Round 2 for SEISS

HMRC has announced that in August, self-employed individuals who meet the criteria for the Self-Employed Income Support Scheme (SEISS) will be invited to apply for a second grant. This will be in addition to anything they received in May/June under the first round of the same scheme.

There are some significant changes as to how the grant is calculated, although many of the rules applying with the regard to the first grant will apply with regard to the second grant meaning that effectively the same eligibility criteria will apply. The principal change is a drop from 80% of averaged profits to 70% of the same figure. So, the second grant is equal to the lower of A and B where:

• A is the self-employed person’s average monthly trade profits × 70% × 3; and
• B is £6,570.

Although applications for the first grant must be made on or before 13 July, failure to make a claim for the first grant does not prevent you from claiming the second grant.

It's also probably worth a brief reminder of what the eligibility criteria are for both tranches of the SEISS. You can claim if you’re a self-employed individual or a member of a partnership and all of the following apply:

• 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

You can check your eligibility on HMRC's website here: https://www.gov.uk/guidance/claim-a-grant-through-the-coronavirus-covid-19-self-employment-income-support-scheme#eligible

It's also worth mentioning that you don't have to be "out of work" to claim under SEISS, that final point of eligibility is the interesting one, that your trade has been adversely affected by coronavirus. HM Treasury have published a Direction setting out the legal framework of SEISS, unfortunately (as with a lot of legislation) it doesn't helpfully define what "adversely affected by coronavirus" means. So, that must leave us to assume (for now) that it relates to a period of non-working, or of reduced profits due to reduced working. It would seem to prove to be a very grey area for now at least.

Finally, of course SEISS is going to be taxable in 2020/21, so check out my blog on that here.

How is your self-assessment tax affected by Coronavirus?

Due to the government’s measures to keep the economy running during the coronavirus pandemic, the 31st January 2020 is set to be a Self Assessment deadline unlike anything we've seen before. Following on from my recent blog on the subject, HMRC and HM Treasury have made unprecedented changes to the tax system to support taxpayers, but how is it likely to affect your self-assessment in the long run?

The principal effect for self-assessment taxpayers (self-employed, landlords, company directors, members of partnerships and so forth) relates to the Chancellor's announcement that if you are due to make a payment on account on the 31st July 2020, you can defer this to the 31st January 2021. You don't need to tell HMRC that you’re deferring the payment, and they will not charge any of the normal interest and penalties for late payment as long as it is made in full either on or before 31st January 2021.

However, it's worth remembering that in terms of cashflow, pushing your payment on account back to January, you will effectively have to pay what you owe HMRC all in one month, which will potentially cause greater harm to your cash flow in the long run. This can be avoided by mapping out your finances ahead of time.

Also, see my blog on how you can use lockdown to your advantage in getting your taxes sorted early this year. The earlier you file your 2019/20 Self Assessment tax return, the sooner you’ll know how much you will owe come 31st January 2021 (especially if you've deferred your July payment on account).

Finally, it's worth remembering that if lockdown means you’re now working from home, you could also stand to make further savings on your 2020/21 tax bill. Start by monitoring your utility and phone bills. You can claim a proportion of certain bills as expenses, provided they’re deemed ‘allowable’ and are for business purposes.

Taxation of UK Coronavirus Support Payments

There is new draft UK legislation for addition to FA 2020 for the taxation of coronavirus support payments:

https://www.gov.uk/government/consultations/draft-legislation-taxation-of-coronavirus-covid-19-support-payments

It applies to individuals, businesses, partnership members, and employers. The legislation confirms the taxability to Income Tax or Corporation Tax of all such receipts subject to business profits on normal principles.

The legislation also provides for Income Tax assessments at 100% of any amount to which the recipient was not entitled and gives HMRC the power to levy penalties upon any deliberately incorrect claims – subject to a 30-day self-reporting window. Furthermore, the legislation will make culpable company officers jointly and severally liable to Income Tax for deliberate false claims where the company could not pay the assessment.

What they giveth with one hand...