COVID-19
Knowledgebase

Duncan & Toplis is here to help and support you through the ongoing challenges presented by the coronavirus pandemic. Whilst this is an anxious time for many, it’s important to know that there is help available.

We are summarising the measures, including eligibility requirements, as they are announced and all details can be found here in our COVID-19 Knowledgebase.

Self-employment Income Support Scheme (SEISS)

On the 26 March the Government announced a support package for the self-employed, including members of partnerships in the UK that have lost income due to coronavirus.  

Initially this scheme was only available for three months to cover the period from March to May 2020. However, it was announced at the end of May that it would be extended for a further three-month period as part of a second phase of grants.

Now, the scheme has been extended further for another six months in the form of two grants covering the three-month periods from November 2020 to January 2021 and February to April 2021. Payments are due to be made more quickly, with the application window for the first of these grants being brought forward from 14 December to 30 November. Applications for the third grant must be submitted by 29 January 2021.

The scheme allows individuals to claim a taxable grant worth 80%, up to a maximum of £7,500, for the third claim period of November 2020 to January 2021. The amount being provided for the fourth claim period, February to April 2021, has yet to be confirmed.

 
The grant will be subject to Income Tax and National Insurance contributions but does not need to be repaid.
  • The grant should be recorded as part of claimants’ self-employment income, and it may affect the amount of Universal Credit claimants receive. This will not affect Universal Credit claims for earlier periods.

  • If claimants receive the grant they can continue to work or take on other employment including voluntary work or duties as an armed forces reservist.

  • If claimants have other employment as a director or employee paid through PAYE their employer may be able to get support using the Coronavirus Job Retention Scheme.

The government have now announced that parents whose trading profits dipped in 2018/19 because they took time out to have children will be able to claim for a payment under this scheme.  

Eligible parents include those who took time out of trading to care for their children within the first 12 months of birth of the child or within 12 months of an adoption placement.

They will now be able to use either their 2017/18 or 2016/2017 and 2017/2018 self-assessment tax returns as the basis for their eligibility.  

Am I eligible?

To be eligible for the third grant you must be a self-employed individual or a member of a partnership. If you claim Maternity Allowance this will not affect your eligibility.

You must have traded in both tax years:

  • 2018 to 2019 (and submitted your Self Assessment tax return on or before 23 April 2020 for that year)
  • 2019 to 2020

You must either:

You must also declare that:

  • you intend to continue to trade
  • you reasonably believe there will be a significant reduction in your trading profits

Guidance on ‘reasonable belief’ and ‘significant reduction’ can be found on the government’s website.

How to claim

You must make the claim yourself. You must not ask a tax agent or adviser to claim on your behalf as this will trigger a fraud alert, which will delay your payment.

You will need your:

  • Self Assessment Unique Taxpayer Reference (UTR) – if you do not have this find out how to get your lost UTR
  • National Insurance number – if you do not have this find out how to get your lost National Insurance number
  • Government Gateway user ID and password – if you do not have a user ID, or have lost it, you can create one or find out how to recover your login details when you make your claim
  • UK bank details (only provide bank account details where a Bacs payment can be accepted) including:
    • bank account number
    • sort code
    • name on the account
    • your address linked to your bank account

For the third round of grant funding, covering the period November 2020 to January 2021, you must make your claim between 30 November 2020 and 29 January 2021.

Loan charge cases

For the purposes of SEISS, a person is subject to the loan charge if:

(a) on 26 March 2020 the person is chargeable to income tax on any amount by reason of Schedule 11 or 12 to the Finance (No. 2) Act 2017 (loan charge) as enacted as at that date, or

(b) the person would be so chargeable but for entering into a contract settlement on or after 20 December 2019.

Contract settlements and amendments to tax returns

For the purposes of SEISS, amounts of trading profits and relevant income are determined by reference to a person’s tax returns as at 23 April 2020 but no account will be taken of any amendment made to a tax return on or after 6pm on 26 March 2020 or any contract settlement.

If claimants have not submitted Self Assessment tax returns for all three years

HMRC will work out their average trading profit based on continuous periods of self-employment, which will be either:

  • the tax years 2017 to 2018 and 2018 to 2019
  • the tax year 2018 to 2019 only, even if they were self-employed in the tax year 2016 to 2017.

Tax treatment of government grants

SEISS grants that were correctly paid are to be taxable on receipt in 2020/21, irrespective of the business accounting date and with no allocation of any part of the grant to March 2020.

  • All coronavirus government support grants are to be included in accounts as taxable income.  
  • Claimants should be aware of this and budget for potential income tax and national insurance bills.  

Reporting errors to HMRC and penalties

HMRC has updated its guidance on telling them about an ineligible receipt of grant or an over payment under the SEISS. The update covers when HMRC must be told and the grant is to be repaid. Details can be found here.

Guidance on the penalties due if HMRC are not told about ineligible receipts or over payments under the SEISS has now been published.

Details of how HMRC decides how much the penalty will be, when you may have to pay a penalty and how to appeal against a penalty can be found here.

 

For the latest guidance and professional advice, please contact us or speak to your dedicated Duncan & Toplis adviser. 

Return to COVID-19 Knowledgebase


Stuart A. Brown

Director Quality and Technical Assurance Duncan & Toplis