Government support for the self-employed
From early May the HMRC will begin contacting customers who may be eligible for the government’s Self-Employment Income Support Scheme (SEISS).
Self-Employment Income Support Scheme – updated 29.05.2020
On Friday 29th May the Government announced an extension to cover a further three months of earnings – but at a rate to match the furlough scheme.
The changes include:
- Individuals can continue to apply for the first SEISS grant until 13 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 will open in 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 12 June.
Read more about the changes here.
From Monday 4th May HMRC contacted customers who may be eligible for the new Self-Employment Income Support Scheme. The scheme allows customers to claim a taxable grant worth 80% of their average trading profits up to a maximum of £7,500, equivalent to three months’ profits.
Customers can claim if they’re a self-employed individual, or a member of a business partnership, their business has been adversely impacted by coronavirus and they:
- traded in the tax year 2018 to 2019 and have submitted their Self Assessment tax return for that year on or before 23 April 2020
- traded in the tax year 2019 to 2020
- are trading when they apply – if they’ve temporarily stopped trading because of coronavirus they will still be classed as trading by HMRC
- intend to continue to trade in the tax year 2020 to 2021
Their trading profits must also be no more than £50,000, and at least half of their total income for either:
- the tax year 2018 to 2019; or
- the average of the tax years 2016 to 2017, 2017 to 2018, and 2018 to 2019
To help customers prepare to claim, HMRC have published updated guidance, which clarifies the eligibility criteria, the application process and how the grant is calculated.
If a customer is not eligible for a grant under this scheme, they may still qualify for other forms of help. HMRC encourages customers and agents to visit GOV.UK to see what support is available.
HMRC would ask at this busy time that people only call us if they cannot find what they need on GOV.UK or via webchat.
Contacting eligible customers
This week HMRC is starting to contact self-employed customers who they think could be eligible based on the information they provided in their 2018 to 2019 tax return, via email, SMS or letter, to invite them to use their new new online checker to see the date from which they can make a claim.
HMRC encourages agents to help their clients to use the eligibility checker themselves, or if necessary, to use the checker on their behalf, and then help them understand the result, including recommending other sources of support if they are not eligible.
To use the eligibility checker the customer/their agent they will need their:
- Self Assessment Unique Taxpayer Reference (UTR)
- National Insurance number
If the checker confirms the customer is eligible, they will be given a date between 13 and 18 May when they can first use the online system to make a claim. Please note these dates are allocated randomly by HMRC – it is not ‘first come, first served’ so when the date the eligibility checker is used has no impact on when the system opens for claims from a customer.
Customers should then log onto their Government Gateway account with their user ID and password. The customer will be able to update their contact details which will be used to email or text message them a reminder of this date.
If they do not have a Government Gateway Account, they can create one when they check their eligibility online.
Making a claim
The process has been designed to be as simple as possible. HMRC will have done all the calculations for the customer already.
They will contact eligible people between 13 and 18 May, on the day they can apply, to remind them the system has opened for them to submit their claim (as above, the dates people can apply will be staggered to allow the system to cope with demand).
To receive money via the Self-Employment Income Support Scheme, customers will need to go to GOV.UK on (or any time after) their allotted day to submit their claim. Customers should again enter their UTR, National Insurance Number and Government Gateway password and user ID and additionally provide their bank account details. They will also have to confirm that their trading profits have been adversely affected by Coronavirus.
Customers who consider themselves to be digitally excluded and therefore unable to apply online, will be invited to contact HMRC by telephone. An HMRC advisor will make a claim on their behalf using the SEISS system.
Applications will be risk-assessed based on the eligibility criteria and HMRC will check claims and take appropriate action to withhold or recover payments found to be dishonest or inaccurate.
A review process will be in place for customers who do not agree with HMRC’s eligibility assessment or calculation of their grant.
The scheme allows people to claim a taxable grant worth 80% of their average trading profits up to a maximum of £7,500 (equivalent to three months’ profits). If the claim is approved it will be paid directly into their bank account within six working days of submitting a claim, paid in a single instalment.
The online system will tell people how much they will be paid and how HMRC calculated that amount (based on their previous tax returns).
How tax agents can support their clients
Tax agents can play an important role in supporting their clients by helping them get ready to claim by:
- Talking them through why they may / may not be eligible
- Helping them to find the details they need
- Using the online eligibility checker on their behalf (or supporting them to use it themselves).
Under the rules of the scheme, not every self-employed person will be able to claim, and HMRC would value the support of agents in being their clients’ first port of call to help them understand this. Agents can go to GOV.UK for information on eligibility, how to make a claim and how we calculate the grants.