Magee Gammon Self Employed

Guidance for the Self Employed

We fully understand the difficulties that you may be facing in these uncertain times and we want to assure you that our team are here to help. To find out how we can support you, please speak to one of our team today.

The information included on this page is our interpretation of what has been published at this time, this may change in the future as further information and clarity of the information already published becomes clearer. We will be updating this page regularly.

 


Updated – 3rd July 2020

UPDATED: How different circumstances affect the self-employment income support scheme

The Government has updated the guidance for self-employed or member of a partnership to explain how certain circumstances can affect your eligibility for the scheme.

The Self-Employment Income Support Scheme currently allows you to claim a taxable grant worth 80% of your average monthly trading profits, paid out in a single instalment covering 3 months’ worth of profits, and capped at £7,500 in total. If you are eligible you must make your claim for the first grant on or before 13 July 2020.

See: https://www.gov.uk/guidance/how-different-circumstances-affect-the-self-employment-income-support-scheme?utm_source=c63f4c2e-b35f-4f36-934a-d94f13b8d29f&utm_medium=email&utm_campaign=govuk-notifications&utm_content=immediate

This scheme is being extended until 19 October 2020. You will be able to claim a second and final grant from 17 August 2020 when the online service will be available.

HMRC will work out your eligibility the same way as the first grant. If you make a claim for the second grant you will have to confirm your business has been adversely affected on or after 14 July 2020.

This grant will be a taxable grant worth 70% of your average monthly trading profits, paid out in a single instalment covering a further 3 months’ worth of profits, and capped at £6,570 in total.

You can claim for the second and final grant even if you did not make a claim for the first grant.

The online service for the second and final grant is not available yet. We will update you when the second grant is available. In the meantime see:

https://www.gov.uk/guidance/claim-a-grant-through-the-coronavirus-covid-19-self-employment-income-support-scheme#extension


Updated – 30th June 2020

Self-employed grants ‘are liable for tax and national insurance’

Recipients of self-employed income support grants may not realise they are taxable, a tax group has warned.

The grants are worth up to 80% of trading profits, paid in a lump sum to cover three months, and capped at £7,500.

More than 2.6 million lump sums worth £7.6 billion had been provided through the scheme up to 21 June 2020, equating to in excess of half the UK’s entire self-employed population.

Up to a third of those grants may have to be repaid in income tax and class 4 National Insurance contributions (NICs) in a 2020/21 tax return, due on or before midnight on 31 January 2022.

The Low Incomes Tax Reform Group (LITRG) fears recipients may assume the lump sums are exempt from income tax and NICs as they are labelled ‘grants’.

The LITRG said self-employed subcontractors in the construction industry will need to watch out for the grants being paid without tax taken off.

This is different to their other income, which is usually taxed before they receive it, and may mean they miss out on their usual refund after submitting their 2020/21 tax return.

Victoria Todd, head of LITRG, said:

“Many claimants might use the money as soon as they get it, for example, to catch up on liabilities or to meet essential living costs – but they need to think now about budgeting for income tax and NICs on it.

“The timing of the grants – early in the tax year – means that individuals might have to forecast their total taxable profits for 2020/21, so they can estimate the amount of tax and NICs due on the grant.

“For many, this is likely to be 20% income tax and 9% Class 4 NICs.

“HMRC needs to publicise that the grants are chargeable to income tax and NICs, to reduce the risk of people getting higher-than-expected tax bills.”

We can handle your 2020/21 tax return.


Updated – 12th June 2020

How different circumstances affect the self-employment income support scheme

The Self-Employment Income Support Scheme currently allows you to claim a taxable grant worth 80% of your average monthly trading profits, paid out in a single instalment covering 3 months’ worth of profits, and capped at £7,500 in total.

If you are self-employed or member of a partnership find out how your circumstances can affect your eligibility for the scheme.

If you are eligible you must make your claim for the first grant on or before 13 July 2020. This scheme is being extended. Different circumstances may affect your eligibility.

How the grant works

If you receive the grant you can continue to work, start a new trade or take on other employment including voluntary work, or duties as an armed forces reservist.

The grant does not need to be repaid but will be subject to Income Tax and self-employed National Insurance.

HMRC will work out if you are eligible and how much grant you may get. But you can follow these steps to help you understand how we will do this and what you can do now.

To work out your eligibility HMRC will first look at your 2018 to 2019 Self-Assessment tax return. Your trading profits must be no more than £50,000 and at least equal to your non-trading income.

If you are not eligible based on the 2018 to 2019 Self-Assessment tax return, they will then look at the tax years 2016 to 2017, 2017 to 2018, and 2018 to 2019.

Find out how HMRC will work out your eligibility including if they have to use other years here:

https://www.gov.uk/guidance/how-hmrc-works-out-total-income-and-trading-profits-for-the-self-employment-income-support-scheme

Grants under the Self-Employment Income Support Scheme are not counted as ‘access to public funds’, and you can claim the grant on all categories of work visa.

You must make the claim yourself. Your tax agent or adviser must not claim on your behalf as this will trigger a fraud alert, and you will have to contact HMRC. This will cause a significant delay to you receiving your payment.

How different circumstances affect the scheme:

Check if your circumstances affect your eligibility for the following situations:

See: https://www.gov.uk/guidance/how-different-circumstances-affect-the-self-employment-income-support-scheme


Updated – 19th May 2020

Self employed deferment of second payment on account

Option for self-employed to defer their second payment on account due 31 July 2020

Choose how and when you can delay making your second payment on account for the 2019 to 2020 tax year.

You have the option to defer your second payment on account if you are:

You can still make the payment by 31 July 2020 as normal if you are able to do so.

HMRC will not charge interest or penalties on any amount of the deferred payment on account, provided it is paid on or before 31 January 2021.

If you want to pay in full

You can pay your second payment on account bill in full any time between 31 July 2020 and 31 January 2021 using the online service.

If you want to pay in instalments

You need to contact HMRC if you already have overdue tax which you are paying through a Time to Pay instalment arrangement and want to include your second payment on account in that arrangement.

If you do not have other overdue taxes, you can make your payment in instalments any time between now and 31 January 2021 by setting up a budget payment plan.

Payments made by Direct Debit

If you choose to defer and normally make your payments on account by Direct Debit, you should cancel your Direct Debit through your bank as soon as possible so that HMRC will not automatically collect any payment due. You can cancel online if you are registered for online banking.

After the deferral ends

The usual interest, penalties and collection procedures will apply to missed payments.

How to get help

If you are still struggling to pay your tax bill by 31 January 2021, or you’re experiencing other financial difficulties you can contact HMRC’s Time to Pay service.

Telephone: 0300 200 3835

Link:

https://www.gov.uk/guidance/defer-your-self-assessment-payment-on-account-due-to-coronavirus-covid-19


Updated – 5th May 2020

Self Employment Income Support Scheme (SEISS)

The Government have recently updated their guidance as to how claims under the Self Employment Income Support Scheme is to be managed.  This scheme is designed to provide a grant to self-employed people enabling them to claim 80% of their average profits over the last three tax years, with the grant capped at £7500, but subject to certain conditions, including excluding those with profits over £50,000 or with over 50% of their income coming from other sources.

The new guidance makes it clear that the tax payer has to make this claim and this can’t be done by their agents.  There are a number of pieces of information that have to be provided and you will have to set up a personal tax account, if you do not already have one,  but you can also check your eligibility before making the claim.

Please note that It is possible for your agent to run the eligibility check for you.  We can also assist clients with providing the necessary information required for the claim.

The details of the scheme can be found here.

https://www.gov.uk/guidance/claim-a-grant-through-the-coronavirus-covid-19-self-employment-income-support-scheme#claim

Please contact your usual point of contact should you have any queries regarding this.


Updated 21st April – 2020

Government SEISS guidance updated

To help people that are eligible for the Self-Employed Income Support Scheme (SEISS) the Government has updated its guidance to confirm essential points.

Tax

The grant will be subject to Income Tax and National Insurance contributions but does not need to be repaid.

Universal Credit

Many people awaiting payment from the SEISS grant may have made applications for Universal Credit.  The Government has confirmed that you should record the grant as part of your self-employment income and that it may affect the amount of Universal Credit you get. However, it will not affect Universal Credit claims for earlier periods.

Eligibility

Alongside the existing conditions outlines in its previous guidance, HMRC has said that self-employed people will have to confirm that their trading has been adversely affected by Coronavirus. To assess this the tax authority will use a ‘risk-based approach’ to compliance.

Self-Assessment extension

If you have not submitted your Self-Assessment tax return for the tax year 2018 to 2019, you must do this by 23 April 2020 or you will not be able to claim. HMRC has confirmed that it will review any late returns in the usual way.

This is important as HMRC will use data from 2018-2019 tax returns to identify those eligible.

Loan charge

If you are self-employed and have received payment in the form of a loan or any other form of credit covered by the loan charge, you may be able to apply for the grant.

However, your eligibility and average trading profits will be based on either:

You also do not have to file your 2018 to 2019 Self-Assessment tax return by 23 April 2020. You should file by the 30 September 2020.

Claims process 

Self-employed individuals are unable to claim until HMRC has contacted them to confirm eligibility. The tax authority has said that it aims to contact those that are eligible by mid-May and will invite people to claim using the GOV.UK online service, which is currently being developed.

If you’re unable to claim online an alternative way to claim will be made available to you, details of which HMRC hopes to announce soon.  You should not contact HMRC, as it has said this will only delay the urgent work being undertaken to introduce the scheme.

Once a claim is processed

Once HMRC has received a claim and the grant is approved, it will contact you to tell you how much you’ll get and the payment details. HMRC has re-iterated that it will make payments by early June 2020.

How total income and trading profits will be calculated for the Self-Employed Income Support Scheme

You can claim for the Self-employment Income Support Scheme (SEISS) if you’re a self-employed individual or a member of a partnership and you:

To be eligible for the scheme your trading profits must also be no more than £50,000 and more than half of your total income for either:

HMRC has confirmed that eligibility and how the grant is paid will be based on your total income and trading profits and has released detailed guidance on what will count.

Calculating trading profits

HMRC will use the figures on your tax returns for your total trading income, more commonly referred to as turnover and deduct all allowable business expenses and capital expenditure.

The expenses include:

HMRC will also take into consideration:

Any losses carried forward from previous years and the personal allowance will not be deducted from trading profits.

Calculating Total Income

HMRC will also consider other income reported on your self-assessment return. Your total income is the total of all your:

Eligibility

Your trading profits must be no more than £50,000 and more than half of your total income for either:

To help people interpret these rules, HMRC has published helpful examples online that demonstrate how the rules will be applied, which can be found by clicking here.

You cannot apply for this scheme yourself. HMRC will aim to contact you by mid-May 2020 if it believes you are eligible and will make payments by early June 2020.

If you are not contacted but believe you may be eligible for the scheme, please speak to our team at the earliest opportunity.


Updated – 15th April 2020

Detailed guidance published on the Self-Employed Income Support Scheme

HM Revenue & Customs (HMRC) has published detailed guidance on the working of the Self-Employed Income Support Scheme (SEISS), which was announced by the Chancellor as part of the Government’s response to the economic impact of the coronavirus crisis.

SEISS will pay self-employed individuals an amount equivalent to up to 80 per cent of their average monthly trading profits, capped at £2,500, to cover at least the three months from March. The amount will be paid in a single lump-sum and will be based upon tax returns from 2016-17, 2017-18 and 2018-19.

Crucially, self-employed individuals will still be able to do business while they are in receipt of a grant from the scheme.

To qualify for the scheme, a self-employed individual must have trading profits of no more than £50,000 and must receive the majority of their income from self-employment. They must also have submitted a Self-Assessment Tax Return for 2018-19. Anyone who has missed the deadline has until 23 April 2020 to do so before they become ineligible for the scheme.

The new guidance confirms that HMRC will use turnover figures provided on tax returns and then to calculate trading profit, it will deduct expenses including:

At the same time, HMRC has confirmed that it will not deduct losses carried forward from previous years from trading profits, nor will it deduct an individual’s personal allowance.

Applications to the scheme are expected to open in mid-May 2020 via an online portal. HMRC will contact self-employed individuals it identifies as being eligible with details of how to apply.

HMRC has also issued a fraud warning, saying that texts, calls or emails claiming to be from HMRC and asking people to click a link to provide personal information will be a scam.


Updated – 27th March 2020

Coronavirus Self Employed Income Support Scheme (CSEISS)

Following the announcement that businesses will be reimbursed by HM Revenue & Customs (HMRC) for 80 per cent of the employment costs of ‘furloughed’ workers for at least three months from March, the Chancellor has announced a similar scheme for self-employed individuals.

The Self-Employed Income Support Scheme (CSEISS) will pay self-employed individuals an amount equivalent to up to 80 per cent of their average monthly trading profits, capped at £2,500, to cover at least the three months from March. The amount will be paid in a single lump-sum and will be based upon tax returns from 2016-17, 2017-18 and 2018-19.

Crucially, self-employed individuals will still be able to do business while they are in receipt of a grant from the scheme.

To qualify for the scheme, a self-employed individual must have trading profits of no more than £50,000 and must receive the majority of their income from self-employment. They must also have submitted a Self-Assessment Tax Return for 2018-19. Anyone who has missed the deadline will have four weeks from 26 March 2020 to do so before they become ineligible for the scheme.

People who pay themselves a salary and dividends through their own company will not be eligible for the scheme, but could be eligible for the Coronavirus Job Retention Scheme if they use PAYE.

HMRC will contact everyone eligible for the scheme directly, inviting them to apply for the support via an online portal. The Chancellor said that the first payments will be made at the beginning of June 2020.

The full criteria for qualification for the scheme are:

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