Like the CJRS scheme for employers, the initial HMRC guidance on the grant scheme to support the self-employed and members in partnerships was also very vague. The self-employed income support scheme (SEISS) allows the self-employed to claim 80% of their average profits for the period up to 2018/19, limited to £2,500 a month, initially for a three-month period.
Like CJRS there are lots of conditions that need to be reached, such as being self-employed in 2018/19 and continuing to trade in 2019/20 and 2020/21 or would be doing so if it the business had not been impacted by Coronavirus.
At the time of writing this, we are still awaiting details of the claims process but HMRC have recently updated their guidance on the calculation of “self-employed profits” and “total income”. In order to make a successful claim, the self-employed profits in 2018/19 must not exceed £50,000 and must be more than 50% of the individual’s total income. If that test is not met, then the same £50,000 and 50% tests are applied to average profits and total income over the three years (or shorter period) to 5th April 2019. We can of course help you determine whether you are eligible and assist you with your claim if required.
HMRC guidance has defined self-employed profits for the purposes of SEISS as turnover for the business less allowable business expenses and capital expenditure. This figure may not be the same figure as that originally declared in your self- assessment tax returns. If the calculation results in a trading loss the amount that is averaged is not nil for that year but the negative result.
HMRC state that total income for the purposes of the 50% test would be taxable income from all sources for the relevant year such as property income, bank interest, employment income and social security income.
There are still several unknowns but at least we now have bit more clarity. Unlike the furlough scheme, the self-employed can continue trading, albeit at a reduced level. We understand that HMRC will open the SEISS claims portal in early May and the grants will be paid to self-employed individuals in early June 2020.