HM Revenue & Customs (HMRC) has published detailed guidance on the working of the Self-Employed Income Support Scheme (SEISS), which was announced by the Chancellor as part of the Government’s response to the economic impact of the Coronavirus crisis.
SEISS will pay self-employed individuals an amount equivalent to up to 80 per cent of their average monthly trading profits, capped at £2,500, to cover at least the 3 months from March. The amount will be paid in a single lump-sum and will be based upon tax returns from 2016-17, 2017-18 and 2018-19.
Crucially, self-employed individuals will still be able to do business while they are in receipt of a grant from the scheme.
To qualify for the scheme, a self-employed individual must have trading profits of no more than £50,000 and must receive the majority of their income from self-employment. They must also have submitted a Self-Assessment Tax Return for 2018-19. Anyone who has missed the deadline has until 23 April 2020 to do so before they become ineligible for the scheme.
The new guidance confirms that HMRC will use turnover figures provided on tax returns and then, to calculate trading profit, it will deduct expenses including:
- Office costs
- Travel costs
- Clothing expenses
- Staff costs
- Things bought to sell on
- Financial costs, such as insurance or bank charges
- Costs of business premises
- Advertising and marketing, such as website costs
- Training courses
- Business expenses deducted through the trading allowance
- Capital allowances, used to buy assets used in the business
- Qualifying care relief
- Flat rate expenses.
At the same time, HMRC has confirmed that it will not deduct losses carried forward from previous years from trading profits, nor will it deduct an individual’s personal allowance.
Applications to the scheme are expected to open in mid-May 2020 via an online portal. HMRC will contact self-employed individuals it identifies as being eligible with details of how to apply.
HMRC has also issued a fraud warning, saying that texts, calls or emails claiming to be from HMRC and asking people to click a link to provide personal information will be a scam.