Yesterday (April 14th), the Government issued further guidance on the SEISS and how they are going to help those who are self-employed and have been significantly affected by Coronavirus. This has provided further clarification of some points mentioned in my earlier article.
One of the main queries related to how trading profits were going to be calculated and HMRC has now confirmed that for the purposes of the grant, trading profits will be those included on your tax return and will include any capital allowance claims which have been made. If you have multiple trades, all the profits and any losses will be added together to determine your total trading profits for the year and this of course includes any partnership profit shares. Unfortunately, HMRC has still not clarified if any income from Furnished Holiday Lets will be deemed trading income, so we will need to await further clarification on this point.
HMRC has confirmed that they are only taking into account any amended returns which were submitted before 26 March 2020 – so there is no opportunity to amend any returns which have been submitted for the purposes of the grant.
HMRC have also confirmed that in year losses will be deducted in full in the calculations. Therefore if you suffered a loss in one of the three years, this loss will be taken into account in calculating your average profits for both the calculation of the grant and to see if your annual trading profits, for 2018/19 or as an average across the three years, are less than £50,000. If you have multiple trades, any losses will also be included when calculating the annual total. This means that if you suffered a large one-off loss during one of the years, this may impact the amount of grant you will be able to claim.
However, any losses brought forward from earlier years will not be taken into account and, if you are a farmer, neither will any adjustment for a Farmer’s Averaging Claim. Each year will be looked at in isolation – pardon the pun!
In order to be eligible for SEISS, your annual trading profits need to make up over 50% of your total annual income, which includes employment and pension income, savings and dividend income and rental profits. HMRC have now stated that social security income will also be included but have issued no further details on this. We would anticipate that only taxable social security benefits will be included but await further clarification to see if they will also include any non-taxable social security benefits.
There were some uncertainties regarding the timescale of making the claims and HMRC have now announced that they aim to contact those who they believe are eligible by mid May, in the hope of paying any grants by the beginning of June 2020. They will send an invitation and the applications will be made through the Gov.uk online service. Please watch out if you receive any texts, emails or phone calls from “HMRC” asking for further personal details to make the claim – this is likely to be a scam.
Further steps on how to claim will be announced shortly by HMRC and hopefully this will also provide details of how to apply if you think you are eligible and do not receive an invitation.
While waiting to receive the grant, some people have been looking to seek temporary employment or volunteer work to help in the community. The Government have confirmed that this will not impact your grant and of course you are still able to continue operating your business wherever possible. But obviously you will need to start your business back up after the pandemic has ended, to ensure you meet the eligibility criteria.
Others have been looking at claiming Universal Credit in the meantime and applications can be made online or by phone, but please remember any grant received will count towards your income for Universal Credit purposes.
If you would like to know any more information relating to your individual circumstances and how much grant you are likely to receive, then please get in touch with your usual point of contact at Albert Goodman.