What is the Government's Self-Employed Income Support Scheme?
On 26th March 2020 the government announced a package of support for self-employed people. You can find out more on the Government’s website, and we’ve outlined it below.
UPDATE 29TH MAY 2020: The Government has extended the SEISS until the end of August.
How does it work?
- For the months of March, April & May self-employed people will be able to apply for a taxable grant worth 80% of their average monthly profits, up to a total of £7,500 for the three month period (applications close 13th July 2020).
- Payments will be made in June (backdated to the 1st of March).
- For the months of June, July & August self-employed people will be able to apply for a taxable grant worth 70% of their average monthly profits, up to £6,570 for the three month period (application are not yet open, they will open some time in August).
- HMRC will use the average profits from tax returns in 2016/17, 2017/18 and 2018/19 to calculate the size of the grant.
- In addition to the taxable grant, if you are able to trade you can continue to do so.
- For those struggling with cash flow in the meantime, the Chancellor recapped some of the other support measures available; Coronavirus Business Interruption Loans Scheme (CBILS), Bounce Back Loans (BBL), deferred payments on account from Jul 2020 to Jan 2021 and Universal Credit.
Who can get it?
- Self-employed individuals (including members of partnerships) whose income has been negatively impacted by Covid-19.
- This will be available for those with trading profits of up to £50,000.
- If you have trading profits of over £50,000, you will not be eligible for support (the chancellor suggested this would affect ~5% of the self-employed workforce).
- You need to have completed your 2018/19 tax return by 26th March 2020.
What happens next?
- You should check if you can claim a grant through the scheme and find out when you’ll be able to make a claim.
- You'll then need to fill out an online application form.
- To do this, you’ll need your Self Assessment Unique Taxpayer Reference (UTR), National Insurance number and Government Gateway user ID and password.
- HMRC will check your claim and, if approved, pay your grant into your bank account within 6 working days. You'll receive an email when your payment is on its way.
Catch up on the latest with a full round up of all government support available
We believe the government can do more
1. Sole traders that have not submitted a 2018/19 self-assessment are excluded
By not allowing 2019/20 tax year data in the relief, the Government is penalising those that started their self-employed journey in the last 24 months. They also aren’t using the latest trading data for self-employed people.
Proposed solution: Allow 2019/20 self-assessments submitted after the 5th April to be included in the SEISS calculation.
2. Those who recently transitioned to full-time self-employed are missing out
At least 50% of your income in 2018/19 (or as an average across the three years prior) must be from self-employment to qualify for SEISS. As many self-employed people start as a “side-gig”, they may only have recently gone full-time self-employed and don’t get support.
Proposed solution: Consider the self-employed income percentage in the most recent tax year following early submission of 2019/20, rather than the average over 3 years. To avoid double claiming, exclude anyone who has been furloughed by an employer.
3. Waiting 3 months until payments under SEISS is too long
The estimate for payment of the SEISS is in June and we believe this needs to change, fast. Members of the self-employed community are struggling to pay their mortgage, bills and buy food today.
Proposed solution: Get payments to people faster through HMRC, or earmark some of the CBILS funding to those with early confirmation of eligibility for SEISS from HMRC, 100% guaranteed by the Government.
4. Limited company owners are left out
Many self-employed people operate under a limited company. Sole directors of limited companies are not included in the SEISS, leaving them to get support elsewhere.
HMRC has now confirmed that sole directors and sole employees of a limited company can treat themselves as “furloughed” under the Coronavirus Job Retention Scheme, if they no longer have work. This means they can claim up to 80% of their monthly salary.
The campaign principles
When we started this campaign we wanted to make sure we removed any commercial interest, a sentiment felt across our entire team. So these are our principles:
1. We will purge all emails gathered once the campaign is over.
2. We will purge all data gathered through any software we build, regardless of whether it's on our platform, unless the customer actively and expressly consents to ongoing communications.
3. We won't restrict any partnerships, regardless of how competitive.
What we're doing
As a collective of organisations who work to support the self-employed community we are working hard to address the gaps above. Here’s how.
1. Bring our collective voices to push the Government to extend support to include those they’ve missed
It’s important to make clear that it’s the Government that has the most influence over the outcome for the self-employed community.
Many of the ideas we’re sharing and delivering to support, may never work without changes to government policy. As a result, the bulk of our efforts at the moment are focussed on influencing these outcomes as much as possible.
We can't promise that we'll achieve our aims, but we’ve started a project to direct our efforts and energy to called The Campaign for Self-employed Income Support. The Campaign is evolving fast with new supporters and partners joining all the time.
2. Share regular and reliable information and analysis of the evolving support available
With the landscape of the Covid-19 pandemic changing daily, updates on government support are evolving rapidly. Our team is constantly digesting the latest updates and sharing them with the community.
This page will be kept updated with the latest information, and you can register your email to be included on our regular updates.
3. Release a free-to-use Self-Assessment Calculator for fast 2019/20 tax returns
Much of our lobbying efforts to address the gaps in the current schemes is to allow people to use the figures in their 2019/20 self-assessments to qualify for support.
Assuming the Government goes ahead with this, to help take the headache out of pulling together and analysing all the data you need to complete your Self-Assessment, Coconut has launched a free-to-use web tool, built on their existing accounting and tax technology.
This is available to everyone, regardless of whether you are an existing Coconut customer or not.