There has been a lot of concentration on the Job Retention Scheme recently, but there has also been an update to the guidance for the self-employed.
Self-Employed Income Support Scheme
The guidance at https://www.gov.uk/guidance/claim-a-grant-through-the-coronavirus-covid-19-self-employment-income-support-scheme was updated on Tuesday to give further information on the mechanism for paying out the grants to the self-employed, and clarification of the rules covering certain situations.
It has previously been made clear that eligible individuals would not have to submit a claim because HMRC have all of the necessary details on their system to identify them, and will contact them in due course. They have now said that this will happen “by mid May”, with payments to be made by early June. It is also now clear that, once they have heard from HMRC, eligible individuals will have to make a claim through the Government Gateway, and therefore they will have to be registered on the Gateway to do this. HMRC says that more information about how to do this will be released in due course, and we will therefore inform you when this happens. The payment will be made in one lump sum, covering the grant for all three months, into the nominated bank account.
There has been no change to the general qualification rules (profit less than £50,000 and more than 50% of total income), but there has been some tinkering with the rules to take account of circumstances which are “outside of the norm”. These are:
- If you were not trading for each of the three years ended 5 April 2019, you will still need to have been trading in 2018/19, but the way in which the grant will be worked out will depend on which other year you were trading. If you started trading in 2017/18, the grant will be based on the average profit for the 2017/18 and 2018/19 years. But if you traded in 2016/17 and 2018/19, but not 2017/18 (probably not the most common of patterns!), the profit for 2018/19 only will be used.
- If the tax return for 2018/19 was submitted by 31 January 2020 but amended after 26 March 2020 (the date these rules were announced by Mr Sunak), the amendment will be ignored in checking eligibility for the scheme or calculating the amount of the grant. This is clearly a provision to prevent manipulation of the 2018/19 profit in order to take advantage of the scheme, another of the Government’s protective measures against fraud. This will also have inadvertently given an advantage to people who had not filed their return by 31 January, who have until 23 April to file their returns with any “amendments” which they may feel to be appropriate – one hopes that HMRC will be reviewing such returns more closely than usual.
- The method by which farming profits will be calculated for the purposes of the grant where the averaging basis is used has been clarified.
- Taxpayers who are currently subject to the arrangements covered by the “loan charge” (they will know who they are) have until 30 September to file their 2018/19 tax returns and will have their profits for the two years 2016/17 and 2017/18 used for the purposes of the grant.
- The grant will be subject to income tax and Class 4 national insurance, probably by inclusion in the taxable profit for the relevant period.
As mentioned above, this update gives some clarification of the SEISS and promises further details to come.
Author: Peter Hedgethorne, Director
(16 April 2020)