Update on the Self-Employed Income Support Scheme (SEISS)

This blog was written by Chris Hodgson, Tax Associate.

The first details of SEISS were announced on 26 March 2020, with little further information being announced at first, but the gaps in knowledge are now starting to be filled.

I have now found three further sources; a Briefing Paper in the House of Commons Library, a recording of a question and answer session between Jim Harra, Chief Executive of HMRC and the members of the Treasury Select Committee, and information contained on the website of the Low Income Tax Reform Group.

I would first give the caveat that SEISS is a work in progress and so some details may change and HMRC may not meet their own deadlines, but I felt that the information would be of interest.

What are the rules?

The rules on eligibility state that your self-employment income must be less than £50,000 and the self-employment income must be more than half of your total income. We now know that this test can be met in one of two ways, and if you are eligible on either of the two bases, you can receive SEISS. They are:

  • Your self employment income for 2018/19 is less than £50,000 and the self employment income is more than half of total income for 2018/19.
  • Your average self employment income for 2016/17, 2017/18 and 2018/19 is less than £50,000 and that average is more than half of the average of your total income for the same three years.

To reiterate, if the conditions are met for either of these two options, and the other conditions are met, you appear to qualify for SEISS. The other conditions are that you:

  • Have submitted your Income Tax Self Assessment tax return for the tax year 2018-19
  • Traded in the tax year 2019-20
  • Are trading when you apply, or would be except for COVID-19
  • Intend to continue to trade in the tax year 2020-21
  • Have lost trading/partnership trading profits due to COVID-19

What do you need to do next?

There is nothing more for a claimant to do now. HMRC will contact you, if, based on the information they hold, they think that you will qualify for SEISS. The recording of the Treasury Select Committee proceedings gives us important information on timing. Jim Harra advised that HMRC intend to contact taxpayers in the middle of May and that payment under SEISS would be made early in June.

When HMRC contact you, at the same time as they tell you that they consider you to be eligible, they will ask for your bank account details. This is because, unlike with a PAYE scheme, HMRC do not have bank account details for all self-employed people. The statement that taxpayers will be contacted in the middle of May is helpful, as we can follow up with the clients who we think are eligible to make sure that they have heard from HMRC.

Who will not benefit from SEISS?

The Select Committee proceedings confirmed two groups of people who will not benefit from SEISS.

If you started self-employment on or after 6 April 2019, you will receive no payment, even though you could prove that you are self-employed now. HMRC knows that this produces unfairness, but in the words of Jim Harra, when creating SEISS speed of response trumped perfection and this is not likely to be changed.

If you have your own limited company, Jim Harra confirmed that you are not self-employed and so will not benefit from SEISS. Also while you could potentially furlough yourself, if you are going to do no work for the company, any payment is purely based on your salary from the company, and ignores any dividends.

Details of the operation of SEISS will be further clarified by HMRC over the coming weeks, and when we know of the changes, we will update our guidance.

Contact us

For further information, please contact Chris Hodgson at chris.hodgson@taitwalker.co.uk.