A fourth grant will be available for the period from 1st February to 30th April 2021, claims will open for this grant late April. A 5th and final grant will cover the period May to September, claims for this will open late July.
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.
Three grants have been made available so far. The first two grants covering the period from March to August 2020, and a third grant for the period from November 2020 to January 2021. Claims for these earlier grants are now closed.
The fourth SEISS grant, covering February to April 2021, will be 80% of average trading profits, up to a maximum cap of £7,500 total.
A significant change is that the fourth grant will be calculated based on profits for the 2019/20 tax year. The earlier grants were based on the 2018/19 tax year, which meant that those who started a new business in 2019/20 were not previously eligible.
HMRC has stated it will be contacting those who started their business in 2019/20, to ask them to complete pre-verification checks. Those affected will receive a letter between 8th March and mid-April, and will receive a follow up call from HMRC within 10 working days of that letter. HMRC will ask these businesses to give them certain information, and if this isn’t provided then access to the fourth grant will be denied.
It is expected that the claims will open in late April and be available until 31st May 2021. HMRC will contact eligible individuals from mid-April to give them a personal claim date. As with previous grants, the claim will be made via the HMRC portal.
A fifth and final SEISS grant, covering May through September, will see the tapering down of Government support, focusing largely on those still most affected by the pandemic. Individuals who’ve seen turnover fall by 30% or more will continue to receive 80% of three months’ average trading profits, up to a £7,500 cap. Where turnover has fallen by less than 30%, the grant received will only be 30% and this will be capped at £2,850.
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:
- The level of grant for the claim period February to April 2021 will provide a grant to self-employed individuals or partnerships, based on 80% of their profits up to a cap of £7,500.
- You must have traded in both the 2018/19 and 2019/20 tax years
- You must have filed a tax return for 2019/20 as self-employed or a member of a trading partnership by 2nd March 2021.
- HMRC will use the average trading profits from tax returns in 2016/17, 2017/18, 2018/19 and 2019/20 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 2019/20 or the average of the tax years 2016/17, 2017/18, 2018/19 and 2019/20.
- You must either:
* be currently trading but are impacted by reduced demand due to coronavirus; or
* have been trading but are temporarily unable to do so due to coronavirus
You must also declare that:
* you intend to continue to trade
* you reasonably believe there will be a significant reduction in your trading profits due to reduced business activity, capacity, demand or inability to trade 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 by 21st June 2021, 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.
Applications doe these will close on 31st March 2021.
With the final application dates for support under the Coronavirus Business Interruption and Bounce Back Loan Schemes being 31st March 2021, eligible UK businesses will welcome the announcement in the Budget of a new Recovery Loan Scheme (RLS).
UK businesses of any size can apply for loans or overdrafts from £25,000 to a maximum of £10 million until the end of this year. Invoice and asset finance will also be made available to provide finance worth between £1,000 and £10 million.
Finance under the new scheme will be backed by an 80% Government guarantee to encourage banks to continue to lend confidently.
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: 17th March 2021This 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.