How the Self-employment Income Support Scheme (SEISS) will work

How the Self-employment Income Support Scheme (SEISS) will work

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 Government announcement on Thursday 26th March sets out the basics of who's eligible and how it will work.

 

Self-employment Income Support Scheme (SEISS)

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.

 

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

 

  • Be self-employed or a member of partnership

 

  • Have lost trading profits due to COVID-19

 

  • File a tax return for 2018-19 as self-employed or a trading partnership

If you've not yet filed for 2018-19, you 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 the impact of COVID 19)

- 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 comes 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.

 

What happens if your 2018/19 profits are very different to what you expected to make this year?

 

  • The government will only act on the most recent data (i.e. the 2018/19 tax year)

To try to provide the most accurate possible estimate of self-employed income, we can look at average profits over 16/17, 17/18 and 18/19.

 

  • Is this grant subject to tax?

Yes – individuals will pay Income Tax and National Insurance on any payments received through this scheme as they are replacement for income in line with normal practice for benefits or grants that replace income. The grant is recognised as income for the purposes of Universal Credit and Tax Credits and may impact the amount claimants are entitled to.

 

  • What should self-employed people do while they wait to be paid?

In the interim, self-employed individuals may be eligible for universal credit. The government has provided over £6.5bn of additional support through the welfare system for those affected by Covid-19.

 

  • Why does this scheme not cover small businesses who are incorporated?

Self-employed individuals who are owner-managers and pay themselves a salary through PAYE will be eligible for support through the Coronavirus Job Retention Scheme.

 

  • SMEs can also access support through the temporary Coronavirus Business Interruption Loan Scheme.

The Coronavirus Business Interruption Loan Scheme supports SMEs with access to loans, overdrafts, invoice finance and asset finance of up to £5 million and for up to 6 years. This new Self-Employment Income Support Scheme is open to anyone who reports trading profits through Income Tax Self-Assessment.

Self-employed individuals who work through a company do not report their trading profits in this way.

 

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

For eligible individuals who have not submitted their returns for 2018-19, they will have 4 weeks’ notice from today to file their returns and therefore become eligible for this scheme.

 

When can I access it?

 

  • Grants are expected to start to be paid by the beginning of June 2020

 

 

Author of this COVID-19 Business Support Hub Article

East Midland Chamber Derbyshire, Nottinghamshire, Leicestershire

Whatever the sector, shape or size of your organisation, our primary focus is to help you thrive. At the Heart of East Midlands Business News and Events.

More About East Midlands Chamber

 

East Midland Chamber

Helping your business grow – the Chamber connects you to funding, skills, new people, expert help and provides a platform where you and your business can flourish.

Connecting you and your business – the Chamber helps you access hundreds of opportunities to meet and connect with businesses in the East Midlands every year.

Providing access to skills – the Chamber can provide you with expert analysis of your current situation, connect you with fully- or partially-subsidised training or even introduce you to new talent.

Reaching and influencing the right person – the Chamber is an authoritative body which has the status and mandate to ensure your voice is heard by the right people.

International expertise – the Chamber’s award-winning International Trade team can help enable businesses at all stages of the export journey - from start-ups to multinationals - to be successful in overseas markets.

 

How to get in touch with East Midlands Chamber

www.emc-dnl.co.uk

 

 

COVID-19 Business Support Hub

These are challenging times for business and although our ethos is to only shout about good news, we've created COVID-19 Business Support Hub on the Love Business the website to support you with expert tips, advice and ideas from your fellow businesses to help you get through this COVID-19 crisis. 
 

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