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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 Stewart Wightman:
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By johnjenkins
04th May 2020 09:19

I would think the reason for this is that the money will be going direct to client, unlike CIS refunds.
It does seem ridiculous as HMRC have the figures so they can't be manipulated. As we act for our client I can't see how they can say we can't make the claim on behalf of our client. Something ain't right.

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Replying to andrew1211:
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By Stewart Wightman
02nd May 2020 10:53

But you are right Andrew, I wont be advising my Clients to set up Gateways, I will hold fire and see what the alternative is.

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Replying to andrew1211:
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By Stewart Wightman
04th May 2020 08:59

I have contacted HMRC again this morning, as they continue to work on the Scheme, which will go live on May 18th for applications, so letters will be out the week before. They advise that the alternative method for Clients without a Gateway is to phone in and cofirm the details on their last three years SA302s....now , Andrew, I am worried!!!

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Replying to Stewart Wightman:
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By andrew1211
04th May 2020 09:06

Crazy! An online tool has gone live this morning, input UTR and NI and tell if can claim or not.

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Replying to andrew1211:
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By Stewart Wightman
04th May 2020 09:47

Yes, I can check all my clients are eligible...but I cant claim for them, and if they dont have a Gateway, they have to phone in, and have their SA302s to hand, even although I have lodged them with HMRC. I really dont know why they are trying to make it difficult.

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Replying to Stewart Wightman:
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By johnjenkins
04th May 2020 09:53

Perhaps they think if they make it too difficult and a lot are back at work then many perhaps might not bother claiming.

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Replying to andrew1211:
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By [email protected]
04th May 2020 10:26

duplicate, deleted

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Replying to andrew1211:
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By [email protected]
04th May 2020 10:25

andrew1211 wrote:

Crazy! An online tool has gone live this morning, input UTR and NI and tell if can claim or not.


Do you have a link please? I can't find this
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Replying to andrew1211:
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By Arbitrary
06th May 2020 09:53

Please, if you could, let me have the link to this tool. I have tried google searching it but nothing turns up.

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By Arbitrary
04th May 2020 12:50

Quickbooks just ran a free 30 minute webinar, headed by a man from HMRC, on the self-employed scheme. He was using the 21st April version of the guidance not the 1st May one and, in response to a very limited number of questions, referred most of them to the guidance and did not know if the grant was net or gross of tax, thus clearly had not even read the very short guidance. I think Quickbooks have shot themselves in the foot with that one. He did however say and I quote, to the best of my note taking ability, you can claim if you are 'suffering as a result of coronavirus'. I had three questions, none of which were taken up, 1) How much profit do you have to lose to be able to claim? 2) ref the 1/5/20 version examples, if you lose a lot of income from a customer, but still so some work for the customer, does this qualify you for a claim? and 3) Is the claim a monthly claim with monthly qualification required or is the claim a three month claim looking at the overall three months? The HMRC man would clearly not have had a chance with those, but I wonder if anyone else has seen anything on this or worked it out.

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By andrew1211
04th May 2020 15:17

The tool is not perfect either. If you have ceased self employment in 19/20 or 20/21 and not corona related it will still tell you a claim is possible. Clearly the actual detail comes in the claim itself, only a guide currently.

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By NSAS
05th May 2020 13:53

I have had a few questions about this does those that are applying for the grant need to have their own government gateway or can this be claimed under an agent gateway.

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Replying to NSAS:
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By andrew1211
05th May 2020 14:09

their own

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By AS44NG
05th May 2020 18:09

So a year on and your client has 7.5k in the bank as a SEISS grant. But you notice that income had continued throughout the down period...

I suspect that will happen a few times to each of us.

Personally I'm pleased that the onus is on the client to complete the application and not us, both in terms of time and avoiding the blame game arguments down the line.

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Replying to AS44NG:
Morph
By kevinringer
05th May 2020 19:07

Great if you see it in the client's bank account. I'm concerned some will put the money in accounts we don't know about and by this time next year when we're completing 2021 tax returns some clients will forget they had it or get confused with other funds they've received eg UC. I fear we're going to miss some SEISS from the 2021 tax returns. I'd hope HMRC would pre-populate the return with SEISS but HMRC still fail to pre-populate with other income it already knows such as PAYE, state pension etc.

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Replying to AS44NG:
Morph
By kevinringer
05th May 2020 19:07

Great if you see it in the client's bank account. I'm concerned some will put the money in accounts we don't know about and by this time next year when we're completing 2021 tax returns some clients will forget they had it or get confused with other funds they've received eg UC. I fear we're going to miss some SEISS from the 2021 tax returns. I'd hope HMRC would pre-populate the return with SEISS but HMRC still fail to pre-populate with other income it already knows such as PAYE, state pension etc.

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Replying to kevinringer:
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By AS44NG
05th May 2020 22:03

Good point. The sneakier clients may divert grants to another bank account. Hopefully HMRC will recognise this possibility and insist on separate disclosure for grants on tax returns.

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Replying to AS44NG:
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By johnjenkins
06th May 2020 08:44

Clients could still have income from work done previously. I don't think this will be any more sneakier than not declaring cash. It's really up to us to put a note in clients file to ask about it at the relevant time. If you know client is lying then get rid.

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By andrew59
06th May 2020 09:39

What about VAT? If clients account for Output VAT using a Flat Rate Scheme will the flat rate charge need to be applied to the SEISS grant?

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Replying to andrew59:
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By andrew1211
06th May 2020 09:41

No

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By solidair123
06th May 2020 22:09

I have a client who commenced self-employment on 11/02/19 and first accounts have been finalised for the period ended 29/02/20. He had been an employee for many years. His 2018/19 Tax Return has been filed showing PAYE income of (say) £20,000 and profit from self-employment (say) £4000 (54 days). His 2019/20 Tax Return has also been recently filed showing a full year's self-employment. Will he be eligible to claim SEISS ??

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By solidair123
06th May 2020 22:09

I have a client who commenced self-employment on 11/02/19 and first accounts have been finalised for the period ended 29/02/20. He had been an employee for many years. His 2018/19 Tax Return has been filed showing PAYE income of (say) £20,000 and profit from self-employment (say) £4000 (54 days). His 2019/20 Tax Return has also been recently filed showing a full year's self-employment. Will he be eligible to claim SEISS ??

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Replying to solidair123:
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By andrew1211
07th May 2020 08:26

No

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Replying to solidair123:
Head of woman
By Rebecca Cave
04th Jun 2020 09:18

As he was trading in 2018/19, he should qualify , but only if his self employed income is at least half of his total income for that year.

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By Homeworker
13th May 2020 12:00

Does anyone know if this will be liable to VAT?? There will be some VAT registered businesses making claims and I have one with a May quarter end.

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By Homeworker
13th May 2020 12:01

Does anyone know if this will be liable to VAT?? There will be some VAT registered businesses making claims and I have one with a May quarter end.

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Replying to Homeworker:
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By johnjenkins
13th May 2020 12:51

Although it's taxable it's not vatable.

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By Barrmc
13th May 2020 17:36

Where would my wife stand? She is a childminder and has 3 years of tax returns however the 1st 2 years she earned 75% of her income as an employee as she was ‘testing the water’ with childminding. However HRMC have counted her first 2 years even though they state that self employed earnings must be at least 50% of yearly income? This has vastly reduced the money on offer as the first 2 years were much lower than the 3rd. We have appealed but do you think we have a case?

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Replying to Barrmc:
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By andrew1211
14th May 2020 08:35

Look at 18/19 alone and I am guessing she is eligible based on that year ALONE. Then if that is the case, apply the 3 year average to work out the actual grant. If they had tested eligibility based on the 3 year average she might have got nothing? I don't see any case.

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Replying to andrew1211:
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By Barrmc
14th May 2020 09:12

They have already applied it to the 3 years although they can quite clearly see that her self employed income was around 5% of her total earnings in year 1 and 25% in year 2. Their is an option to appeal during the process which my wife has done as right now she’s basically been given around a 6th of what she’s been earning the past 2 years.

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Replying to Barrmc:
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By andrew1211
14th May 2020 09:25

Don't get your hopes up but good luck!

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Replying to Barrmc:
Morph
By kevinringer
14th May 2020 12:24

You don't have a case. HMRC have applied the rules correctly.

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By [email protected]
13th May 2020 19:12

Well, I applied today and they will pay me in 6 days, no questions asked just NIN, UTR , name address and bank details.

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Replying to [email protected]:
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By andrew1211
14th May 2020 08:30

Hardly no questions asked.....there are at least 3

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By Ben47
15th May 2020 00:54

Hi. I applied today. they used my 17/18 & 18/19 returns, but I only started trading halfway through the 17/18 tax year (I was full time employed before this) - this has considerably reduced my grant. Surely they can only take into account full tax years?! It means that if I had randomly happened to start trading at exactly April 6th 18, then I would receive a larger grant ...it makes no sense. I have appealed, so see what they come back with. I think it's bizarre that If I had contributed less to tax to the government coffers, that I would receive a larger grant?!!

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Replying to Ben47:
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By andrew1211
15th May 2020 08:48

Appeal in vain. Why cannot people understand it would take HMRC 6 months to design a system that dealt with every little quirk, nuance and oddity. The system is a quick fix (and not even that quick for the self employed compared to the employed) and is designed to get relief to as many as possible as quickly as possible.

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Replying to andrew1211:
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By LookingForHelp
15th May 2020 09:22

They could at least look to offer a fair taper on the arbitrary cap. Even if they offered to offset it against the Jan 2021 bill, that 8 months to get it sorted. Thus allowing those affected to drawdown from money set aside that would have ordinarily be payable in July 2020. It's incredulous that CJRS is an uncapped scheme which is paid now to professional footballers whilst your local plumber, electrician etc who may be a few pounds the wrong side of the line gets zero help. Mr Sunak's total silence on all rational middle ground proposals offered up since is just as bad. Does he think that by ignoring them it will make it better?

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Replying to andrew1211:
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By Ben47
15th May 2020 10:40

it's not rocket science to workout that my business was registered/I only started trading at a certain point in the year - the registration of my UTR would give them this. Also, they could just simply just use my first full tax return. The arbitrary manner is completely nonsensical ...penalising people that started trading at a certain point in the year is beyond ridiculous!

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Replying to Ben47:
Morph
By kevinringer
15th May 2020 10:24

Them's the rules. If the system did work on months how would it cope with multiple self-employments starting and finishing? And what about multiple other incomes starting and finishing for the 50% rules. It would get very complex and take much longer to develop.

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Replying to kevinringer:
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By Barrmc
15th May 2020 10:39

It states total earnings on your yearly tax return. Take that figure and work out the 80% in line with the furlough scheme. Set the cap at £2500. That’s what people live on, set their monthly budgets by. If I earn 51% self employed and 49% employed I don’t just live off the 51%.

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Replying to Barrmc:
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By LookingForHelp
15th May 2020 11:20

I agree. And those earning £50,001 don't live off nothing.

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By stevewedd
15th May 2020 12:37

Thank you Rebecca.

Do I have to levy VAT on the (full) grant authorised, please?

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Replying to stevewedd:
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By andrew1211
15th May 2020 13:44

no

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By Amyg3
16th May 2020 19:35

I’ve gone through and made my claim. My scenario is
2016/2017 - 20% of pay from self employed so mainly receiving PAYE pay
2017/2018 - 0% self employed as on maternity leave from PAYE
2018/2019 - majority of pay (85%) from self employed although still lower than normal as beginning part of trading year still on maternity
2019/2020 - also majority self employed, but irrelevant for this calculation

The grant I have been awarded does not even amount to 1 months pay. Feeling deflated, even though I know some people will get zero help. Should my 2016/2017 amount go towards the calculation even though it amounts to less than 50% overall income? Being in maternity has not helped either.

Thank you

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Replying to Amyg3:
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By LookingForHelp
16th May 2020 20:02

The scheme is a total nightmare. I earned £100 too much from 4 years ago & £212 too much from 2 years ago to tip the cap. Apparently that puts me in a £200k (I wish!) earnings bracket and deserving of no help. Whilst the CJRS pays o those who DO actually earn £200k as it has NO cap. I still have bills to pay (personal & business) and current trade is literally next to nothing. Oh, and kids to feed and tragically funerals to contend with.

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Replying to LookingForHelp:
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By Amyg3
16th May 2020 23:09

There really are many flaws to this grant and no where near on par with our PAYE colleagues. Sorry you have been caught up in this mess.

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Replying to Amyg3:
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By Barrmc
16th May 2020 20:20

My wife’s in a similar situation, 1st 2 years she earned a fraction of her income via self employment and the rest from employment. 3rd year 100% from self employed but the 1st years have skewed the average so much she’s got around 2.5wks worth of wages to cover 3 months. Going by their own 50% stipulation you’d have thought her first 2 years would not count. There is an option at the end of the application to appeal and that’s what my wife has done. Not holding out much hope though.

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Replying to Barrmc:
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By Amyg3
16th May 2020 23:13

This sounds very similar with pretty much the same outcome! Have also appealed...not holding out much hope either. Guessing it will be awhile before we get a reply to the appeal.

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