COVID 19 News and Updates – UK | | Sep 28, 2020
Summary of Government changes produced by Prager Metis LLP – 25 September 2020
What we know
The Chancellor recognises the continued impact that COVID-19 has had on the self-employed and has taken action to provide support. The SEISS Grant Extension provides critical support to the self-employed. The grant will be limited to self-employed individuals who are currently eligible for the SEISS and are actively continuing to trade but are facing reduced demand due to COVID-19.
Who is eligible for the grant extension?
To be eligible for the scheme, self-employed individuals, including members of partnerships, must meet the following criteria:
- Currently be eligible for the SEISS (although they do not have to have claimed the previous grants). The eligibility criteria is discussed below in the section – “Recap – Who is eligible for the SEISS?”.
- Declare that they are currently actively trading and intend to continue to trade.
- Declare that they are impacted by reduced demand due to COVID-19 in the qualifying period. The qualifying period for the first grant is between 1 November and the date of claim.
Recap – Who is eligible for the SEISS?
You will be eligible for the Self-employment Income Support Scheme if all of the following apply (please note that when we refer to self-employed this includes a partner in a partnership and when we refer to self-employment income/profits this includes partnership trading income/profits):
a) you are currently self-employed (this includes if you have had to temporarily stop trading because of the coronavirus) and intend to continue trading in the next tax year (2020/21)
b) you have submitted or should have submitted a Self Assessment tax return for the 2018/19 tax year which included self-employment profits (see below about what to do if you have not submitted a return yet).
c) your self-employment income has reduced because of the coronavirus.
d) your self-employment profits make up 50% or more of your income, (so if you are self-employed and an employee and your tax returns show you earn more from your employment then you will not be eligible for this new scheme We explain what help is available for employees on our page: Coronavirus: Employees: work changes).
e) and your self-employment profits are less than £50,000.
If either condition (d) or (e) does not apply then HMRC will allow you to average profits over the 2016/17, 2017/18 and 2018/19 tax years so that if the average self-employment profits for these three tax years were below £50,000 and these profits were more than 50% of your average taxable income over the period, then these conditions will be treated as met.
What does the grant cover?
The extension will provide two grants and will last for six months, from November 2020 to April 2021. Grants will be paid in two lump sum instalments each covering a three month period.
The first grant will cover a three-month period from the start of November until the end of January. The Government will provide a taxable grant covering 20 per cent of average monthly trading profits, paid out in a single instalment covering 3 months’ worth of profits, and capped at £1,875 in total.
The Government are providing broadly the same level of support for the self-employed as is being provided for employees through the Job Support scheme.
The second grant will cover a three-month period from the start of February until the end of April. The Government will review the level of the second grant and set this in due course.
The grants are subject to Income Tax and National Insurance Contributions.
How can I claim?
HMRC will provide full details about claiming and applications in guidance on www.gov.uk in due course.