000 in 2018-19 or an average trading profit of less than £50,000 from 2016-17, 2017-18 and 2018-19
• More than half of income in these periods must come from self-employment
• Grants to be available for at least three months
• Applications for the scheme can be made from 13th May 2020
• Check how to make an application for the grant - applications went live on 13th May 2020.
• Availability of funds was available from early June 2020 and a second and final grant at 70% of average monthly trading profits became available in August 2020 
• Payment of grants is via a single sum
• Less than three years in self-employment, the scheme will consider whatever accounts are available
• If no filed trading accounts the scheme is not available
• Those who pay themselves a salary and dividends through their own company are not covered
• But can claim for their salary under the Coronavirus Job Retention Scheme if paid via PAYE
• HMRC will use existing information to check potential eligibility and invite applications once the scheme is operational
• Income support scheme is being designed by HMRC from scratch
• The grant will be taxable in the hands of the payees
• Scheme is available to members of partnerships
• Before grant payments are made, the self-employed can access other available C-19 government support 
• This includes more generous universal credit and business continuity loans where they have a business bank account
• Further information and details of the scheme will be shared shortly by HMRC

Further details are published on the FAQs Business Support website, which includes a link to Government Guidance about the package of measures announced at Budget 2020 to support public services, individuals and businesses affected by Covid-19. 

To search for the types of support that are currently available for self-employed use the  Gov.uk Covid-19 support finder hub.

Check eligibility for grant under Self-Employment Income Support Scheme- Gov.uk

1. Who can claim
2. Check if you’re eligible to claim
3. How much you’ll get
4. How to claim

Check how the HMRC will assess applications for self-employed income support in working out trading profits and non-trading income.

1. Trading profits
2. Non-trading income
3. Eligibility
4. How we will work out the grant

Find out how different circumstances can affect eligibility to the scheme, or amount of grant. 

The taxable grant will be based on average trading profits over the 3 tax years:

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

HMRC will work out the average trading profits by adding together total trading profits or losses for the 3 tax years, then divide by 3.

The grant will be 80% of average monthly trading profits, paid out in a single instalment covering 3 months, and capped at £7,500. The grant amount HMRC works out will be paid directly into a bank account, in one instalment.

Find out how HMRC will work out average trading profits including for those who have not traded for all 3 years.

Check how to make an application for the grant - applications goes live on 13th May 2020.

The Government says that the Self-Employed Income Support Scheme "..brings parity with the Coronavirus Job Retention Scheme, announced by the Chancellor last week, where the Government committed to pay up to £2,500 each month in wages of employed workers who are furloughed during the outbreak."

The Chancellor, the Governor of the Bank of England, and the CEO of the FCA wrote jointly on 25th March to the CEOs of the UK Banks on the subject of COVID-19 and bank lending, saying that the priority for "..banks, building societies, government and the financial authorities- should now be to taje all action necessary to ensure that the benefits of the [Government's support measures]..are passed through to businesses and consumers."

The Chancellor, the Governor of the Bank of England, and the CEO of the FCA wrote jointly on 25th March to the CEOs of the UK Banks on the subject of COVID-19 and bank lending, saying that the priority for "..banks, building societies, government and the financial authorities- should now be to take all action necessary to ensure that the benefits of the [Government's support measures]..are passed through to businesses and consumers."

For more information on eligibility see the CBIs website guidance.

By the publications team at: Contracts-Direct.com

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