The Government announced the Self-Employed Income Support Scheme (SEISS) on Friday 27th March 2020, which aims to support self-employed individuals or partnership members through the impact of the COVID-19 pandemic.
Designed to closely reflect the Coronavirus Job Retention Scheme that had been announced the previous week, SEISS will provide self-employed individuals and partnership members with a taxable grant up to 80% of their profits (max. £2,500 per month) for at least the coming three months. So, what do you need to know about the scheme?
Eligibility for the scheme
To be eligible the recipient must comply with the following criteria:
- Their 2018-19 SA Tax Return must be submitted (for those that have yet to submit their tax return, the Government has allowed an additional four weeks to do so, and still be eligible for the grant).
- They must be trading at the date of the grant application (or they can demonstrate that they would be had it not been for the COVID-19 pandemic).
- They must have been trading within the current financial year.
- They should be planning to continue trading within the next financial year (6th April 2020 to 5th April 2021).
- They will have lost profits due to the Coronavirus pandemic and subsequent restrictions.
In addition to these criteria, their trading profits must meet one of the following:
- From the 2018/19 tax year their trading profits are below £50,000, which must make up more than half of their taxable income.
- Or, average trading profits over the 2016/17, 2017/18 and 2018/19 tax years were less than £50,000 and made up more than half of average taxable income (the lesser period will be accounted for if the self-employed person began trading between 2016 and 2019.)
How will the government decide who is eligible?
Eligibility will be decided by HMRC based on the 2018/19 tax returns. Those that have yet to file, have until 23rd April 2020. Once the decision has been made, the self-employed individual will receive an invite to complete an online application on the GOV.UK website.
How much will the grant be?
Each grant will be calculated based on the average profits for the 2016/17, 17/18 and 18/19 tax years. Calculations will be made as follows:
- Trading profits for the past three tax years (if applicable)
- Divided by three (or however many tax years the individual has within the criteria)
- The monthly payment will not exceed £2,500 per month (for three months)
The final grant will be paid in one instalment. The scheme should be in place by June, meaning payments will not be made until then, as currently PAYE job retention scheme is being prioritised.
If you have any questions with regards to the above information, please don’t hesitate to contact the Exchequer Solutions team.