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

Posted by Jake Smith on May 6th, 2020 | Get paid

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

The government announced a support scheme aimed at the self-employed – the Coronavirus Self-Employed Income Support Scheme – on 26th March 2020.

Further details have now been released, including an online tool to check if you’re eligible. The scheme will open for applications on 13th May. We’ve put together this guide to help you make a claim.

Background to the scheme

The Self-Employment Income Support Scheme (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’ve 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 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 is due to be operational on Wednesday 13th May 2020, with payments reaching bank accounts by 25th May, or 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.

Who can claim?

You can only claim if your average trading profit over the last three tax years 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.

How do you claim?

An online eligibility checker is now available on HMRC’s website which will let taxpayers check their eligibility for the scheme, as well as giving them a date on which they can apply. You will need your unique taxpayer reference (UTR) and National Insurance number and should ensure your details are up-to-date in your government gateway account.

You will need to provide the following information when you make a claim using HMRC’s online portal:

  • Self Assessment UTR – if you do not have this find out how to retrieve your lost UTR
  • National Insurance number – if you do not have this find out how to get your lost National Insurance number
  • Government Gateway user ID and password – if you do not have a user ID, you can create one when you check your eligibility online
  • Details of the bank account you want HMRC to pay the grant into (account number, sort code, and account name- the account you choose must be able to accept a BACS payment).

You’ll also 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 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 grant will be awarded 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 make your 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?

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 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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