Cirencester and Malmesbury-based accountancy firm McGills Chartered Accountants has welcomed the Government’s new Self-Employed Income Support Scheme (SEISS), but fears that the Chancellor may seek redress through the tax system in future.
In his latest response to the Coronavirus pandemic, the Chancellor Rishi Sunak has announced that the 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 three months from March.
This scheme mimics measures already introduced under the Coronavirus Job Retention Scheme, which offers a similar package to those in employment who are furloughed by their employer.
“The Government has already taken significant steps to support those in employment and so it is great to see that it has gone one step further to help the large number of self-employed individuals in the UK,” said Sharla Dandy, Partner at McGills.
“It is estimated that this scheme will benefit around 95 per cent of the country’s self-employed workforce, but it comes with a number of caveats that people need to be aware of.”
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. Sharla said that anyone who has missed the deadline will have four weeks from 26 March 2020 to do so before they become ineligible for the scheme.
Sharla added: “The cash grant from the scheme will be paid in a single lump-sum at the beginning of June and will be based upon tax returns from 2016-17, 2017-18 and 2018-19.
“HMRC will contact everyone eligible for the scheme directly, inviting them to apply for the support via an online portal. If you are self-employed and been affected by the Coronavirus pandemic it is important you make use of this scheme.”
The scheme will only be open to those who receive more than half of their income from self-employment, warned Sharla, and will not be available to those who pay themselves a salary and dividends through their own company, who will instead have to rely on the Coronavirus Job Retention Scheme.
However, in return for this large finance package, the Chancellor warned that the tax position around self-employment may need to change, suggesting that all must pay equally in future.
“The Chancellor’s speech concluded with a rather ominous message, which seems to suggest that the Government is now looking to remove or reduce any tax advantage from being self-employed,” said Sharla.
“Although we don’t have details of this yet, it is important that self-employed individuals monitor the situation to ensure they are not disadvantaged in future.”