RAYMOND BENN & CO - CORONAVIRUS (COVID-19) UPDATE – SELF EMPLOYED – PARTNERS – SELF EMPLOYMENT INCOME SUPPORT SCHEME (SEISS) – 27.03.2020

Most of you will have heard the Chancellors announcement on Thursday 26 March regarding financial assistance for lost income specifically aimed at the self-employed and I have copied and pasted word for word the excerpt from the Government website below.

In terms of assistance we can give, I draw your attention to the following headline areas of relevance to you as being in receipt of self-employed profits either through individual self-employment or through a profit split received from a Partnership

  • It appears at first view that if your taxable profit is above £50,000 (assessed over the 2018/19 year OR averaged over the 2016/17, 2017/18 and 2018/19 years) then no grant is available and you must revisit our original e mail to you and explore the various loans and grants available there to assess whether appropriate assistance is available to you notably the Business Interruption Loan Scheme or Support for businesses that pay little or no business rates. Other schemes may also be appropriate and we suggest you apply for all those that may be relevant ensuring that you satisfy the conditions outlined in the individual scheme https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/covid-19-support-for-businesses
  • On review of both the original package launched last Friday and this update for those regarded as self-employed, that there does not appear to be any specific support on the basis of income replacement, for Owner Managed limited companies who pay their directors a low salary at the entry level to national insurance or no salary and then 'top up' their income with dividends, often to a level for a living income.
  • While it may be the case for an Owner Manager of a limited company that 80% of the low salary can be claimed through the Coronavirus Job Retention Scheme – this is confirmed by the Federation of Small Business who states that because the duties of a director are a statutory responsibility any salary paid for this role comes under the same regulation as a furloughed employee and will be paid under the scheme - however any dividend received by the director is regarded as investment income and does not fit into any of the income replacement schemes currently on offer from the Government.
  • To make a claim for the relief the self-employed profits must make up the majority of your earnings – below in the HMRC advice, it says that HMRC will contact you if the scheme applies – depending on the split between your employment and your self-employed earnings and if you do not receive notification from HMRC you may need to contact HMRC as they are encouraging individuals to do so on a case by case basis

https://www.gov.uk/guidance/claim-a-grant-through-the-coronavirus-covid-19-self-employment-income-support-scheme

“Who can apply

You can apply if you're a self-employed individual or a member of a partnership and you:

  • have submitted your Income Tax Self-Assessment tax return for the tax year 2018-19
  • traded in the tax year 2019-20
  • are trading when you apply, or would be except for COVID-19
  • intend to continue to trade in the tax year 2020-21
  • have lost trading/partnership trading profits due to COVID-19
  • Your self-employed trading profits must also be less than £50,000 and more than half of your income comes from self-employment. This is determined by at least one of the following conditions being true:
  • having trading profits/partnership trading profits in 2018-19 of less than £50,000 and these profits constitute more than half of your total taxable income
  • having average trading profits in 2016-17, 2017-18, and 2018-19 of less than £50,000 and these profits constitute more than half of your average taxable income in the same period
  • If you started trading between 2016-19, HMRC will only use those years for which you filed a Self-Assessment tax return.
  • If you have not submitted your Income Tax Self-Assessment tax return for the tax year 2018-19, you must do this by 23 April 2020.

HMRC will use data on 2018-19 returns already submitted to identify those eligible and will risk assess any late returns filed before the 23 April 2020 deadline in the usual way.

How much you'll get

You'll get a taxable grant which will be 80% of the average profits from the tax years (where applicable):

2016 to 2017

2017 to 2018

2018 to 2019

To work out the average HMRC will add together the total trading profit for the 3 tax years (where 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.

We'll pay the grant directly into your bank account, in one instalment.

How to apply

You cannot apply for this scheme yet.

HMRC will contact you if you are eligible for the scheme and invite you to apply online.

Individuals do not need to contact HMRC now and doing so will only delay the urgent work being undertaken to introduce the scheme”

The FSB also have a good presentation for what's on offer - https://www.fsb.org.uk/campaign/covid19.html

CONCLUSION

I repeat our final paragraph from our original Coronavirus package sent earlier in the week

We will obviously be here to assist as best we can, but it is important that you urgently take the initiative of reviewing our website together with the attached links to assess your own position https://www.raymondbenn.co.uk/news/covid-19

I appreciate that once you have identified those schemes that apply to you, the key element is the process of application and the timing between application and receipt of funds - if these areas are becoming difficult for you we will try to assist - however one aspect is common amongst all our clients and those of other practices - there are hundreds of thousands of people in the same position, so patience will be required

For Income Tax Self-Assessment, payments due on the 31 July 2020 will be deferred until the 31 January 2021.'

For VAT, the deferral will apply from 20 March 2020 until 30 June 2020.

If you have missed a tax payment or you might miss your next payment due to

COVID-19, please call HMRC's dedicated helpline: 0800 0159 559

We wish you all the best during these extremely difficult times