Coronavirus self-employed help scheme – update

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Coronavirus self-employed help scheme – the self-employed income support scheme – SEISS announced on the 26th March

As the self-employed only report their income annually, and that can be some months after the end of the trading period, for example if your trading period ends on the 31st March, the tax return covering that period, and the profits from that trading period, do not have to be submitted until the following 31st January, HMRC had to come up with a way of calculating who would be eligible for the grant and how much they would be entitled to receive.  The decision is to base the amount of the grant on the average trading profits reported on the tax returns for the last 3 years.  That is 2018/2019, 2017/2018 and 2016/2017.  If you have not traded for the full 3 years, average profits will be calculated based on the period that you have been trading.  The grant will be 80% of the average trading profit, but there is a ceiling limit of £2,500 per month.

HMRC will contact those who are eligible for the grant inviting them to apply for the payment online.  This is the same method that was used for the Small Business Rates Relief Grant which was rolled out recently.

You should be aware that HMRC will not be contacting you by e-mail or text message, so please do not click on any links in e-mails that you might receive or respond to any text messages.  These will be scammers who are trying to obtain your bank account details.

The grant will not be paid to the following –

  1. Anyone whose average annual profits exceed £50,000
  2. Anyone who has not filed a tax return for 2018/2019
  3. Anyone who receives less than half of their annual taxable income from self-employed profits
  4. Anyone who has already ceased trading

As the grants apply to those who were trading in 2018/2019 those who commenced self-employment after the 6th April 2019, the start of the tax year 2020, will not qualify for the grant.

The aim of the grant is to help the self-employed through the Coronavirus crisis, therefore you must have been trading in 2019/2020 and have continued to trade, were it not for the interruption to business due to the Coronavirus restrictions.  If you had already taken the decision to cease trading completely, you will not be entitled to the grant.

The letting of property, both residential and holiday accommodation, do not qualify as trades, even though holiday lets are treated as trade for some pensions and Capital Gains Tax purposes.  Therefore, income from property, including holiday lets, is likely to be excluded by HMRC when deciding whether more than half of your taxable income comes from trading profits.

If you are eligible for the grant but have not submitted your 2018/2019 tax return you have until the 23rd April 2020 to do so.  Please note the usual penalties for late filing and or late payment will apply.

The money will not be available until June 2020, but it will be paid as a single lump sum into a bank account which you will be able to specify, providing it is in your name.

The grant will be treated as taxable income and as such will have to be included on your tax return for the tax year ended 5th April 2020 – tax year 2020/2021.

If Synergy Accounting can help with further information or advice please contact us by e-mail – or Koreen’s mobile number is 075317412

Remember to stay safe and keep smiling 😊


About the Author:

Koreen is a Member in Practice of The Association of Accounting Technicians, which means that she is both licensed and regulated by the AAT. However Koreen is also a Fellow Member which is an acknowledgement by the AAT of her senior status in terms of knowledge and experience.
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