It's all fairly confusing about what help is out there at the moment.
Yesterday the Chancellor announced the Self-employment Income Support Scheme (SEISS).
Here is our recap of the announcement and what it means (SO FAR).
SEISS will support self-employed individuals (including members of partnerships) whose income has been negatively impacted by COVID-19.
The scheme will provide a grant to self-employed individuals or partnerships, worth 80% of their profits up to a cap of £2,500 per month.
HMRC will use the average profits from tax returns in 2016-17, 2017-18 and 2018-19 to calculate the size of the grant.
The scheme will be open to those where the majority of their income comes from self-employment and who have profits of less than £50,000.
The scheme will be open for an initial three months with people able to make their first claim by the beginning of June.
How do I apply?
HMRC will use existing information to check potential eligibility and invite applications once the scheme is operational. HMRC is urgently working to deliver the scheme; grants are expected to start to be paid out by beginning of June 2020.
Am I Eligible?
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;
File a tax return for 2018-19 as self-employed or a member of a trading partnership. Those who have not yet filed for 2018-19 will have an additional 4 weeks from this announcement to do so;
Have traded in 2019-20; 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 come from self-employment. This can be with reference to at least one of the following conditions:
Your trading profits and total income in 2018/19
Your average trading profits and total income across up to the three years between 2016-17, 2017-18, and 2018-19.
I'm a Director of my own company...what about me?
In short, we are still waiting for guidance from the government on how sole directors are treated. We, long with many other accountants and our professional body are on the case to get this clarified.
The Self employed scheme is not available for directors. Their guidance ambiguously states:
"If you’re a director of your own company and paid through PAYE you may be able to get support using the Job Retention Scheme."
...But can you?
The Job Retention Scheme is for employees that would otherwise lose their jobs as a result of COVID-19. Under the Job retention scheme you could get paid 80% of your PAYE wages, up to a monthly cap of £2,500.
You cannot undertake work for your 'employer' (your business) while on furlough.
This is what we know so far:
Once you are on furlough you will not be able to work for your employer; you are now in any way able to undertake any action to be - making money for your employer - providing services to your employer
Companies also have to have an active officer in the business at all times...
When it comes to sole directors, the guidelines are tricky. There is a LOT of unverified information doing the rounds.
Please chat to us directly if we act as your accountants, or to your accountant to get tax advice.
Information as of 27th March 2020