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Self-Employment Income Support Scheme – guide for the self-employed

Posted by Jake Smith on Jun 28th, 2020 | Get paid

Self-Employment Income Support Scheme - guide for the self-employed | Crunch - image of coronavirus spelt on a calculator

The government’s support scheme for the self-employed – the Coronavirus Self-Employed Income Support Scheme (SEISS) – has been updated to include a second payment.

You have until 13th July 2020 to make a claim for your first payment under the scheme. If you’re eligible for the second and final grant, and your business has been adversely affected on or after 14th July 2020 you’ll be able to make a claim from 17th August 2020.  HMRC have provided an online tool to check if you’re eligible, and an online portal for making a claim. We’ve put together this guide to help you make a claim.

You must make a claim yourself – Tax Agents or advisers such as Crunch cannot make a claim on your behalf.

Background to the scheme

The SEISS is designed to support self-employed individuals. For Crunch clients, this usually means you operated as a sole trader during your period of eligibility for the scheme. If you were employed by your business, or you’re a director employed by your limited company, you may be eligible for the Coronavirus Job Retention Scheme. We have prepared a separate CRJS guide for employers to assist you.

HMRC started contacting people it believes are eligible to use the SEISS from 4th May 2020. The first phase of the scheme provides a taxable grant worth 80% of the self-employed individuals’ trading profits up to a maximum of £7,500. The grant is paid in a lump sum. It does not cover any income from non-trading sources.

The online service launched on Wednesday 13th May 2020, with payments reaching bank accounts around six working days after the claim is made.

Please note, tax agents or advisors such as Crunch cannot make a claim on your behalf. We have prepared this guide to help you understand whether you may be eligible for a payment from the scheme and to help you through the application process based on guidance published by HMRC.

Claiming SEISS grant available to 13th July (first tranche)

The first tranche of SEISS allows you to claim a taxable grant worth 80% of your average monthly trading profits over the three tax years to 2018/19, paid in a single amount up to a maximum of £7,500.

If you’re eligible and your business has been adversely affected by COVID-19, you must make your claim for the first grant on or before 13th July 2020.

Claiming SEISS grant available from 14th July (second tranche)

The SEISS scheme is being extended for those people whose trade continues to be, or is now, adversely affected by coronavirus. If you’re eligible for the second tranche of grant, and your business has been adversely affected on or after 14th July 2020 you’ll be able to make a claim from 17th August 2020. The second grant is also a taxable grant and worth 70% of your average monthly trading profits, paid out in a single amount up to a maximum of £6,570.

The eligibility criteria for the second grant are the same as the first grant. You do not need to have claimed the first grant to claim the second grant: for example, your business may have been adversely affected by coronavirus more recently.

Who can claim?

You can only claim if your average trading profit over the three tax years to 2018/19 was less than £50,000. Also, the majority of your income over that period must come from self-employment and:

  • you carry on a trade which has been adversely affected by coronavirus
  • you traded in the 2018/19 tax year and submitted your Self-Assessment tax return to HMRC on or before 23rd April 2020 for that year
  • you traded in the 2019/20 tax year
  • you intend to continue to trade in the 2020/21 tax year.

Check if you’re eligible to claim for SEISS

You can check online to find out if you’re eligible to make a claim for the first grant. Your tax agent or adviser can check your eligibility but cannot make a claim on your behalf. You’ll need your:

You can use HMRC’s online tool to check your eligibility for SEISS.

If you’re eligible

If you want to claim under the first tranche of grant you must make your claim on or before 13th July 2020. To claim you’ll need your:

  • Government Gateway user ID and password – if you do not have a user ID, you can create one when you check your eligibility or make your claim
  • UK bank details (only provide bank account details where a Bacs payment can be accepted) including:
    • bank account number
    • sort code
    • name on the account
    • your address linked to your bank account.

You’ll have to confirm to HMRC that your business has been adversely affected by coronavirus. HMRC has confirmed it will check claims and take appropriate action to withhold or recover payments found to be dishonest or inaccurate.

How to claim for SEISS

You must make the claim yourself. Your tax agent or adviser must not claim on your behalf as this will trigger a fraud alert, and you will have to contact HMRC. This will cause a significant delay in receiving your payment.

You can start your SEISS claim using HMRC’s online system.

How the claim is calculated

You’ll get a taxable grant based on your average trading profit over the three tax years:

  • 2016/17
  • 2017/18
  • 2018/19.

HMRC will work out your average trading profit by adding together your total trading profits or losses for the three tax years, then divide the total by three.

The first grant will be calculated at 80% of your average monthly trading profits, paid out in a single installment covering three months, and capped at £7,500 in total. The online service will tell you how the amount of grant is calculated.

HMRC has provided various examples showing how it will calculate your average trading profits including if you have not traded for all three years.

What happens after you claim?

Once you’ve submitted your claim, you will be told immediately if your grant is approved. HMRC has said it will pay the grant into your bank account within six working days. You must keep a copy of all records in line with normal self-employment record keeping requirements, including:

  • the amount claimed
  • the claim reference number
  • evidence that your business has been adversely affected by coronavirus.

How do you report receipt of the grant for tax purposes?

The grant is taxable, so you will need to report it:

  • on your Self Assessment tax return
  • as self-employed income for any Universal Credit claims
  • as self-employed income and that you’re working 16 hours a week for any tax credits claims.

Contacting HMRC

You can contact HMRC though its lines are understandably extremely busy at this time.

What if I’m not eligible for the Self-Employment Income Support Scheme?

If you’re not eligible for support under SEISS, there may still be other support available to you such as Universal Credit or the Coronavirus Bounce Back Loan Scheme – you can use the government’s Business Support Finder to check.

If you’re based in Scotland and you’re newly self-employed, meaning you don’t qualify for the SEISS, you may be eligible for a grant under the ‘Newly Self-Employed Hardship Fund’ there are also two other schemes run by the Scottish government, the ‘Pivotal Enterprise Resilience Fund’ and the ‘Creative or Tourism and Hospitality Enterprises Hardship Fund’. There is a Scottish government business support website with all the information on funding sources available.

Crunch’s COVID-19 Hub is where we house all our content and links for support available to business as a result of the coronavirus epidemic.

 

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