The Self-employment Income Support Scheme (SEISS) will support self-employed individuals (including members of partnerships) who have lost income due to coronavirus (COVID-19).
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
- traded in the tax year 2019-20
- are trading when you apply, or would be except for COVID-19
- intend to continue to trade in the tax year 2020-21
- have lost trading/partnership trading profits due to COVID-19
Your self-employed trading profits must also be less than £50,000 and more than half of your income come 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
- 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
If you started trading between 2016-19, HMRC will only use those years for which you filed a Self-Assessment tax return.
If you have not submitted your Income Tax Self-Assessment tax return for the tax year 2018-19, you must do this by 23 April 2020.
HMRC will use data on 2018-19 returns already submitted to identify those eligible and will risk assess any late returns filed before the 23 April 2020 deadline in the usual way.
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
To work out the average HMRC will add together the total trading profit for the 3 tax years (where applicable) then divide by 3 (where applicable), and use this to calculate a monthly amount.
It will be up to a maximum of £2,500 per month for 3 months.
The grant will be paid directly into your bank account, in one instalment.
How to apply
HMRC will contact you if you are eligible for the scheme and invite you to apply online.
Individuals do not need to contact HMRC. The first payments are expected to be made by the beginning of June.
Update 1st May
- Contact is expected Mid May. HMRC are planning for applications to be through the business tax account using a government gateway ID.
- Will need to confirm lost profits due to COVID19 have been experienced and compliance will follow. We are currently unsure as to what this compliance will look like although it’s almost certainly going to be risk assessed. Care must be taken when making application, but HMRC appreciate knowing the effect of COVID19 at application is not an exact science
- It is unlikely agents will be able to apply for clients because HMRC will do the calculations. There will be a (slower) option for the digitally excluded but most are expected to need a Business Tax Account.
- Will be a query and dispute process, this is currently under discussion.
- Calculations will be made by HMRC and likely to be based on boxes 64/65 (self employed) and 8 partnership. Pension contributions and gift aid ignored.
- Losses for a year will be treated as a negative and bring average down. However, use of brought forward profits will be ignored, along with averaging relief.
- For the 50% of total income they will firstly look at 18/19, but if a taxpayer fails that in 18/19 they will then look at average of the 3 years, so may qualify based on the average if other income is a new source.
- If there are two or more trades these will be added together.
- No pro rata for part years traded.
- This is currently designed to be one payout for 3 months, but may get extended.
- Unlikely to be VATable but is taxable in 20/21 to Income Tax and Class 4 NIC.
- Amendments to returns after 26/03/20 will be disregarded
- BEWARE. This is a huge opportunity for getting caught by scams, as HMRC are likely to be using email, texts etc.
HMRC guidance can be seen at https://www.gov.uk/guidance/claim-a-grant-through-the-coronavirus-covid-19-self-employment-income-support-scheme
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