COVID-19 – Self-Employed Income Support Scheme
On Thursday, 26 March 2020, the Chancellor Rishi Sunak announced the Self-Employed Income Support Scheme (SEISS), which offers further Government support for those in self-employment.
SEISS is available to self-employed individuals, including members of partnerships, but not to incorporated businesses (see below) or employees.
The scheme is an addition to the previously unveiled measures to help the self-employed, such as:
- The availability of the increased Universal Credit for all self-employed.
- Business continuity loans.
- Deferral of the July 2020 income tax instalment.
- Deferral of VAT.
Under the scheme, qualifying self-employed individuals will receive a cash grant of 80% of their average monthly profits, up to £2,500 per month.
Initially, the grant will be available for three months. Payments are expected to be made by early June but will be backdated to 1 March.
The scheme is open to:
- Individuals who are already in self-employment.
- Individuals with a 2018/19 trading profit of less than £50,000 or those with an average trading profit of less than £50,000 for 2016/17, 2017/18 and 2018/19.
- Individuals whose self-employment income for years 2016/17, 2017/18 and 2018/19 forms the greater part of their total income arising in those years.
There are additional criteria to be met, including:
- There is a requirement to submit a tax return for 2018/19 (deadline to file has been extended to 23 April 2020).
- The business traded in the 2019/20 tax year or is trading at the time of application for the grant (or would have been trading if it were not for Covid-19).
- There is an intention to continue trading in the 2020/21 tax year.
- The business has lost trading profits due to Covid-19.
It is expected that HMRC will identify and contact self-employed individuals who may qualify directly to invite them to apply for the scheme once the online application form is ready.
The size of the grant will be determined by the individual’s average profits for 2016/17, 2017/18 and 2018/19.
The grant will be included in the calculation of taxable profits and any tax due on the profits will be payable by 31 January 2022.
COVID-19 – Companies and Coronavirus Job Retention Scheme
As you may recall from our technical note dated 24th March 2020, under the regime available to all UK employers, business with employees designated as “furloughed workers”, who remain on the payroll but are unable to work, can have 80% of wage costs, up to a cap of £2,500 per month, reimbursed by HMRC.
The payments will be backdated to 1 March 2020 and the scheme will initially operate for 3 months.
The HMRC online portal through which information on furloughed workers should be submitted has yet to be created as at today’s date but there are a series of next steps which can be undertaken now:
- As a general point, draw up (or review) your cash flow statement.
- Keep open and clear channels of communication with your staff with regards to all options.
- Preparing details of which employees may need to be furloughed and your reasoning behind this decision (the cash flow statement may help).
- Have to hand furloughed employees’ existing terms and conditions.
- If an employee needs to be furloughed, their terms and conditions of employment may need to be varied. Furlough will only pay 80% of wage costs capped at £2,500 – if the business is not going to make up the difference, a contract change may be required.
- The grant can only start once the employee ceases to work – therefore prompt action will need to be taken to obtain the staff agreement.
- Consider what is required to demonstrate that the employee is furloughed i.e. not working for the business.
We will endeavour to keep you updated as more information becomes available.
Arnold Hill & Co LLP
Should you have any queries or questions in respect of the above or if any assistance can be provided with regards helping you benefit from this government scheme, please reach out to your usual Arnold Hill & Co contact or one of our one of our partners below.
Justin Moore – 020 7306 9104
Reuben Fevrier – 020 7306 9105
Tim Straw – 020 7306 9103
Lucy J Duncan – 020 7306 9102
Stephanie Clegg – 020 7306 9107
Leanne Konopka – 020 7306 9117
Main Contact Number – 0207 306 9100