Coronavirus - Self-Employed Scheme

6th May 2020 Corporate

The Chancellor has made a Treasury Direction under Sections 71 and 76 of the Coronavirus Act 2020 which was published on 1 May 2020. The direction sets out that HMRC is responsible for the payment and management of amounts to be paid under the Self-Employment Income Support Scheme (SEISS) and the legal framework for the scheme.

Following the direction, the guidance for claiming under the SEISS was updated on 1 and 4 May 2020 and the guidance can be found here.

From 4 May 2020, HMRC will begin contacting eligible claimants to invite them to claim a grant should they need it. The claims service will open on 13 May 2020.

Below we have outlined key points which arise from the direction:

Conditions to qualify under the scheme

  • the individual must carry on a trade the business of which has been adversely affected by reason of circumstances arising as a result of coronavirus or coronavirus disease. This criteria confirms that the grant does not apply to any self-employed person subject to fulfilling other financial criteria as was previously thought by many;
  • the individual must have completed a tax return in one of the relevant tax years (all or any of the tax years 2016-17, 2017-18 and 2018-19) previously it was thought that a tax return must have been completed for 2018/19;
  • the individual must have traded in 2018/19, 2019/20 and intend to trade in 2020/21; and
  • the individual must meet the “profit condition” which is set out in paragraph 5 of the direction. These conditions mean that the individual will need to have had an income of under £50,000 per annum.

To receive quick confirmation from the eligibility checker, individuals need to have their Unique Taxpayer Reference (UTR) and their National Insurance Number accessible and ensure that their details are up-to-date in their Government Gateway account.

Payment

Full details of the payment of the SEISS can be found in paragraph 6 of the direction. To accurately calculate the payment an individual is entitled to it is advisable to refer to this calculation in full. Typically, the calculation equates is 80% of 3 months' earnings, averaged over the last three years.

The direction has also clarified that the calculation does not credit earnings that have been received by the individual. Whilst, an adverse effect by reason of circumstances arising as a result of coronavirus or coronavirus disease is a requirement of SEISS, if trading profits have only marginally decreased the individual would still be entitled to receive up to the maximum SEISS payment in the sum of £7,500 in a single instalment.

If you want to discuss any of the content in this blog, please contact your usual JMW contact ​​​​on 0345 872 6666 or complete the contact form found on this page.

This article is for general guidance only and should not be used for any other purpose. It does not constitute and should not be relied upon as legal advice and reflects the position as at the time of writing (5th May 2020). We recommend that you review the daily updates and guidance issued by the government. ​​​​​

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Dominic Coyle is a Trainee Solicitor located in Manchesterin our Trainee Solicitors department

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Mark Heppell is a Partner located in Manchester in our Corporate department

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