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      COVID-19 Information Hub

      Coronavirus Self-Employed Income Support Scheme Grant Extension

      A fifth grant under the Self-Employed Income Support Scheme is now up and running, and is for individuals affected by the Coronavirus (Covid-19) whose main source of income is through self-employment or as a partner in a partnership. This is in addition to other measures put in place to help individuals struggling to cope financially. This scheme is only open to people classed as ‘self-employed’ - it will not apply to individuals trading through a limited company (please see our commentary below). Other exclusions also apply. Please read on for a summary of advice issued by the government and our own supplementary commentary, analysis and guidance. Updated 06/09/2021

      Eligibility

      You will be eligible where all of the following apply:

      • You have been trading in 2019-20 and 2020-21, and are continuing to trade when you apply, or would be were it not for Covid-19.
      • You intend to continue to trade in the 2021-22 tax year.
      • You have a reasonable belief that there will be a significant reduction in your trading profits due to the impact of Covid-19 between 1 May 2021 and 30 September 2021. HMRC have published further guidance click here.
      • You have filed a self-assessment tax return for the 2018-19 tax year in which self-employment profits are included. The deadline for meeting this requirement was 23 April 2020. If your 2018-19 tax return is still unfiled, you will not qualify for the fifth grant. Additionally, your 2019-20 tax return must have been filed before 2 March 2021.
      • Your trading profits were below £50,000 over the relevant tax years.
      • More than half of your total taxable income on average came from your self-employment business over the relevant tax years.
      • Amendments to earlier year submissions may impact upon your past eligibility or the level of the grant, and you may be required to repay some or all of the grant paid to you.

      How to access the scheme

      You will need to:

      • Apply using this link. Click on the green ‘start now’ button and following the on-screen instructions.

      What is excluded?

      • Anyone who fails to meet the eligibility criteria.
      • Anyone whose profits have fallen solely as a result of increased costs of business.
      • Owner-directors of limited companies, trustees or owners of Furnished Holiday Lets.

      More guidance can be found here.

      Details of how HMRC calculate the grant can be found here.

      Kirk Rice commentary:

      The fifth grant is now anticipated to be the final grant available to the self-employed and is more limited in its scope than previous grants. The qualifying criteria have been tightened and there is a greater onus on the taxpayer to provide more information in support of the claim. HMRC have tightened their processes and are looking closely at those who apply to ensure that they are genuinely being adversely affected by Covid-19 over the period of the claim. Any claims that are found to be fraudulent will be repayable, together with a fine.

      HMRC in their early guidance has confirmed that any grant paid out under the Self-Employed Income Support Scheme will affect any claims to tax credits and any grant awarded under the scheme will also be treated as taxable income in the hands of the recipient. The grant will be subject to both income tax and National Insurance Contributions.

      Given the greater scrutiny by HMRC in approving grant payments and the likelihood that many past claims will be re-examined to catch those who have fraudulently made claims, we advise that it would be prudent to keep a record of lost clients, or client jobs/contracts that have been cancelled or postponed as a direct result of the virus. Where you have had to reduce your fees to retain jobs, or have suffered periods of illness, business closure or other ways your business has been affected, then keep a record of those as well. These may be needed as evidence to back-up your claims in the event of an HMRC enquiry.  

      Trading via a Limited Company

      Owner directors of limited companies are not included in the measures. This all comes down to the distinction between someone who operates their business in their own name under a self-employed trade, and someone who runs a company through which they are either paid a salary or extract profits via dividends (or both). It is only the self-employed traders who will benefit.

      Private company owners who operate on their own, perhaps via a Personal Service Company, and who have no employees can now be included in the Job Retention Scheme (see here) under the furloughing provisions provided they have been paying themselves a salary via a PAYE scheme. Any such furloughed directors may only complete their statutory duties, and must not undertake any other work during the period of furlough. Where a company owner has only been paying themselves via dividends, they will not be included in the scheme.

      There is also help via the Business Interruption Loan Scheme (see here), the Business Bounce Back Loan Scheme (see here) and the VAT Deferral Scheme (see here), and access to state benefits such as Universal Credit (see here).

      We anticipate this will be the final update to our guidance on the SEISS.

      Got a question? Ask us using the form below.

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