Coronavirus Financial Support for Self Employed

On 26 March the UK Government announced financial support for individuals who are self-employed and have been negatively affected by COVID-19.

Self Employment Income Support Scheme

The first grant available for the Self Employment Income Support Scheme has closed. The second grant will be available from 17 August 2020.

The Self Employment Income Support Scheme will provide self-employed individuals or members of partnerships with a taxable grant. The second grant is worth 70% of their profits, over a three month period, up to a cap of £6,570.

To be eligible for the scheme you need to meet the following criteria:

  • traded in 2019/20, trading when you apply or would be trading if not for COVID-19 
  • filed a tax return for 2018/9 (those who have not filed, will have four weeks from 26 March to do so)
  • have lost trading profits due to COVID-19
  • intend to continue to trade in 2020/21
  • trading profits are less than £50,000 and more than half your income comes from self-employment*

*This is determined by at least one of the following conditions being true:

  • Your trading profits and total income in 2018/19
  • Your average trading profits and total income across up to the three years between 2016-17, 2017-18, and 2018-19.

The second grant amount will be 70% of your average profits from the tax years 2016-2019. It will be a maximum of £6,570 for a three month period. Individuals must prove to HMRC that their business has been adversely affected by Coronavirus on or after 14 July 2020. 

Universal Credit

You may be eligible for Universal Credit while you wait for the grant, but the grant will be considered as self-employed income and may affect the amount of Universal Credit you will get. Any Universal Credit claims for earlier periods will not be affected. 

The deadline to submit your 2018/2019 Self Assessment tax return was 23 April 2020. If you had not submitted this by then, you will not be able to claim through this scheme

How HMRC works out trading profits and non-trading income

Trading profits

This is shown on your tax calculation as either profits from:

  • self-employment
  • partnerships

HMRC will work out your total trading profit after deducting any allowable expenses such as:

  • expenses
  • capital allowances
  • flat rate expenses

If your annual gross trading income, from one or more trades or businesses is more than £1,000 you can use the tax-free allowances, instead of deducting any expenses or other allowances.

HMRC will work out your share of the partnership’s trading profits by taking all partnership income, and then deduct anything that is non-trading income, such as investment income.

They will not deduct from your trading profits:

  • any losses brought forward from previous years
  • your personal allowance

Non-trading income

This is the amount recorded as ‘total income received’ on your online or paper tax calculation, less your trading income.

HMRC will work out your non-trading income by adding together all your:

  • income from earnings
  • property income
  • dividends
  • savings income
  • pension income
  • overseas income
  • miscellaneous income (including taxable social security income)

How to Claim

Check your eligibility

To check your eligibility you will need your:

  • Self Assessment Unique Taxpayer Reference (UTR) number 
  • National Insurance number 

Make a Claim

To make a claim you will need your:

  • Self Assessment UTR - if you do not have this find out how to get your lost UTR
  • National Insurance number - if you do not have this find out how to get your lost National Insurance number
  • Government Gateway user ID and password - if you do not have a user ID, you can create one when you check your eligibility online
  • bank account number and sort code you want us to pay the grant into (only provide bank account details where a Bacs payment can be accepted)

You’ll have to confirm to HMRC that your business has been adversely affected by Coronavirus on or after 14 July 2020.

Scheme Extension

Applying for the first SEISS grant
Individuals can continue to apply for the first SEISS grant until 13 July. Under the first grant, eligible individuals can claim a taxable grant worth 80 per cent of their average monthly trading profits, paid out in a single instalment covering three months’ worth of profits, and capped at £7,500 in total. Those eligible have the money paid into their bank account within six working days of completing a claim.

Applying for the second SEISS grant
Applications for the second grant will open on 17 August. Individuals will be able to claim a second taxable grant worth 70 per cent of their average monthly trading profits, paid out in a single instalment covering three months’ worth of profits, and capped at £6,570 in total. Individuals claiming a second grant will need to prove their business has been adversely affected on or after 14 July 2020. 

After you Claim

Once you’ve submitted your claim, you will be told straight away if your grant is approved. HMRC will pay the grant into your bank account within 6 working days.

You must keep a copy of all records in line with normal self-employment record keeping requirements, including:

  • the amount claimed
  • the claim reference number for your records
  • evidence that your business has been adversely affected by coronavirus

You will need to report the grant:

  • on your Self Assessment tax return
  • as self-employed income for any Universal Credit claims
  • as self-employed income and that you’re working 16 hours a week for any tax credits claims

How different circumstances affect the Self-Employment Income Support Scheme

If you're self-employed or member of a partnership find out how your circumstances can affect your eligibility for the scheme.

Pay the Grant Back

You must tell HMRC if you think you:

  • have been overpaid
  • should not have claimed the grant (because you weren't eligible or made the claim in error)

You should tell HMRC as soon as possible if you know you’ve been overpaid or are not eligible for the grant. You may have to pay a penalty if you do not tell them.

Tell HMRC

Self Employed New Parents

Self-employed parents whose trading profits dipped in 2018/19 because they took time out to have children will be able to claim for a payment under the Self-Employed Income Support Scheme (SEISS).

The scheme requires claimants to have traded in 2018/19 with their profits making up at least half of their total income. They must also have submitted a self-assessment tax return on or before 23 April 2020 for the 2018/19 tax year.

The government has ensured parents, including mothers, fathers and those who have adopted, who took time out of trading to care for their children within the first 12 months of birth of the child or within 12 months of an adoption placement, will now be able to use either their 2017-18 or both their 2016-17 and 2017-18 self-assessment returns as the basis for their eligibility for the SEISS.

They will also need to meet the other standard eligibility criteria for support under the SEISS.

Further information will be published in early July.

View HMRC guide

Find out more about Universal Credit

 

This page was last updated 15 July 2020. 

Coronavirus Business Advice and Support

The AND business team is here to support you.

For further information or if you need help and advice, please get in touch via email or telephone 028 9147 3788