Self-employment Income Support Scheme (SEISS) update - new conditions and application process
By Philip McNeill, Head of Taxation (Tax Practice and Owner Managed Business Taxes)
5 May 2020
Philip McNeill highlights recent updates and changes to the Self-Employed Income Support Scheme.
New guidance and procedures
SEISS guidance is being regularly updated. These notes here reflect the guidance at 4 May 2020.
The procedure for making claims is that self-employed individuals and partners in a trading partnership will enter their UTR and NINO in the HMRC eligibility checker. They will need an email address so that HMRC can email an invitation giving a place in the queue to make a claim. The eligibility checker is now available and this part of the process can be commenced now. They will also need bank details to hand when the application is actually made to notify the account into which the grant is to be paid.
Agents will not be able to make claims on behalf of clients, but can access the eligibility checker to check entitlement on behalf of clients.
The eligibility checker will use data already held by HMRC to assess whether an individual is eligible. If they are eligible, HMRC will put them in a queue to make an application. Applications are expected to start from 13 May 2020.
Note – HMRC will also be contacting individuals whom it considers may be eligible and inviting them to use the eligibility checker to confirm eligibility and their intention to make a claims.
HMRC will be contacting individuals by email, text or letter to invite them to start the process off by using the eligibility checker. Given that some addresses held by HMRC could be out of date or be for premises which are closed due the COVID-19, this invitation route is unlikely to reach all eligible businesses.
Anyone who considers that they are eligible and who has not been contacted by HMRC would be well advised to go to the eligibility checker directly to start the process off.
If the eligibility checker shows that an individual is not eligible, they will be directed to other COVID-19 business support measures. It is understood that an appeal process will be available from 18 May where an individual considers they are eligible despite the eligibility checker negative result.
Key changes
The fine details on the rules has been revised in recent updates. One key change is ‘trading profits must be no more than £50,000 and at least equal to your non-trading income’. The earlier versions required trading profits to be more than non-trading income.
Reminder of general conditions
HMRC’s guidance currently says (at 4 May 2020)
You can claim if you’re a self-employed individual or a member of a partnership and:
- you carry on a trade which has been adversely affected by coronavirus
- you traded in the tax year 2018 to 2019 and submitted your Self Assessment tax return on or before 23 April 2020 for that year
- you traded in the tax year 2019 to 2020
- you intend to continue to trade in the tax year 2020 to 2021
Your business could be adversely affected by coronavirus, for example if:
- you’re unable to work because you:
- are shielding
- are self-isolating
- are on sick leave because of coronavirus
- have caring responsibilities because of coronavirus
- you’ve had to scale down or temporarily stop trading because:
- your supply chain has been interrupted
- you have fewer or no customers or clients
- your staff are unable to come in to work
You should not claim the grant if you’re above the state aid limits or operating a trade through a trust.
To work out your eligibility we will first look at your 2018 to 2019 Self Assessment tax return. Your trading profits must be no more than £50,000 and at least equal to your non-trading income.
If you’re not eligible based on the 2018 to 2019 Self Assessment tax return, we will then look at the tax years 2016 to 2017, 2017 to 2018, and 2018 to 2019.
Points to note:
- Amendments to tax returns after the date the scheme was announced are ignored. This is primarily a security issue to avoid potentially fraudulent claims
- There is no arbitrary measure of business impact – such as a percentage fall in profits – but HMRC will expect businesses to retain evidence of the adverse impact of COVID-19 on their business
- Businesses must have been trading in the 2018-19 tax year (the base assessment year) and during 2019-20, and be trading in 2020-21 (unless prevented from trading by COVID-19)
- HMRC will be looking at 2018-19 year first to check eligibility. It will check previous years if the business is ineligible based on 2018-19
Ineligible businesses
Despite Government’s best endeavours, some businesses currently fall outside the SEISS. This will include businesses which commenced trading during the 2019-20 tax year.
Businesses which traded in 2018-19 through to date, but which cease trading before making a SEISS claim are also ineligible: businesses may be temporarily closed due to COVID-19 but must intend to trade later in 2020-21 tax year.
Individuals with multiple income sources may find that even with the easement to the rules requiring self-employment income to equal (rather than exceed) non-trading income, they still miss the scheme. For example, an individual with 50% trading and 50% employment income would qualify, but if trading income is less that half total income, they would be ineligible.
Links
Claim a grant through the coronavirus (COVID-19) Self-employment Income Support Scheme
How HMRC works out profits for SEISS
Other help
The Coronavirus Financial Support on the Government’s Business Support website has an overview of the support available.
We’d welcome your feedback on the Self-Employed Income Support Scheme – do let us know if you have any queries or concerns and we will collate these and take them back to HMRC. Contact us on tax@icas.com
Find more information on the impact of coronavirus below:
