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Self employed

Coronavirus self-employed scheme: Get the details right

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HMRC guidance on the self-employed income support scheme (SEISS) was updated on 4 May, setting out how applications for the SEISS grant will be made. This article has been revised to reflect announcement of the second SEISS grant. 

5th May 2020
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HMRC will pay a taxable grant to self-employed individuals and partners equivalent to 80% of their average trading profits for three months, capped at £2,500 per month. A second SEISS grant will be payable in August at a rate equivalent to 70% of the taxpayer's average trading profits for three months, capped at £2,190 per month

The SEISS Direction (law underpinning the scheme), currently provides for a maximum grant of £7,500 per person, but this is likely to be revised to reduce the maximum for the second SEISS grant to £6,570. 

Who qualifies?

The SIESS grant will be payable to taxpayers who meet these conditions:

  • registered with HMRC as self-employed
  • submitted tax returns for 2016/17 to 2018/19 (or years within that period when trading) which include self-employed trading income
  • was trading in 2018/19 and 2019/20 (see Direction para 4.2(c)),
  • is still trading in 2020/21 (or would be if it were not for the coronavirus shutdown)
  • has lost trading profits due to coronavirus (new condition per 14 April)
  • self-employed profits make at least half of their annual average income (condition clarified by Direction para 5.3(c)) 
  • average self-employed profits for 2018/19 do not exceed £50,000 and were more than nil or
  • average annual self-employed profits for 2016/17 to 2018/19 do not exceed £50,000 and were more than nil (Direction paras 5.2 and 5.3)

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Replies (199)

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Replying to KPEM online:
By Duggimon
06th Apr 2020 10:04

edit: replied to wrong post

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Replying to KPEM online:
By Silver Birch Accts
06th Apr 2020 15:46

Self -Employment, per Sa302,would appear appropriate.

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Replying to KPEM online:
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By Southwestbeancounter
06th Apr 2020 16:20

We've presumed that it needs to be after CA's as HMRC will easily have access to this info.

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Replying to KPEM online:
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By LookingForHelp
13th Apr 2020 13:42

Hi, that's a great question. I didn't see you had posted it here I have just asked it on thread link no 3. I am not an accountant and cannot get a true answer on this even from HMRC! I sit (literally) £100 either side of the line. Section 47 (Before CA) I get a grant, section 64 (After CA adjustments) I get nothing. HMRC have both figures and both are as easy to access as each other. After CA also takes into account non-earnings related matters like Investment allowance so is not a true compensation against lost 'earnings' . Which differs from the scenario you post. Not one penny. Unless the cap is removed, increased or tapered. Which is not looking likely at all. My earnings are certainly not £200k and when you have played more than your part in raising 5 kids you are certainly not a rich person!!! With my SE sector now virtually closed for new business I could draw down from my tax bill savings to pay bills etc now that it is deferred but that would be a dangerous gamble if I drew down and there was no grant to replace what I have spent! Or health permitting try and find extra work. But that also flies in the face of 'stay at home' especially when you are helping to look after others on 12 week mandatory isolation. My Tax bill money that I saved for July 2020 and a small amount of savings for new equipment etc takes me out of the loop for UC. It's a tremendous strain & worry for many.

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Replying to LookingForHelp:
Helen Froggett Thomson
By Helen Froggett-Thomson
27th Apr 2020 11:09

I know you posted this a couple of weeks ago but by now you may have realised that there's been clarification on one of these elements at least - the money you've set aside for tax and NI does not have to count towards your UC application. ie any money you've saved does not count towards the £16,000 threshold, although you do need to declare it to the Job centre when you have your phone interview and online assessment. I hope this helps. Feel very sorry for you and the thousands in your position.

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Kieran Phelan
By KPEM online
06th Apr 2020 09:48

Trading profits - do we know as yet that this is pre or post capital allowances as yet?

I have one or two two who will qualify based on SE earnings after CA's but will drift over £50k if 'trading profits' equals adjusted profits before CA's.

Cases like these may wish to increase a CA claim to push average profits under £50k too. I don't see this as a major issue as those with such profits will most likely already have claimed CA's to reduce tax exposure.

But with all scenarios relating to amending tax returns, I feel this is similar to requests to amend payroll. I think HMRC may compute the SEISS grants based on EXISTING tax returns in order to get payments processed in the shortest time-frame possible.

As with all current support packages, there will be those who can avail, those who can't, those who need it and those who don't.

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Replying to KPEM online:
By Duggimon
06th Apr 2020 10:05

It's per your tax return, so post capital allowances.

Anything else would be impossible to administer efficiently.

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Replying to Duggimon:
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By spuddle
06th Apr 2020 12:19

Capital allowances are separately stated on tax returns so surely could be included or excluded from calculations.

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Replying to spuddle:
By Duggimon
07th Apr 2020 08:07

Not for partnerships they're not.

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By dsassoon
06th Apr 2020 09:49

What about a taxpayer who has 3 type of income:

PAYE Employment c.£8k
Self employed profit c.10k for over 2 years
Rental income as a landlord c.£15k

The self employed income is more than half the income from trade (property income not being considered a trade) but less than half of the total income reported on the Tax Return ?

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Replying to dsassoon:
By Duggimon
06th Apr 2020 10:06

It needs to be at least half your total income, not half your total income excluding some of your income.

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By mkowl
06th Apr 2020 09:49

Yes thanks on the buy to let point - I believe there was a financial expert on TV one afternoon last week that said something about furnished holiday lets but I immediately had a client convinced it was now applicable to his buy to let portfolio.

I wouldn't mind but when I suggested had he lost any tenants or reduced the rent yet he said no.

Can the figure be combined for clients with self employed and partnership income. Given each would qualify separately if that was the only source

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By johnjenkins
06th Apr 2020 09:56

Good article, Rebecca.
My view is that the Government wants to help all business and this is just a start. They obviously know that there will be anomalies, but they will get sorted. The main thing is to get money into peoples pockets as quickly as possible. UC will undergo an overhaul to accommodate what could be 2m more claimants.
Rough times for many in the world not just us. What happens when the lockdown is lifted? Many will not have work until it filters through. Maybe that is why people are being paid for March, April and May. I also think things will change on a daily/weekly basis as circumstances change.

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By Diana Miller
06th Apr 2020 10:08

Do you know if agents can claim on behalf of their clients? We have some clients that do not have a computer and, as with the £10,000 grant, will struggle to claim?

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Replying to Diana Miller:
By Nick Graves
06th Apr 2020 11:41

Diana Miller wrote:

Do you know if agents can claim on behalf of their clients? We have some clients that do not have a computer and, as with the £10,000 grant, will struggle to claim?

No-one knows ATM.

But if the Married Allowance transfer, etc is anything to go by it will be too difficult/not cost-effective.

For my digitally-incapable clients, I have planned to have them sit outside the office window and we can shout at each other. I'll colour in the claim for them.

If your practice is above a shop or somesuch, this might be problematical.

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By [email protected]
06th Apr 2020 10:06

How about:
2016/2017 PAYE Employed £27,600
2017/2018 PAYE Employed £26,300
2018/2019 Self-employed £2,517
2019/2020 Self-employed £18,500 Accounts prepared to show continued trading.
What help is available to this client?

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Replying to [email protected]:
By Duggimon
06th Apr 2020 10:11

They will unfortunately get just 20% of £2517

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Replying to Duggimon:
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By I'msorryIhaven'taclue
06th Apr 2020 11:52

Provided of course she can demonstrate a current downturn in trade. Do you imagine that means a downturn on £2,517 or on £18,500?

If you thought it ethical / moral / legal then you might always combine the 24 months' accounts into one long set, and resubmit 2018/19's return with a 12 month apportionment of the 24 months' profits.

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By Technica
06th Apr 2020 10:18

I have a self-employed client who is unable to work at the moment due to the Coronavirus restrictions. He is looking at temporary employment until he is able to start trading again. He's asked if he will still be eligible for the grant if he takes temporary employment until he is able to resume trading. He meets the criteria for the SEISS grant. I can't see anything in the guidance that would prevent him from taking temporary employment. Am I correct? Thanks.

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Replying to Technica:
Helen Froggett Thomson
By Helen Froggett-Thomson
27th Apr 2020 11:14

I believe you are correct

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By ARI TSALIKIS
06th Apr 2020 10:20

Even where your self employed average income for the past three years is more than £50,000, would you qualify if your income for 20018/19 is less than £50000?

See extract from HMRC website:

"Your self-employed trading profits must also be less than £50,000 and more than half of your income come from self-employment. This is determined by at least one of the following conditions being true:

1. having trading profits/partnership trading profits in 2018-19 of less than £50,000 and these profits constitute more than half of your total taxable income
2. having average trading profits in 2016-17, 2017-18, and 2018-19 of less than £50,000 and these profits constitute more than half of your average taxable income in the same period"

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By agknight
06th Apr 2020 10:24

I've been waiting for an article such as this to iron out the anomalies.

What I'm garnering is that a grant can be forthcoming, but if when delivering the 2020/21 tax return the client income is above that of the three year average, that excess will be repaid? Or above 80% of the average?

Another point not raised. I think I'm right in saying this applies to March, April and May - with March thus in the 2019/20 tax year. Is all of this income to be accounted in 2020/21 tax year?

The thing I've gleaned from answers so far is to consider to resubmit clients tax returns, adjusting capital allowances as necessary, to become eligible for a claim.

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Replying to agknight:
Helen Froggett Thomson
By Helen Froggett-Thomson
27th Apr 2020 11:25

Hi
with respect to the re submission option, they've amended the guidance to say this 'We will not take into account any changes made to submitted returns after 26 March 2020, when working out your eligibility or amount of the grant.'
And re the March, April and May question, they've now said that it relates to a 'quarter' not specifically those three months and the grant will need to be declared on the tax return for 20/21.

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By rainbow
06th Apr 2020 10:30

Your article refers to the three years 2015/16 to 2018/19. By my reckoning that is a 4 year period.

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By rainbow
06th Apr 2020 10:30

Your article refers to the three years 2015/16 to 2018/19. By my reckoning that is a 4 year period.

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By Power Hynes Associates
06th Apr 2020 10:47

"Those who started trading on or after 6 April 2019 are not eligible for the SEISS grant. This seems harsh, but HMRC has to draw the line somewhere." Not sure it is HMRC drawing the line. No reason why someone filing their first Self-Assessment Return for 2019/2020 who gets it in by 23rd April that they could not be assessed for the Taxable Grant. It's not a matter of drawing the line somewhere. The Chancellor said there were unlimited funds available. It should be about equity and fairness.

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By Homeworker
06th Apr 2020 10:59

Do all applicants need to set up a Personal Tax Account, if they do not already have one? Will agents be able claim on their behalf?

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By Chris Dale
06th Apr 2020 11:16

What about our Self-Employed clients with profits over £50k p.a. who have been paying tax every year and whose business has just disappeared?

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Replying to Chris Dale:
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By meadowsaw227
27th Apr 2020 09:54

Could they survive of their "rainy day" savings !

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Replying to Chris Dale:
Morph
By kevinringer
27th Apr 2020 13:47

They get nothing. I have several clients in this position. The Government decided to drawer the line somewhere and £50,000 was where they drew it.

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Replying to kevinringer:
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By LookingForHelp
27th Apr 2020 13:57

Do you think they will review this cut off? Does anyone from the accountancy Industry have any details of a review? There is lots on Social Media and petitions etc but we just have a wall of silence from Rishi Sunak. They moved the employee dates from 28/02/2020 to 19/03/2020 (albeit with some caveats) after a lot of public lobbying so maybe they can look at this again and maybe introduce a taper? Or higher cap, or even remove it? To be a penny or a few pounds over and to be told you get nothing, watch PAYE with much higher income get full assistance and to be part of the collective effort to pay it back is beyond the pale.

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Replying to LookingForHelp:
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By johnjenkins
27th Apr 2020 14:50

The petitions on social media are mostly scams.
There are many anomalies with the PAYE furlough schemes and no doubt there will be some with the self-employed. Most will get sorted however I'm sure there will be some losers purely because the scheme is a temporary solution.

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Replying to LookingForHelp:
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By johnjenkins
27th Apr 2020 14:50

The petitions on social media are mostly scams.
There are many anomalies with the PAYE furlough schemes and no doubt there will be some with the self-employed. Most will get sorted however I'm sure there will be some losers purely because the scheme is a temporary solution.

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By JIT AUJLA
06th Apr 2020 11:28

Dear Rebecca
Thank you for your analysis of the process. Is the government going to do anything for people in small businesses who take most of their income via dividends.

kind regards

Jit Aujla

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Replying to JIT AUJLA:
By Silver Birch Accts
06th Apr 2020 15:49

No.

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Replying to JIT AUJLA:
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By stevewedd
15th May 2020 12:57

Why should it?

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By seonaid anderson
06th Apr 2020 11:38

the list of eligible people includes people who were unable to start their business because of COvid and those who started since April 2019. ( or least it did on the HMRC website last week...)
.
Should we now be preparing self assessment returns for 2018-19 for people who have given up employment to start a business since 6 april 2019 even though they wouldn't normally be required to submit a return for that year?

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Replying to seonaid anderson:
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By I'msorryIhaven'taclue
06th Apr 2020 11:55

You mean a nil return?

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Replying to seonaid anderson:
Morph
By kevinringer
06th Apr 2020 14:32

seonaid anderson wrote:

the list of eligible people includes people who were unable to start their business because of COvid ...


Covid-19 didn't exist in 2018-19 so they can't argue they didn't start their business in 2018-19 because of Covid-19.
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By cglister
06th Apr 2020 11:51

At face value, 80% of three year's average taxable income seems reasonable. This does not, however, take account of the fact that these taxable profits are after the deduction of fixed costs, such as professional subscriptions, professional indemnity insurance, rent, rates, other business insurances, fixed vehicle costs (insurance, rfl, MOT etc.). All these costs continue to be payable, even if you spend all this difficult time in bed! As an sole practitioner accountant, all these fixed costs are quite substantial, and the 80% payout would no way be close to covering these costs. Would it not be better to allow the calculation of 'super profits', all of course verifiable, and detailed in the previous years' financial accounts, to reflect a truer position?

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By andrewtodd
06th Apr 2020 12:10

Thanks Rebecca. Are there any clues about how clients who don't have any form of online presence will be able to claim?

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By Ian McTernan CTA
06th Apr 2020 12:35

Of course this scheme and all the others don't cover small one man (or two or three) where the person operates through a limited company and only extracts what the company can afford whilst leaving money in the company for cash flow, etc.
Self employed, yep , here's some money.
Employees who take zero risk, yep, have 80%.
People who earn over 50k as an employee, yep, £2500 a month.
People who earn over 50k as either self employed or dividends from their company, stuffed.

I have many clients who don't fit into any of the categories HMRC have decided to help, and now have zero income (and might be paying employees too to help them) but lots of overheads.

Oh wait, they can try and claim UC....and some might get the 80% of £700 a month salary.

My professional landlord clients are completely stuffed with many tenants taking a break from paying rent...

As for CIBLS, it's still a farce with the banks now imposing new rules of minimum turnover 100k, min loan 25k and max turnover 25% for 2019..so those small one man companies still being shafted in all directions.

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Replying to Ian McTernan CTA:
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By meadowsaw227
27th Apr 2020 10:00

Presumably if they are extracting "only what the company can afford" then they may be able to survive on the furlough pay they should receive on their salaries ! .

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By Ryan-Khan Co Accountants
06th Apr 2020 13:08

Thanks Rebecca - useful article - "Property letting businesses are not regarded as a trade" - any guidance on this as I am sure I will be asked for it? Thanks

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By petestar1969
06th Apr 2020 13:46

So the self-employed guys won't need to apply? HMRC will contact them? But not by email or text so by post? I better check all my self-employed clients have told HRC their correct address then.....

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By spenner68
06th Apr 2020 14:01

What about this example -

16/17 Self employment £14,500
17/18 PAYE employment £22,400
18/19 PAYE employment £11,400, Self employment £5600

Employment ceased during 18/19, been self employed again since Dec 18

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By User deleted
06th Apr 2020 14:06

As I am at home with plenty of time to spare I have offered to help where I can FOC. I am fully up to speed with the all employer/employee options.

A guy has asked me where he stands. He became self employed 8 months ago so after the 2018/19 tax year. I don't know what he did before then but unless he was selfemployed in another capacity (unlikely) then I am assuming it is academic.

Based on what I have read he fails to qualify for SEISS funding and I am not sure what if anything he does qualifies for?

Have I missed something?

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By User deleted
06th Apr 2020 14:06

As I am at home with plenty of time to spare I have offered to help where I can FOC. I am fully up to speed with the all employer/employee options.

A guy has asked me where he stands. He became self employed 8 months ago so after the 2018/19 tax year. I don't know what he did before then but unless he was selfemployed in another capacity (unlikely) then I am assuming it is academic.

Based on what I have read he fails to qualify for SEISS funding and I am not sure what if anything he does qualifies for?

Have I missed something?

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Replying to User deleted:
By Silver Birch Accts
06th Apr 2020 15:50

No.

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Morph
By kevinringer
06th Apr 2020 14:33

Do we know if profits are pre or post farmers' averaging?

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