April 2020
SEISS - What is it?
- It’s basically the self-employed version of being furloughed.
- It supports self-employed individuals who have lost income due to the Coronavirus (Covid-19).
- The Government will offer a taxable grant worth up to 80% of your trading profits.
- The grant is offered to a maximum of £2,500 a month for the next 3 months.
- An extension may become available depending on how long this lasts.
Eligibility
- You must have submitted a tax return for the 2018/19 tax year (you should have anyway by now).
- You have traded in this tax year (2019/20 when writing).
- Had it not been for Covid-19 you would have been trading now.
- You intend to carry on trading after the pandemic.
- Because of Covid-19 you have lost trading profit.
- Your trading profit is less than £50,000.
- More than half of your income comes from self-employment i.e. if you do a little side job plus your main employed job, it’s unlikely you’ll be eligible.
What you’ll get
- HMRC will add together your last 3 years' trading profits (or 2 or 1 year(s) depending on what you've got).
- Take an average, and grant you 80% up to a maximum of £2500 a month, for 3 months.
Example
John the landscape gardener has trading profit for the last 3 years of:
Tax Year 16/17 - £22,000
Tax Year 17/18 - £16,000
Tax Year 18/19 - £24,000
- Average trading profit over the last 3 years is: £20,666.67.
- As this is below £50,000 he is eligible for SEISS.
- On average John would therefore earn £1,722.22 a month. 80%of this is £1,377.78.
- This is below £2,500 so John would be entitled to receive the full £1,377.78.
How to apply
- HMRC will contact you if you are eligible for the scheme, and will invite you to apply online.
- There are not yet any timescales on when they will contact you; so sit tight and look for updates on gov.com
- There has been some commentary suggesting this scheme will not be available until June 2020.
- This is coming under heavy scrutiny so could change.
- Payments however would be backdated.
Problems
- If you haven’t been declaring your income like you should have been for the last 3 years or if have written off absolutely everything as a business expense then i'm afraid your entitlement will be 80% of what you have declared, not put under the mattress.
- Where you can speak to your mortgage lender, pretty much every bank is offering a mortgage holiday.
- This mortgage holiday will not impact your credit rating.
- Usually you can apply online or through your banking app.
- Cash Flow. if you have no savings or will be getting close to exhausting these over the next few weeks, now will be the time to speak to your existing credit card provider or bank overdraft.
- I have seen a few providers increasing credit limits etc... for customers impacted by Covid-19
NB: IF YOU HAVE SAVINGS AND CAN AVOID GETTING FURTHER INTO DEBT, USE THEM. CREDIT CARDS / OVERDRAFTS / LOANS ALL NEED TO BE REPAID
This article is accurate at the date of writing, namely 3rd April 2020