Are you eligible for second grant?
Earlier this year the Government announced arrangements for the self-employed to potentially receive a grant to help mitigate the financial effects of COVID-19.
The scheme allowed the self-employed, if eligible, to claim a taxable grant of 80% of your average monthly trading profits, paid out in a single instalment covering 3 months and capped at £7,500.
The Government has recently extended this scheme, allowing those who qualify to claim a second grant for businesses adversely affected on or after 14 July 2020. This second and final grant can be claimed from 17 August 2020.
The second and final grant is worth 70% of your average monthly trading profits, paid out in a single instalment covering 3 months’ worth of profits, and capped at £6,570 in total. The online service will tell you how your grant was worked out.
As with the first grant, this will be subject to Income Tax and self-employed National Insurance.
Please note… you can make a claim for the second and final grant if you are eligible, even if you did not make a claim for the first grant.
Who can claim?
The basic criteria remain the same. You can claim if you are a self-employed individual or a member of a partnership, and:
- you traded in the tax year 2018 to 2019 and submitted your Self-Assessment Tax Return on or before 23 April 2020 for that year;
- you traded in the tax year 2019 to 2020;
- you intend to continue to trade in the tax year 2020 to 2021;
- you carry on a trade which has been adversely affected by coronavirus.
However, the Government have provided some more specific details regarding what it constitutes to be ‘adversely affected’, which are shown below.
- You are unable to work because you:
- are shielding;
- are self-isolating;
- are on sick leave because of coronavirus;
- have caring responsibilities because of coronavirus.
- You had to scale down, temporarily stop trading, or incurred additional costs because:
- your supply chain has been interrupted;
- you have fewer or no customers or clients;
- your staff are unable to come in to work;
- one or more of your contracts have been cancelled;
- you had to buy protective equipment so you could trade following social distancing rules.
Check if you are eligible to claim
HM Revenue & Customs now have an online tool which will allow you to find out if you are eligible to make a claim. This can be found at https://www.tax.service.gov.uk/self-employment-support/enter-unique-taxpayer-reference. You will need your self-assessment Unique Taxpayer Reference (‘UTR’) and National Insurance number for this – both of these appear on the first page of your annual Tax Return.
Once you have done this, and if you are eligible, you will be advised that “you need to use Government Gateway to sign in and add your contact details. If you do not have an existing Government Gateway user ID and password you should create them now”.
PLEASE NOTE – White Hart Associates as your agents CANNOT make this claim for you. HM Revenue & Customs did consider this option, but decided against it on the grounds of implementation speed and complexity. Therefore, you will need to set up your Government Gateway access now in order to be able to claim the grant. The link above details the way to do this.
How much you will get
You will get a taxable grant based on your average trading profit over the 3 tax years:
- 2016 to 2017
- 2017 to 2018
- 2018 to 2019
HM Revenue & Customs will work out your average trading profit by adding together your total trading profits or losses for the 3 tax years, and then will divide by 3.
The grant will be 70% of your average monthly trading profits, paid out in a single instalment covering 3 months, and capped at £6,570 altogether. The online service will tell you how HM Revenue & Customs have worked the grant out.
The grant amount will be paid directly into your bank account, in one instalment.
How to claim
The online service will be available from 17 August 2020. If you are eligible, HM Revenue & Customs will tell you the date you can make your claim from. If your claim is approved, you will receive your grant in one payment directly into your bank account.
After you have claimed
Once you have submitted your claim, you will be told straight away if your grant is approved. We will pay the grant into your bank account within 6 working days.
You must keep a copy of all records in line with normal self-employment record-keeping requirements, including:
- the amount claimed;
- the claim reference number for your records;
- evidence that your business has been adversely affected by coronavirus, which include:
- Business accounts showing a reduction in turnover.
- Confirmation of any coronavirus-related business loans you have received.
- Dates your business had to close due to lockdown restrictions.
- Dates you or your staff were unable to work due to coronavirus symptoms, shielding or caring responsibilities.
You will need to report the grant:
- On your Self-Assessment Tax Return.
- As self-employed income for any Universal Credit claims.
- As self-employed income and if you are working 16 hours a week for any tax credit claims.
Errors and Omissions
If after review you made a claim in error as you were not eligible for the grant, have been overpaid, or would like to make a voluntary repayment, you will need to tell HM Revenue & Customs and pay some, or all of the grant back.
The deadlines to inform HM Revenue & Customs of an error or omission will depend on the date you received your grant.
If you received the grant:
- before 22 July 2020 you must tell HM Revenue & Customs on or before 20 October 2020.
- on or after 22 July 2020 you must tell HM Revenue & Customs within 90 days of receiving the grant.
It is important that you inform HM Revenue & Customs of any errors to avoid costly penalties which could be up to 100% of the grant amount.
Details of how to inform HM Revenue & Customs of any errors can be found by following the link below:
Hopefully, the Self-Employment Income Support Scheme (‘SEISS’) claims process will run smoothly, but as ever we at White Hart Associates remain available to assist our clients in whatever way possible – please do not hesitate to contact us if required.