Following our previous update on 25th March 2020, please find below notable changes that have been released via gov.uk.

In places details remain limited, however, we will continue to update you promptly once further information is released.

Self-employment Income Support Scheme (SEISS)

This scheme will support self-employed individuals (including members of partnerships) whose income has been negatively impacted by COVID-19.

It will provide a grant to self-employed individuals or partnerships, worth 80% of profits up to a cap of £2,500 per month.

This grant will be taxable, although the detail hasn’t been released, we expect that it will be included in your self-assessment calculation for 2020/21 as income.

HMRC will use the average profits from tax returns in 2016-17, 2017-18 and 2018-19 to calculate the size of the grant.

It is open to those where the majority of their income comes from self-employment and who have profits of less than £50,000.

It will be open for an initial three months with people able to make their first claim by the beginning of June.

To be eligible for the scheme you must meet all the criteria below:

• Be self-employed or a member of partnership;
• Have lost trading/partnership trading profits due to COVID-19;
• Filed a tax return for 2018-19 as self-employed or a member of a trading partnership
• Have traded in 2019-20 and be currently trading at the point of application (or would be except for COVID 19) and intend to continue to trade in the tax year 2020 to 2021
• Have trading profits of less than £50,000 and more than half of your total income comes from self-employment. One of two methods can be used to calculate the total income from self-employment:

One of two methods can be used to calculate the total income from self-employment:

1. Trading profits and total income in 2018/19
2. Average trading profits and total income across up to the three years between 2016-17, 2017-18, and 2018-19.

To access the scheme you should NOT contact HMRC now.

HMRC will use existing information to check potential eligibility and invite applications once the scheme is operational. They will then pay the grant directly to bank accounts.

HMRC is urgently working to deliver the scheme; grants are expected to start to be paid out by beginning of June 2020.

Until these grants are released the self-employed are eligible for other government support including Universal Credit and the Business Interruption Loan Scheme (see Update 3 – 25th March 2020).

Coronavirus Job Retention Scheme

There has been a small amount of detail released since the Update 2 – 23rd March 2020.

In addition to providing a grant for 80% of wages of furloughed workers the grant will cover Employers National Insurance payments (if applicable) and basic pension contributions.

They expect the scheme to be up and running in the next few weeks with payments being made at the latest by the end of April.

If these timings leave you with short term cash flow concerns then the advice is to look at the Business Interruption Loan Scheme. (See Update 3 – 25th March 2020 for full details).

Directors of Limited Companies

No guidance has been released about directors of limited companies however the following points should be noted.

Directors are employees of the limited company.

Dividends are not classed as salary by HMRC and will not be covered by any scheme that has been detailed at this point.

It is unlikely that directors will be able to be furlough themselves so will not be eligible for the Job Retention Scheme. However in exceptional circumstances this may be applicable. Please contact us if you believe this applies to yourself.

VAT Deferral

We advised you in Update 2 that VAT liabilities that arise from 20 March to 30 June 2020 can be deferred and do not need to be paid until 5th April 2021.

Clients who normally pay by direct debit should cancel their direct debit with their bank if they are unable to pay. Please do so in sufficient time so that HMRC do not attempt to automatically collect on receipt of your VAT return.

If cash flow allows we recommend that you set aside all tax liabilities that are being deferred into a separate savings account and only use when necessary.

Companies House – Filing of Account 3 month extension

A joint initiative between the government and Companies House.

Following the agreement, companies will still have to apply for the three-month extension to be granted, but those citing issues regarding Covid-19 will be “automatically and immediately granted an extension”.

If you wish to apply for a three-month extension, please contact us in order for us to process the application online on your behalf.