KLG is open 8.30am-5.30pm, 5 days a week and fully operational during the COVID-19 quarantine. We are available to serve our clients , as well as serving potential new clients.

We provide Legal & HR advice to protect and support your business.

After the government announced significant help for businesses and employees, self-employed have not been forgotten, either. On 26th March the Self-employment Income Support Scheme (SEISS) has been unveiled as the unprecedented fiscal package designed to ease the financial loss caused by the coronavirus. 

We will try to explain further how the SEISS works. However, the government crafted the self-employed support package from the scratch in a few days and there are no regulations yet in force and for a lot of points additional clarification is expected. 

For support from a professional, reliable employment law specialists, contact us today or visit our For Employers page.

Eligibility for SEISS

These are the criteria that a person must meet to receive the grant:

They are registered self-employed or a member of an incorporated partnership 

The SEISS covers only registered self-employed or a member of an incorporated partnership. Unfortunately, the company owners or directors in a company are not eligible. Thus, the last paragraph of the Scheme directs a director paid trough PAYE to get support from Job Retention Scheme (JRS). 

They have trading profits of up to £50,000

This is determined either by (i) having trading profits/partnership trading profits in 2018-19 of less than £50,000 or (ii) having average trading profits in 2016-17, 2017-18, and 2018-19 of less than £50,000. 

As it is, many self-employed will not benefit of the Scheme by even slightly exceeding the threshold. This seems to differentiate from the Job Retention Scheme (JRS) where there is no such income limit for furloughed PAYE workers. 

It is not clear yet whether trading allowances, tax reliefs or trading losses are considered. 

They should derive more than 1/2 of their income from their self-employed/partnership activities 

This applies to persons having different sources of income. The government advises that calculation will be based on an individual’s self-assessment tax returns for the last three tax years to obtain a fair and reasonable average.

They have filed a tax return for 2018-19

The government will use the already submitted returns. For those who missed the 31 January Self-Assessment deadline, they will have until Thursday 23 April 2020 to submit their tax return and then they can still access the scheme.

They were trading in the last financial year 2019-20, are still trading now (unless coronavirus is stopping you from trading) and intend to continue trading in the tax year 2020-21

People who started trading on or after 6 April 2019 are not eligible for the SEISS grant. Likewise, people who already have ceased trading permanently are excluded from benefitting the Scheme. It is not clear yet what is the meaning of the concept “trading”, for instance whether property letting businesses or letting of furnished holiday accommodation qualifies as trade. 

They suffered a loss in trading/partnership trading profits due to COVID-19

The Scheme’s aim is help self-employed people who face financial difficulties and who are genuinely affected by coronavirus and need financial support. There is no information or guidance about what proof and checks may be needed to satisfy this requirement. It is advisable thought, that people considering applying for a grant to preserve all relevant documents and take the step toward keeping records about cancelled work due to coronavirus, struggles to meet their contractual obligations, etc

2. How much do self-employed benefit of the Scheme

The grant is worth 80% of the self-employed trading profits, capped to a maximum of £2,500. To determine the size of the grant the average trading profits from tax returns in 2016-17, 2017-18 and 2018-19 will be used. Putted simply, the three years profits will be added together and divided by three and 80% of the figure you arrive at,  is the value of the grant. 

3. Tax implications 

The grants are taxable – so claiming the grant will mean that a higher taxable income should be included on the 2020/21 tax return. This will entail some tax consideration that every person wishing to apply for the grant need to consider. Independent financial advice should be sought. 

4. How the Scheme works

No action needs to be taken. The Scheme specifies that HMRC will contact those taxpayers who are eligible and will invite them to apply for the grant. The government announced that they will share further information and details shortly. HMRC warns on the scams such as emails, texts, or calls, allegedly offering money from HMRC and asking for the business bank details to be confirmed. 

5. When is the grant available and length of the support

For the people wishing to claim the grant, they still have a little more waiting to do. It is expected that SEISS will start on June and the scheme will be available for three months. Payments will likely be backdated to cover March, April and May. 

Until June, the government direct the eligible people toward accessing other  forms of help available for self-employed such as :(i) grants for businesses that pay little or no business rates; (ii) Universal Credit; (iii) Business Interruption Loan Scheme; (iv) deferral of Self-Assessment income tax payments due in July 2020 and VAT payments due from 20 March 2020 until 30 June 2020

Contact us 

If you are a self-employed or a partner looking for assistance in implementing this changes or further advice on how to support your staff please contact our team of employment specialists today. 

Call us 0330 221 0684

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Contact us

Kalra Legal Group
Clyde House
Reform Road

Tel: 0330 221 0684
Email: info@klglaw.co.uk

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