COVID-19 – Business Support – Self-Employment Income Support Scheme Goes Live Today

HMRC has announced that the application process for the Self-Employment Income Support Scheme will go live from today.

The scheme is open to a self-employed individual or a member of a partnership who:

  • traded in the tax year 2018-19 and submitted their Self-Assessment tax return on or before 23rd April 2020 for that year;
  • traded in the tax year 2019-20;
  • intend to continue to trade in the tax year 2020-21; and
  • carry on a trade which has been adversely affected by COVID-19.

HMRC has given examples of ‘adversely affected by COVID-19’ to include those who:

  • are shielding;
  • are self-isolating;
  • are on sick leave because of COVID-19;
  • have caring responsibilities because of COVID-19; or
  • have had to scale down or temporarily stop trading because:
    • your supply chain has been interrupted
    • you have fewer or no customers or clients
    • your staff are unable to come in to work

If you meet these conditions, the final qualifying criteria are that your trading profits in a year must be no more than £50,000 and at least equal to your non-trading income.

The first step is to check whether HMRC believe that you are eligible for the scheme here.   For this you will need your Self-Assessment Unique Taxpayer Reference number and your National Insurance number.

If this check confirms your eligibility, you will be given a date between 13th and 18th May from which you can apply.

You will need your personal Government Gateway User ID and password.  Perversely, we as agents are not able to make the application on behalf of our clients through our online portal.

If you do not have these, there will be a fast-track process to set them up without the need for activation codes through the post.

It is vital that you ensure that your bank and contact details are up to date on this platform.

HMRC will first look at your 2018-19 Self-Assessment tax return in isolation but, if you are not eligible based on this tax return, they will then look 2016-17, 2017-18 and 2018-19 collectively.

HMRC have published worked examples on the calculation process here.

The application process will show how HMRC has calculated the grant that they believe you are due to receive.  At this point, you can share the calculation with your agent for verification and the agent can seek a review of the calculation where appropriate.

Once your claim has been submitted, you will be notified immediately if your grant is approved and, if this is the case, the grant will be paid into your bank account within six working days.

It is important to remember that the grant itself is taxable income and, as such, it will need to be reported:

  • on your 2020-21 Self-Assessment tax return.
  • as self-employed income for any Universal Credit claims.
  • as self-employed income and that you are working sixteen hours a week for any tax credits claims.

At this stage, the Self-Employment Income Support Scheme covers the period between April and June 2020 with a maximum grant of £7,500.00.  However, with the news that the Job Retention Scheme has been extended to October, we expect further developments.

There are two glaring categories who will receive little or no financial support, those who started in Self-Employment after 6th April 2019 and those Company Directors whose earnings are predominantly paid in Dividends.

For the latter category, Rishi Sunak again highlighted in parliament the difficulty in distinguishing between the Dividends that are earned from those received as passive income from a share portfolio.

However, everyone who has a second payment on account for 2019-20 tax year due on 31st July can choose to delay that payment irrespective of the income source.  No application is necessary for this and no penalties or interest will be charged in the deferral period.

The final payment for the 2019-20 tax year will be due by 31st January 2021 and we would strongly advise that your tax return be filed as soon as possible to crystallise the amount the due or, indeed, any potential rebate.