SELF-EMPLOYMENT INCOME SUPPORT SCHEME (SEISS)
As businesses and individuals are impacted by the Corona virus COVID-19 outbreak, the government is announcing various funding support mechanisms.
Our team of business advisers and tax specialists are publishing updates in line with Government announcements and highlighting key areas that businesses need to consider.
Self-Employment Income Support Scheme (SEISS)
The Government announced on 26 March that it will support self-employed individuals and members of partnerships, providing a grant of 80% of their monthly profits up to a cap of £2,500 per month.
HMRC will calculate the size of the grant using the average monthly profits from self-assessment tax returns submitted for 2016-17, 2017-18 and 2018-19. The scheme will only be open to those with trading profits of less than £50,000 and where the majority of their income comes from self-employment.
The scheme will initially be open for an initial three months with people able to make their first claim by the beginning of June 2020.
HMRC will invite eligible individuals to apply once the scheme is operational.
applicable) then divide by 3 (where applicable), and use this to calculate a monthly amount.
It will be up to a maximum of £2,500 per month for 3 months.
The grant will be paid directly into your bank account, in one instalment at the beginning of June 2020.
How to apply
Individuals cannot apply for this scheme yet.
HMRC will contact those who are eligible for the scheme and invite them to apply online.
Please do not contact HMRC now and doing so will only delay the urgent work being undertaken to introduce the scheme.
Once it is up and running, access to the scheme will be through the GOV.UK.website
Please be wary of scams and if someone texts, calls or emails claiming to be from HMRC, saying that you can claim financial help or are owed a tax refund, and asks you to click on a link or to give information such as your name, credit card or bank details, it is a scam.
After you’ve applied
Once HMRC has received your claim and you are eligible for the grant, they will contact you to tell you how much you will get and the payment details.
If you claim tax credits you’ll need to include the grant in your claim as income.
Other help you can get
Remember the government are also providing the following additional support for the self-employed:
• Deferral of the payments on account due at the end of July 2020 to 31 January 2021
• grants where your business pays little or no business rates
• a higher amount of Universal Credit
• Business Interruption Loan Scheme
This scheme does not apply if you’re a director of your own company and paid through PAYE where you may be able to get support using the Job Retention Scheme.
• an employer can choose to top up to 100%, but does not have to (subject to employment law and renegotiating any contractual entitlements)
• for employees whose pay varies, the employer can claim for the higher of (i) the same month’s earning from the previous year (eg earnings from March 2019); or (ii) average monthly earnings in the 2019-20 tax year
• individuals are only entitled to the minimum wage for the hours they work. So if they are furloughed and do not work, and 80% of their normal earnings would take them below the minimum wage based on their normal working hours, they still only receive 80% as they are not working. However, they are entitled to be paid NMW for any time spent training.
• to be eligible, the employee must have been on the payroll on 28 February 2020. If they were hired later, they are not eligible. Anybody who was on the payroll on 28 Feb and has since been made redundant can be rehired and put on the scheme
• furlough leave must be taken in minimum blocks of three weeks to be eligible for funding
• there is nothing in the guidance which prohibits rotating furlough leave amongst employees, provided each employee is off for a period of at least three weeks
• the employee must not be working at all. If they work for even an hour (presumably during their entire three week furlough period), they are not eligible. However, they are able to undertake training and do volunteer work, provided they do not provide services to or make any money for their employer.
• when agreeing changes in hours (and acceptance of 80% pay), assuming the contract does not already allow for that, normal employment law applies. The employer must be careful not to discriminate in deciding who to offer furlough too. My view is that prioritising vulnerable workers is unlikely to be discrimination, as prioritising the over 70s (direct age discrimation against those under 70) is almost certainly justifiable, and those who do not suffer from serious health conditions are not a protected class.
• employees on sick pay or self-isolating cannot be furloughed, but can be furloughed afterwards. Employees who are shielding can be placed on furlough.
• employees on maternity (or similar) leave can continue to draw SMP (or similar) payments. The guidance does not prohibit women on maternity leave agreeing to return to work early and then being furloughed, or electing to change to shared parental leave and then being furloughed.
• employers can only claim once every three weeks, ie they cannot get weekly reimbursement. Claims can be backdated to 1 March 2020.
The government will issue further guidance on the mechanics of claiming the payment in due course. It says it expects the scheme will be up and running by the end of April.