Self-employment Income Support Scheme
The Government's Self-Employment Income Support Scheme (SEISS) provides self-employed individuals or members of a partnership that have been adversely affected by coronavirus financial support by way of taxable grants.
The first grant, for which applications closed on 13th July 2020, was based on 80% of average monthly trading profits and capped at £7,500.
The second grant was worth 70% of average monthly trading profits, paid out in a single instalment covering three months’ worth of profits, and capped at £6,570. Claims for this second grant closed on 19th October 2020.
The scheme has now been extended for a further six months, running from November 2020 to April 2021. Two grants will be provided during this period, each covering three months. The first of these grants will be for the three-month period to January 2021 and based on 80% of average monthly trading profits, subject to a cap of £7,500 Claims for this grant are expected to open on 30th November 2020, via the same HMRC portal as the earlier grants.
Self-employed Income Support Scheme - what you need to know
Please note the details below apply only to grants covering November 2020 to April 2021.
Key details about the Self-employment Income Support scheme are as follows:
- For the claim period from November 2020 to January 2021, the scheme will provide a grant to self-employed individuals or partnerships, based on 80% of their profits up to a cap of £7,500.
- The level of grant for the claim period February to April 2021 will be set at a later date.
- You must have filed a tax return for 2018-19 as self-employed or a member of a trading partnership by 23rd April 2020.
- HMRC will use the average trading profits from tax returns in 2016/17, 2017/18 and 2018/19 to determine the size of the grant. Deducting any trading losses arising in those years from any profits.
- In order to be eligible, you must have trading profits of no more than £50,000 and more than half of your total income come from self-employment for either the tax year 2018/19 or the average of the tax years 2016/17, 2017/18, and 2018/19.
- You must intend to continue to trade and either:
* are currently actively trading but are impacted by reduced demand due to coronavirus; or
* were previously trading but are temporarily unable to do so due to coronavirus.
Deferring tax payments
Any payments on account towards Income Tax for the 2019/20 tax year, which would have been due for payment by the end of July 2020, have been deferred until the end of January 2021. This is an automatic process and does not need to be applied for.
Further, on 24th September 2020 the Government announced that taxpayers with up to £30,000 of Self-Assessment liabilities due will be able to use HMRC’s self-service Time to Pay facility to secure a plan to pay over an additional 12 months. This means that Self-Assessment liabilities due in July 2020 will not need to be paid in full until January 2022.
Any Self-Assessment taxpayer not able to pay their tax bill on time, including those who cannot use the online service, can continue to use HMRC’s Time to Pay Self-Assessment helpline to agree a payment plan. It also has a dedicated helpline –0800 024 1222 – with increased staff numbers, to help those who are concerned about being able to pay their tax due to coronavirus.
Deferral of VAT payments
Earlier this year, VAT-registered businesses were given the option of deferring their VAT payments becoming due between 20th March 2020 and 30th June 2020. The deadline for paying this deferred VAT was originally set at 31st March 2021, although businesses could still before then if they wished.
On 24th September 2020, the Chancellor announced that businesses who deferred VAT due from 20th March to 30th June 2020 will now have the option to pay in smaller payments over a longer period. Instead of paying the full amount by the end of March 2021, businesses can make smaller payments up to the end of March 2022, interest free. You will need to opt-in to the scheme, and for those who do, this means that your VAT liabilities due between 20th March and 30th June 2020 do not need to be paid in full until the end of March 2022.
Working from home for the self-employed
The self-employed can claim expenses which are wholly and exclusively for the purpose of your business. This means that when you work from home you may claim a measure of relief, which must be restricted for your personal use. Typically, you could claim a proportion of your costs for things like heating, electricity, Council Tax and mortgage interest or rent.
Full guidance on what to claim can be found here.
Know your numbers and project your cashflow
During this difficult time, it is highly likely that you may have to make important decisions to help support your business and your cashflow now and in the future will play a key part.
Ensure that you keep your accounting records up to date and that you work closely with your accountant. This is also the perfect time to consider updating your systems and start using some of the technology available to help you to save time and better understand your figures.
If your accounts are up to date, you will be able to predict the demands on your future cashflow and forecast what funds your business and, more importantly, you and your family may need over the next few months.
Funding availability during the pandemic
Most major banks have said they have options available should businesses experience any temporary setbacks as a result of coronavirus affecting their business.
You should also consider alternative lenders who may be able to help you in the short term.
If your income falls, discuss a mortgage holiday with your bank. It is important to note that the sum owed remains and the mortgage continues to accrue interest during this period.
On 4th May the Government launched its Bounce Back Loan Scheme, designed to help small businesses needing financial help during the coronavirus pandemic. Giving them access to loans from £2,000 up to 25% of their turnover with a maximum loan of £50,000. To apply for a Bounce Back Loan, businesses need to complete a short application form on a lender’s website, which self-certifies whether they are eligible.
Support for employers
If you are also an employer and want to understand the key points you need to consider during the COVID-19 pandemic, please read our dedicated guidance page here.
Want to know more?
To find out more about what support is available for the self-employed during the coronavirus outbreak, you can watch our webinar here.
Last updated: 5th November 2020This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.