Remind Your Clients! SEISS Part 2 Launches This Week
If any of your clients are self-employed then they could be eligible for part 2 of the SEISS scheme grants. Make sure they don’t miss out.
Could your clients make a claim?
From the 17th August, self-employed people who fit the eligibility criteria can claim the second part of the SEISS government grant. Don’t forget to remind your clients!
A quick rundown of the SEISS so far
Back on the 26th March, Chancellor Rishi Sunak revealed that the government would offer cash grants to self-employed workers worth 80% of their profits for 3 months, up to a maximum of £2,500 per month. The scheme is known as the Coronavirus Self-employment Income Support Scheme (SEISS), and went live on the 13th May 2020.
Has the deadline to claim the first SEISS grant passed?
Yes. The final date for the first round of SEISS applications passed on the 13th July 2020. However, on the 29th May, the Chancellor further announced that there would be a second and final grant under the SEISS scheme available in August. This will be worth 70% of average monthly trading profits, paid again in a one-off instalment to cover 3 months. This time the cap is £6,570 in total, and it’s this second grant that opens for applications on the 17th August 2020. The scheme will close completely on the 19th October 2020.
Who is eligible for the SEISS grants?
To be eligible, self-employed individuals and members of a partnerships must have been adversely affected by the pandemic. They must also:
- Have completed their self-assessment tax return for the tax year 2018/19 by the 23rd April 2020
- Have been trading in the tax year 2019/20
- Intend to continue trading in the tax year 2020/21
What does ‘adversely affected’ actually mean?
HMRC has given some guidance around what ‘adversely affected’ means in this context, although it is rather open to interpretation. However, if your client has been unable to work because of self-isolating, shielding, care responsibilities or sick leave due to COVID-19, then they should be able to claim. They may also claim if their business has had to be scaled back, or stopped altogether, or if they incurred extra costs because:
- They had fewer customers, or no customers
- There was an interruption in their supply chain
- One or more of their contracts were cancelled
- Staff have been unable to attend work
- They needed to purchase PPE or other protective equipment to meet social distancing regulations.
How is my client meant to prove they have lost income?
There hasn’t been any specific guidelines around how to measure a reduction of income in order to claim the SEISS grants. However, it’s highly recommended that your clients keep an accurate record of the ways in which they were affected, and when, so they can demonstrate the loss if required.
How different circumstances affect the scheme
If your client falls under one of the following categories, then you’ll need to check their eligibility using the government guidance. Their claim may be affected if they:
- Filed their tax return for 2018/19 late
- Have a limited company
- Have recently been on maternity leave
- Are non-resident or chose the remittance basis
- Have loans covered by the loan charge
- Claim averaging relief
- Have received previous state aid in the most recent tax year
Note that this isn’t an exhaustive list.
Some important facts to note about round 2 of the SEISS scheme
In order to receive this second and final grant, your client’s business must have been negatively affected by the coronavirus on or after the 14th July 2020. Again, what constitutes being “negatively affected” has rather been left to claimant interpretation; no set percentage of loss or specifics have been outlined by HMRC. However, generally speaking if one of your clients has seen any reduction in their work, lost clients, earned less or had to shut up shop altogether, then they’re highly likely to be eligible for the second grant.
The key message is that they must have been affected on the 14th July or in the weeks afterwards to claim. This means that even if your client claimed the first grant, they may not be automatically eligible for the second. Likewise, if the business was unaffected by coronavirus in the earlier part of the year, so your client didn’t take the first grant, then they can claim the second grant if business has slowed down since then.
Can I claim the SEISS grants and R&D Tax Credits?
Research and development (R&D) Tax Credits are only available to UK companies that pay Corporation Tax. The relief is offered in respect of costs incurred in scientific or technological R&D projects. It’s administered either as a reduction in Corporation Tax liability, or (for companies that made a loss) as a cash credit.
The SEISS on the hand is aimed at very small businesses, sole traders and freelancers who are not liable for Corporation Tax. Therefore, recipients of the SEISS grants would not be eligible for R&D Tax Credits anyway.
My client is subject to Corporation Tax and has recently undergone an R&D project. What should I know about R&D Tax Credits?
The R&D Tax Credits scheme is open to any UK company of any size in any sector, and how much they can claim depends on a number of factors. The scheme is further subdivided into two branches, the SME branch and RDEC, and it’s important to know from the outset which one your client falls under. To help, we strongly advise reading our recent blog: R&D Tax Credits: What's The Difference Between The SME Scheme And RDEC?
The SME scheme is particularly generous, offering as much as 33 pence in every £1 of R&D expenditure back. The RDEC scheme is less generous, however because it’s typically used by much bigger companies the rewards can be huge.
Regardless of which branch of the scheme your client uses, the eligible costs are many and varied. They include staff wages, expenses, employers NIC and pension contributions, payments made to volunteers for clinical trials, certain overheads and much more.
Essentially, if your client’s company has undertaken a project that sought to make an advance in science or technology in their field, then R&D Tax Credits could well follow. They may have developed a brand new product, service or process for example, or made a substantial upgrade to an existing one. It’s all about the experimental side of innovation, not the end result.
Think this might apply to one of your clients? Take a look at our R&D Tax Credits page for more information.
See how the R&D tax experts at Myriad Associates can work with you and your clients
R&D Tax Credits can make a huge difference to businesses, especially during these tough economic times. But this is a particularly niche tax area even for the most competent and experienced accountants, with many pitfalls along the way. Not only is HMRC very strict about what the claim must include, the rules around R&D tax relief change regularly too.
So why not try the Tax Cloud portal for accountants to make a straight-forward, hassle-free claim today? It’s the perfect chance to attract new clients, expand your services and build up extra revenue too. Alternatively, use our contact page or call 0207 360 4437.