HM Treasury has published a press releasewhich confirms that the scheme to support the self-employed through the outbreak of coronavirus is now open for claims. This new scheme has been set up by the government to provide support for those who are self-employed, either as a sole trader or a partner in a partnership and who have been trading during the 2018/19 tax year. You have been trading if you have been running a business selling goods or services and you complete self-employed or partnership pages as part of your self-Assessment tax return.
The Self-Employment Income Support Scheme (SEISS) will allow self-employed individuals and members of partnerships whose businesses have been negatively impacted by coronavirus to claim a grant of up to £7,500 to cover a three-month period. This is the maximum amount that can be claimed, but the grant is based on 80% of their average monthly trading profits.
Your 2018/19 tax return should have been submitted by 31 January 2020. You will still be considered for the scheme if you submitted your tax return by 23 April 2020.
It is expected that any successful claims will result in payments being made to bank accounts within six working days of submission.
People will be able to make their claims on a specified date between 13 – 18 May 2020 based on their Unique Tax Reference number. HMRC has been assigning self-employed individuals a specific date to apply on, which can be verified on the online checker. Individuals are welcome to apply on or after their designated date, but not before.
When eligible individuals go online, they will be asked to supply their Unique Tax Reference (UTR), National Insurance (NI) number and Government Gateway password and user ID. They will also be required to provide their bank account details and the address that the bank account is registered to in order for HMRC to make payment. Claimants must have a UK bank account that HMRC can transfer money directly into, as payments may be delayed if they do not have this.
HMRC will confirm how they have calculated the grant that individuals are entitled to, so that this can be discussed with tax agents or advisors should any queries arise. Tax agents are not permitted to make a claim on behalf of their clients, as doing so could trigger HMRC’s anti-fraud procedures. This would inevitably slow down the claim process and make it more difficult for HMRC to pay the grant out.
Individuals who have not been contacted by HMRC after 17 May and believe that they are eligible, are advised to use the eligibility checker after that point, and if applicable, make a claim.
The SEISS is just one of a number of measures announced to support the self-employed through the outbreak of coronavirus, which includes Bounce Back loans, the deferral of income tax and increased levels of Universal Credit.
Individuals are eligible for the SEISS if their business has been negatively impacted by the outbreak of COVID-19, if they traded in tax year 2019-20 and intend on continuing to trade. They must earn at least 50% of their income through self-employment, have trading profits which do not exceed £50,000 per year and have traded in tax year 2018-19, having submitted their associated Self-Assessment tax return on or before 23 April 2020. HMRC will calculate the amount to be paid on an average of tax returns for 2016-17, 2017-18 and 2018-19.
What if I am receiving universal credit?
Self-employed UC claimants must send their earnings to DWP after the end of each assessment period.
You usually need to report payments into and out of the business in the assessment period – that includes the total amount of income your business received, which we assume will also include the SEISS grant. We are seeking confirmation of this. You will also report any expenses paid out in that assessment period along with any payments of tax, national insurance and any money you paid into your pension. Although the grant is taxable, you can only deduct any tax actually paid in that assessment period for UC purposes.
Although the grant covers the period from 1 March to 31 May (3 months), it will not impact any UC received during that period – in other words it will not affect past UC entitlement.
However, it is possible that receipt of the whole amount of the grant in one UC assessment period will trigger something called ‘surplus earnings’ and as a result, it may affect your UC in subsequent assessment periods.
How Payroll Bureau can support you
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