01 April 2020

UK Self-Employment Income Support Scheme

The UK Chancellor, as part of the government’s package of financial support in response to the coronavirus COVID-19 virus disruption to the UK economy, has announced financial support for self-employed individuals and members of partnerships.  The Self-Employment Income Support Scheme (SEISS) is being rolled out to aid eligible self-employed individuals to claim financial support from the government from lost income arising from the impact of COVID-19 on the UK economy.  

Who is eligible for SEISS support?

Financial support via SEISS will be available to self-employed individuals or members of a partnership who meet the following criteria:

  • they have submitted their Income Tax Self Assessment tax return for the tax year 2018-19;

  • have traded in the tax year 2019-20;

  • are trading at the time of applying for SEISS support (or would have been trading except for the COVID-19 disruption);

  • intend to continue trading in the tax year 2020-21;

  • have lost trading or partnership trading profits due to COVID-19 disruption; and

  • self-trading profits must be less than £50,000 and at least half of your income is derived from self-employment.

How are the threshold tests for self-trading profits determined?

The requirement for SEISS applicants to have derived at least half of their income from self-employment and that self-trading profits be less than $50,000 is determined by at least one of the following conditions being met:

  • trading profits or partnership trading profits in the 2018-19 tax year of less than £50,000 and these profits constituted more than half of the applicant’s total taxable income for that tax year; or

  • average trading profits in the tax years 2016-17, 2017-18 and 2018-19 of less than £50,000 and these profits constituted more than half of the applicant’s average taxable income in the same period.

Assessment of compliance with the threshold test will be based on filed self-assessment tax returns held by HMRC, so applicants who started trading between the commencement of the 2016-17 tax year and the end of the 2018-19 tax year will only be assessed based on their filed tax returns.

UK tax years commence on 6 April of a calendar year and end on 5 April on the following calendar year.

How much financial support will SEISS provide?

SEISS support will provide 80% of average monthly profits over the relevant tax years up to a cap of £2,500 per month for a period of 3 months.  Assuming that 3 tax returns are available for an applicant, their total trading profits for the tax years 2016-17, 2017-18 and 2018-19 will be added together then divide this total by 3 and then calculate a monthly amount.

How to apply for SEISS support?

HMRC will review self-assessment tax returns for the tax year 2018-19 that have already been submitted to HRMC to determine eligibility for SEISS support and will contact the relevant tax payer directly to invite them to apply for SEISS support.  Once HMRC confirms eligibility, the tax payer will need to apply for SEISS support via the UK government’s website (GOV.UK).

Where a tax payer hasn’t yet submitted their self-assessment tax return for the 2018-19 tax year, HMRC have confirmed that they will risk assess any late returns filed before 23 April 2020.

When will SEISS be paid?

Following a successful application for SEISS support, HMRC will arrange for payment of SEISS support to be made directly to a successful applicant’s bank account in a single lump sum.  Payments are expected to commence being paid by the beginning of June 2020.

King & Wood Mallesons’ Banking & Finance team are available to discuss your queries on all areas of finance and financial markets law, please contact Khai Nguyen in our London office.

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