A second grant under the SEISS scheme has has been announced and applications will open through the HMRC portal on 14th August 2020. Some of the key features of this new grant are:
- The second grant will be calculated at 70% of the taxpayer’s annual average profits, capped at £2,190 per month, and payable for three months. Therefore, the maximum payment will be £6,570. This is lower than the previous grant which paid 80% up to a maximum of £7,500.
- The grant does not need to be repaid but will be subject to Income Tax and self-employed national insurance.
- You do not have to have claimed the first grant to claim the second grant.
- You must have been adversely affected by Coronavirus on or after July 14th 2020.(see below).
- Other conditions are the same as for the first grant. The deadline for claiming under the first round is 13 July 2020.
What does “adversely affected” mean?
To qualify your business must have been “adversely affected” by the Coronavirus pandemic. For the sake of clarity: You can continue to trade and still claim the grant. Your business is adversely affected if the impact of Coronavirus meant that:
- You were unable work;
- Your sales were lower or your costs were higher.
- Your business was disrupted.
As before, we advise you to keep records to show how you have been adversely affected and in what period between 14 July to 13th October 2020. HMRC have provided some further details and examples: SEISS Second Grant Rules. Further guidance may be issued by HMRC before August.
What else do I need know?
Other rules for the second grant are similar to first grant such as:
- you must have traded in the 18/19 and 19/20 tax year and are continuing to trade, or would have traded if you were not adversely affected by Coronavirus.
- Businesses trading through a limited company do not qualify for this scheme. If you are thinking about transferring your business into a limited company you must take advice as this could affect your eligibility.
- Average maximum self-employed trading profits in the three years to 5 April 2019 were £50,000 and the majority of income needs to have come from self-employment.
- Your Self-assessment tax return for 2018/19 must have been filed by 23 April 2020.
The grant will be included as income when you file your 20/21 tax return (deadline 31 January 2022). If you normally claim a rebate on CIS income taxed at source, then the CIS refund due will be offset by the tax due on the grant.
Finally, your accountant cannot make the claim on your behalf. But if you need advice on any of the conditions or you are uncertain about anything please contact us.
One Final Word of Caution
The government is pushing through legislation to tackle abuse. This will give HMRC powers to investigate abuse of the SEISS scheme and raise assessments to claw-back SEISS together with fines of up to 100%. Examples of incorrect SEISS claims could include:
- Where a trade has not in fact continued after the 18/19 tax year because the business has ceased or because it transferred to a limited company.
- Where the business has not been adversely affected by Coronavirus.
Given that the most likely starting point for an investigation will be the 20/21 tax return, it could be a while before HMRC will start investigating. The legislation will introduce a 30-day window of opportunity for businesses to ‘confess’ of any errors or deliberate abuse.
The rules for the Self-Employed Income Support Scheme (SEISS) are subject to change as the government/HMRC issue further guidance and clarification. While we make every effort to make sure this guide is accurate and up to date, you should take professional advice before acting on the information provided here. If you contact us, we will be happy to help. Beans cannot take responsibility for actions taken and losses incurred as a result of actions taken or not taken based on the information provided here.