13 Aug Update on Self Employment Income Support Scheme
If you’ve been following our recent posts, you’ll know we’ve been working flat out to ensure our guidance is up to date in accordance with how the Government continues to respond to the ongoing Covid-19 situation.
Whilst here at Link Accounting we specialise in limited businesses looking to accelerate growth, we also have a large client base of ambitious self-employed folk in and around the Banbury area (and beyond!).
So today’s update is on the Self Employment Income Support Scheme (SEISS) and covers:
- Application dates
- Are Grants taxable?
- Scam alert
If you have any questions on the SEISS, it’s worth checking out my Q&A blog, which was in early response to the Chancellors announcement, as a first port of call.
If you haven’t already applied for the SEISS grant, then take a look at our quick help video guide that will walk you through the process. The first step is obviously to check your eligibility, and HMRC has helpfully released an online eligibility checker tool if you are unsure.
For more information on eligibility read the updated guidance from HMRC. You will be told straight away if your claim has been successful, and if it is you will receive payment into your account within 6 working days.
Most importantly, I know I’ve made the point before but I need to make it again – you will need to register for a Government Gateway login if you’ve not already done so, because this is how the grant will be administered to you.
No Gateway, no grant. Simple.
Remember that HMRC is not giving agents access to make claims for you. This means you need to make the claim yourself if you are contacted by HMRC.
Two SEISS grant payments are claimable under the scheme, for different amounts:
- First grant for the period ending 13th July 2020 capped at £7,500
- Second grant for the period from 14th July 2020 capped at £6,570
The deadline for claiming the first grant was 13th July 2020. Unless you fall into the extended rules for those with parental responsibilities or military reservists, it is no longer possible to make a claim for the first grant.
To claim for the second round of grants, your business must have been adversely affected on or after 14th July 2020.
Claims for the second round of grants at the lower rate may be made from 17th August with a deadline of 19th October 2020.
Are grants taxable?
Now for the clanger, although the government has named the SEISS ‘grants’, you may be tempted to believe they would be tax exempt. Unfortunately not and you may actually be liable for as much as a third of the grant you received.
The grant is intended to replace what you would have ordinarily earned as your taxable income, so you’ll need to declare this money on your self-assessment tax return, and pay income tax and Class 4 National Insurance on it.
Although, because of the timing of the scheme, the grants made under the SEISS are most likely to be included on your 2020 – 2021 tax return, there is still some time before you’ll need to pay back the taxes on these by 31 January 2022.
Heads up people, don’t spend it all at once. However tempting it may be to book the summer off and slope off to the seaside in this tropical heat we’re experiencing, our advice to you is save some of the money to contribute to those taxes so you don’t have any nasty surprises later.
As you’re required to keep a record of the amounts received this will help you to estimate what the likely tax charge on your income will be by using the anticipated tax rates. For most, these are likely to be 20% income tax and 9% on NI.
There are known scam emails being sent around, so be careful of fraudsters pretending to be HMRC or the government and requesting your bank account details.
You will be asked to access the SEISS and provide your contact and bank details only through gov.uk and never through responding to any email from ‘HMRC’ or by activating a link.
If you do receive any email or text message you think may be scam related then please forward these to HMRC’s phising team – firstname.lastname@example.org and give details of what you’re reporting in the subject line (e.g. ‘Suspicious email address’ or ‘twitter scam’).
As ever, if you need support with this or any other part of your Self Employed accounting, we’d be happy to help. Just book a free 30 minute consultation to discuss how we could work best together by clicking here >