Hot off the press - there’s a new acronym on the block: ‘SEISS’ (see below)
Not to be confused with SEIS (Seed Enterprise Investment Scheme)…Duh!
Self-employment Income Support Scheme (SEISS)
The Self-employment Income Support Scheme (SEISS) announced today.
This scheme will allow you to claim a taxable grant worth 80% of your trading profits (derived from average declared profits over the past 3 years) up to a maximum of £2,500 per month for the next 3 months. This may be extended if needed.
The following (in italics) is lifted straight from the latest Government guidance:
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.
How to apply
You don’t - HMRC will contact you from a review of your filed tax return records and ask you to complete a form.
Overall this is good news. The sting is that it won’t pay out until June.
The reference point being filed tax returns makes sense from a compliance perspective and is quite cunning. They’ve even opened the doors to those who have yet to file their 2019 tax returns. This is seemingly generous, as that tax return should have been filed by 31 January 2020!
So will we suddenly see many ‘cash in hand’ businesses coming forward to (late) file self-assessment tax returns? Also, those “wishing” their declared income was higher over the past three years…?
There was also a glib reference to aligning self-employed taxes with employee taxes in the future, given that the ‘same’ package of 80% capped at £2.5k is being offered.
What the Chancellor fails to appreciate is the different risk profile of someone running their own business compared to an employee. Don’t you think?
So we will no doubt see an attack on National Insurance rates in the months to come - perhaps also seeing NIC added to (small company) dividends too...?
All in all, this could be a cunning plan from the Treasury.
Read the full guidance here.
Founder/Directors - Where’s our ‘C’ support?
So we now have the SEISS (above) for the self-employed i.e. sole traders and partners in a partnership. We already heard about the Job Retention Scheme for employees.
So where do us Founders/Directors fit in to the government assistance if the Coronavirus impacts on us?
There has been a debate going on about whether directors, particularly single director companies, could benefit from the Job Retention Scheme if their earnings are adversely impacted?
The key question has been around whether it is possible for a director to ‘furlough’ themselves…?
Interestingly, in the SEISS guidance that was released this evening, there is a final comment that states:
“If you’re a director of your own company and paid through PAYE you may be able to get support using the Job Retention Scheme.”
Which is good news.
However, as suspected, dividends will not be included in the 80% calculation:
Not so great for low salary/high dividend strategies that we’ve grown to know so well.
So watch this space. It should be possible for directors to claim after all. We should know more as soon as the portal is released.
Business Rates: Get ready to claim
It looks like Local Authorities are now gearing up to dish out the business grants for those businesses with possible claims for business rate grants as recently announced by the Chancellor.
Although you don’t need to apply as such, it is unclear how Local Authorities will logistically pay out the grants if they don’t have company bank details - and if they send out cheques, we probably won’t be at our offices to collect and bank them?!
The suggestion was that the payments would be processed in early April.
So I suggest you find your local authority and bookmark the page and check regularly - just in case they request further information prior to processing.
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