27th March 2020

COVID-19 Self-employment Income Support Scheme

 At last, we have heard the measures for the "self-employed". The problem with these measures is the term "self-employed", a lot of small businesses trade through private limited company's including the people he mentioned electricians and plumbers among many others.

This fact is very well known to HMRC and the Treasury you only need to look at recent Budgets and in particular the introduction of the the new 7.5% dividend  tax in 2017.

So where everyone will now think you are being taken care as everyone friends, family will think you are "self-employed", these measures will not apply to you if you trade through a limited company. 

We can only hope there will be further measures will be put into place for the small limited company owners and that something is done to recognise that currently you could only look to furlough yourselves as directors and claim 80% of your salary. Currently there is no mention of dividends.being included in any schemes.

There is a lot of commentary about whether directors will be able to claim this but I cannot see how you wouldn't be able to, you are by definition an employee and so i would have expected it to have been specifically mentioned if you were to be excluded.

The scheme will be welcomed by the self-employed, points of note:

- Won't apply if you started trading after 5th April 2019
- Whilst Furnished Holiday Lets are considered a business for many reasons in tax law it doesn't appear to be covered by these measures.
- We need clarification as to which profit figure they will base the measures on, for example before or after claims for allowances on buying plant. In particular where you have bought plant / vans etc. which qualified for 100% AIA.
- You must have filed your 2019 Tax Return, which obviously you all have as we wouldn't have let you not!

On another note:

- I understand some of you are now talking to your banks about the Business Interruption Loan Scheme and these wheels appear to be turning.
- I am also hearing that the Grants for those of you who get Small Business Rates relief and the other Grant provisions are also being contacted by your local authority.


What is it?

The Self-employment Income Support Scheme (SEISS) will support self-employed individuals (including members of partnerships) whose income has been negatively impacted by COVID-19. The scheme will provide a grant to self-employed individuals or partnerships, worth 80% of their profits up to a cap of £2,500 per month.

HMRC will use the average profits from tax returns in 2016-17, 2017-18 and 2018-19 to calculate the size of the grant. The scheme will be open to those where the majority of their income comes from self-employment and who have profits of less than £50,000. The scheme will be open for an initial three months with people able to make their first claim by the beginning of June.

Am I eligible?

To be eligible for the scheme you must meet all the criteria below:

  • Be self-employed or a member of partnership;

  • Have lost trading/partnership trading profits due to COVID-19;

  • File a tax return for 2018-19 as self-employed or a member of a trading partnership. Those who have not yet filed for 2018-19 will have an additional 4 weeks from this announcement to do so;

  • Have traded in 2019-20; be currently trading at the point of application (or would be except for COVID 19) and intend to continue to trade in the tax year 2020 to 2021

  • Have trading profits of less than £50,000 and more than half of your total income come from self-employment. This can be with reference to at least one of the following conditions:

    • Your trading profits and total income in 2018/19

    • Your average trading profits and total income across up to the three years between 2016-17, 2017-18, and 2018-19.

How do I access it?

Individuals should not contact HMRC now. HMRC will use existing information to check potential eligibility and invite applications once the scheme is operational. HMRC will then pay the grant directly to eligible claimants’ bank account. HMRC is urgently working to deliver the scheme; grants are expected to start to be paid out by beginning of June 2020. For eligible individuals who have not submitted their returns for 2018-19, they will have 4 weeks’ notice from the date of the announcement to file their returns and therefore become eligible for this scheme.

HMRC are publishing guidance on the scheme, available here. This guidance will continue to be updated.

When can I access it?

HMRC is urgently working to deliver the scheme; grants are expected to start to be paid by the beginning of June 2020. This time is necessary to ensure that the scheme is both deliverable and fair. In the interim the self-employed will still able eligible for other government support including more generous universal credit and business continuity loans.

Further information on how to access these schemes can be found here.

Another useful link for Business Support Measures.

Wishing you all well as always

Nick Hunt