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On 26 March 2020, the Chancellor announced that the Government would provide support to self-employed workers in the form of a cash grant of 80% of their profits, up to £2,500 per month. This is known as the Coronavirus (COVID-19) Self-employment Income Support Scheme (SEISS).
Here are some of the most frequently asked questions (FAQ’s) regarding this:
What is meant by ‘total income’ and ‘trading profits’ for the purposes of the SEISS?
HMRC’s guidance explains how to work out total income and trading profits – see here.
How is the requirement to show that trading profits have been lost as a result of the COVID-19 crisis to be determined?
You will need to confirm to HMRC that your business has been adversely affected by coronavirus. HMRC will use a ‘risk based approach’ to check a person’s compliance with the scheme rules.
Is it possible to amend a 2018/19 tax return before 23 April 2020, for example if one had been using the cash basis, the trading allowance or had claimed capital allowances, and had reported lower profits as a result?
No, if a person amends their 2018/19 tax return after 26 March 2020, any changes will not be taken into account when working out their eligibility for the SEISS or the amount of the grant.
Does one look at the trading profits and total income at partner level or at partnership level when working out whether a partner in a partnership is eligible to claim a SEISS grant?
HMRC’s guidance says that a member of a partnership can make a claim for the SEISS grant and that it is their trading profits and their total income which should be looked at in working out if they meet the eligibility criteria.
For the self-employed who started trading during 2019/20 (and who are not included in the SEISS), would it be possible to submit a 2019/20 tax return before 23 April 2020 to receive self-employment income support?
We are waiting to hear from HMRC whether this will be possible. For now, unfortunately, if you were not self-employed in the 2018/19 tax year and so did not submit a 2018/19 tax return showing any self-employed income then you are not eligible for the SEISS. Click on this link to check if you qualify for other government support.
How will HMRC contact taxpayers whom they consider will be eligible? Will it be by letter, email or through their personal/ business tax account? What about those who happen to be digitally excluded for some reason?
The scheme is not open yet and taxpayers are being asked NOT to contact HMRC but to wait for HMRC to contact them. HMRC will aim to contact taxpayers who are eligible for the scheme by mid-May 2020. HMRC will use tax returns already submitted to contact individuals identified as eligible and invite them to apply online through GOV.UK. For people unable to claim online there will be an alternative way to claim. Further details will be provided by HMRC soon. We don’t yet know how HMRC are intending to contact those people they identify as eligible.
⚠️ Be careful of fraudsters using texts, telephone calls or emails pretending to be HMRC or the government and requesting your bank account details. You will be asked to access the SEISS through GOV.UK.
What’s the position if a person has received loans impacted by the loan charge?
If you had loans impacted by the loan charge, you’re going to declare a loan charge or settle your disguised remuneration scheme involvement with HMRC by 30 September 2020, and you’re going to claim a grant through the SEISS, your grant will be based on either:
· the average of the tax years 2016/17 and 2017/18
· the tax year 2017/18 if you were not self-employed in the tax year 2016/17
You should file your self-assessment tax return for 2018/19 by 30 September 2020. It does not have to be submitted by 23 April 2020.
What if an individual is self-employed with more than one trade at the same time? Do you combine them?
Yes, if a person has more than one trade in the same tax year, HMRC will add together all the profits and losses for all the trades to work out the trading profit.
How does it work when a taxpayer has made a loss in one of the tax years on which the grant will be based?
In-year losses are taken into account as well as profits in calculating a person’s eligibility for the grant and the amount of the grant they will receive.
If an individual has remained self-employed throughout the 2016/17, 2017/18 and 2018/19 tax years but has changed what they do, for example, running a shop, then closing it down and becoming a window cleaner, does this matter?
No, so long as the periods of self-employment are continuous.
What is the position for property lettings businesses? Do they qualify for the SEISS?
Property lettings businesses are not regarded as a trade so landlords will not qualify for the SEISS.
Click here to view our Nordens Care Pack where you will find an SEISS calculator and many other tools you may find helpful.
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