Coronavirus: Statutory self-employment pay scheme
COVID-19 Self-employment income support scheme (SEISS). The Chancellor announced the following new measures on 26 March 2020.
Support for the self-employed during the coronavirus crisis:
*To work out the average HMRC will add together the total trading profit for the three tax years, or less, if you have been trading a shorter time and then divide by three or the number of months and use this to calculate a monthly amount.
On 1 May 2020 HM Treasury published The Coronavirus Act 2020 Functions of Her Majesty’s Revenue and Customs (Self-Employment Income Support Scheme) Direction this confirms the detail of the scheme.
On 4 May 2020 HMRC announced that claims would commence from 13 May 2020, with the first payments expected from 25 May 2020.
Additionally, more than half of your total income comes from self-employment.
One of the following conditions must be met to be eligible for the scheme:
HMRC have included examples in their guidance of the circumstances in which they might consider a business to be "adversely affected by coronavirus":
There are special rules for those who are subject to the loan charge:
A person is subject to the loan charge if-
(a) on 26 March 2020 the person is chargeable to income tax on any amount by reason of Schedule 11 or 12 to the Finance (No. 2) Act 2017 (loan charge) as enacted as at that date, or
(b) the person would be so chargeable but for entering into a contract settlement on or after 20 December 2019.
The profits conditions rules are different for loan charge payers:
Non-UK residents and non-domiciled individuals claiming the remittance basis:
What is total income?
Total income means the total of:
If you started trading between the years 2016 to 2019, HMRC will only use those years for which you filed a Self Assessment tax return.
HMRC give the following example (14 April 2020):
So even if you made a loss in the tax year 2018 to 2019, you would still be eligible for the grant because your average trading profit for the three tax years:
Making a claim
HMRC's online eligibility checker became available on 4 May 2020.
How will the grant be calculated?
On 14 April 2020 HMRC provided additional guidance and examples as to how they will work out trading income for the purposes of the scheme.
If your total trading income (turnover) in each of the tax years 2016 to 2017, 2017 to 2018 and 2018 to 2019 was £20,000 and you claimed the £1,000 trading allowance each year:
This is worked out as:
Your average trading profit would be £19,000.
Example 2: You have more than one trade in the same tax year
We will add together all profits and losses for all these trades to work out your trading profit.
If you only traded in the tax year 2018 to 2019 and made a £60,000 profit for your first trade, and then a £20,000 loss for your second trade, your trading profit for that year would be:
Trade 1 £60,000 profit deduct trade 2 £20,000 loss = £40,000
Example 3: You have traded for more than one year
To work out your average trading profit we will add together all profits and losses for all tax years you’ve had continuous trade.
If you made:
Your average trading profit for the three tax years would be £30,000.
If you did not trade in tax year 2016 to 2017 but made:
Your average trading profit for the two tax years would be £35,000.
If you are a self-employed farmer, market gardener, creative author or artist claiming Averaging relief HMRC will use the amount of profit before the impact of the averaging claims to work out:
Members of partnerships
If you have not submitted your Income Tax Self Assessment tax return for the tax year 2018-19, you must do this by 23 April 2020.
HMRC will use data on 2018/19 returns already submitted to identify those eligible and will risk-assess any late returns filed before the 23 April 2020 deadline in the usual way.
The comparable Employee Job Retention scheme for employees will apply to furloughed workers laid off during the crisis and has a cap of £2,500 per month.
Confused by the rules?
HMRC's online checker became available on 4 May 2020.
Additional support for small business
|2016 to 2017||2017 to 2018||2018 to 2019||Average for the 3 tax years|
|Trading profit are more than half of your total income||Yes||Yes||No||Yes|
COVID-19: Statutory self-employment pay scheme - Updated: 4 May 2020
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