Covid-19: More details on self-employed grant scheme

Self-employed Grant Scheme:

Like the CJRS scheme for employers the initial HMRC guidance on the grant scheme to support the self-employed and members in partnerships was also very sketchy.

In outline the Self-Employed Income Support Scheme (SEISS) allows the self-employed to claim 80% of their average profits for the period up to 2018/19, limited to £2,500 a month, initially for a three-month period.

Like CJRS there are lots of conditions that need to be satisfied such as being self-employed in 2018/19 and continuing to trade in 2019/20 and 2020/21, or would be doing so if it the business had not been impacted by coronavirus.

At the time of writing we are still awaiting details of the claims process but HMRC have recently updated their guidance on the calculation of “self-employed profits” and “total income”.

In order to be able to make a successful claim the self-employed profits in 2018/19 must not exceed £50,000 and must be more than 50% of the individual’s total income. If that test is not met, then the same £50,000 and 50% tests are applied to average profits and total income over the three years (or shorter period) to 5 April 2019.

We can of course help you determine whether you are eligible and assist you with your claim if required.

Self-Employed Profits

HMRC guidance has defined self-employed profits for the purposes of SEISS as turnover for the business less allowable business expenses and capital expenditure. This figure may not be the same figure as that originally declared in your self- assessment tax returns. If the calculation results in a trading loss the amount that is averaged is not nil for that year but the negative result.

Total income

HMRC state that total income for the purposes of the 50% test would be taxable income from all sources for the relevant year such as property income, bank interest, employment income and social security income.

There are still several unknowns but at least we now have bit more clarity. Unlike the furlough scheme mentioned earlier the self-employed can continue trading, albeit at a reduced level.

We understand that HMRC will open the SEISS claims portal in early May and the grants will be paid to self-employed individuals in early June 2020.

Need more information?

We offer a wide range of services which are unique to your businesses who are just getting going! Our team of chartered accountants have a wealth of experience in a broad range of sectors, from construction and property to the charity sector. Our team work hard to ensure they create smart and effective tax-efficient solutions for start-ups to optimise growth and help them succeed. If you want to learn more about how the team can help or simply want some start-up advice from a trusted accountant do hesitate to contact us. For more information please do hesitate to contact us on 0161 962 1855. Alternatively you can email us using the form below and we will contact you as soon as possible.

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