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Coronavirus/COVID-19: Update 15 April 2020

We are pleased that there has been some clarification in connection with the Self-Employed Income Support Scheme (SEISS). Although there are still some areas that remain vague, at least we now have explanations surrounding the calculation of ‘trading profits’ and ‘total income’ and also for agricultural clients as to whether ‘trading profits’ are pre or post farmers’ averaging relief.

Also the Scottish Government this morning has announced an extension of the small grant scheme to extend payments to include more than one property, rather than an one-off grant.

Self-Employed Income Support Scheme (SEISS)

When HMRC first announced plans for the Self-employment Income Support Scheme (SEISS), it was offered to individuals whose trading profits were less than £50,000 and made up more than half of their total income for either the tax year 2018/19, or the average of the tax years 2016/17, 2017/18 and 2018/19.

The support includes direct cash grants of 80% of average monthly trading profit over the last three years, up to £2,500 per month. The grants would be provided for a period of at least three months.

However, it was unclear what exactly HMRC considered ‘trading profits’ and ‘total income’ to be. HMRC have now published guidance on what they mean by these terms and how they will work out ‘trading profits’ and ‘total income’ for the purpose of SEISS.

Trading profits are effectively the taxable profit on an individual’s self-assessment tax return (after capital allowances have been taken into consideration) ignoring any losses carried forward from a previous year. HMRC will use the figures on your tax returns for your total trading income (turnover), then deduct any allowable business expenses and capital expenditure. Allowable expenses are outlined in the HMRC guidance.

Total income has been confirmed as being income from earnings, trading profits, property income, dividends, savings income, pension income and miscellaneous income (including social security income).

There was also ambiguity surrounding trading profits specifically in relation to our agricultural clients. HMRC have now confirmed that they will use the amount of trading profits before the impact of farmers averaging claims to work out if someone is eligible for the grant and how much you will get. Farmer’s averaging looks at a 5-year period, whereas the qualifying period for this scheme is only three years to 5 April 2019.

We have also been asked if someone is self-employed with more than one trade at the same time, will both self-employments be combined when considering eligibility for SEISS? The answer to this is yes. HMRC will add together all the profits and losses for all self-employments the trades to work out the trading profit.

You do not need to contact HMRC in relation to SEISS. HMRC will use tax returns already submitted to identify those eligible. The aim is to contact individuals by mid May 2020 and invite you to claim through the GOV.UK online service. If you’re unable to claim online we have been assured that an alternative will be available. Unfortunately, we do not know yet if GWA, as your agent, will be able to apply on your behalf but we will keep you updated should this change and are happy to discuss with you any details in relation to SEISS.

A word of warning. We know there has been an escalation in the number of fraudulent texts, telephone calls and emails pretending to be from HMRC.  Please be extra vigilant and never provide any bank account, credit card or payment details.  You will only ever be asked to access SEISS via the GOV.UK online service.

Full details on the Self-employment Income Support Scheme (SEISS) can be found here on the GOV.UK website.

Guidance, on how HMRC will work out your income and profits, along with some useful examples of how these will be calculated can be found here on the GOV.UK website.

Small Business Grant Scheme Extended – Scotland only

The Scottish Government has announced this morning an extra £120 million to extend the Small Business Grant scheme.

Originally grants were being provided on a one per business basis, rather than one per property as elsewhere in the UK. As a result of this announcement, small business rate payers in Scotland will, in addition to their first property, be able to apply for further 75% grants on all subsequent properties.

These new arrangements came with a caveat from Finance Secretary Kate Forbes that businesses to only claim help if “absolutely necessary”.  The extension to the Small Business Grant should be in place and open for applications by 5 May via your local authority.

The announcement also offered an extra £100m of funding for self-employed people and firms that are not currently covered. This additional money is aimed at newly self-employed people who may not be able to access the existing funding, which requires evidence of past tax returns, and businesses who are ineligible for other Scottish Government or UK wide Government schemes, for example those that may be home-based.

As soon as more detail becomes available in relation to these funds, we will let you know.

Support for Trout and Shellfish Producers – (Scotland only)

Further to our update yesterday when we highlighted support for the Scottish seafood processing industry, the Scottish Government have announced further grants for aquaculture businesses. Trout farmers and shellfish, including oyster, producers whose businesses are being threatened by the effects of COVID-19 are being offered hardship payments of up to £27,000.

As the hospitality and restaurant markets for cultivated shellfish have been drastically reduced the aim is to help shellfish growers maintain farm sites for oyster and mussel production in the longer term. Grant payments will cover two months and be equivalent to 50% of the business’s average monthly gross revenue from sales of aquaculture products in 2019.

To apply for a grant, businesses are required to demonstrate that they operate on a full-time basis and have suffered severe hardship as a result of the Covid-19 outbreak.

Details of the announcement can be found here on the GOV.SCOT website.

Retail Hospitality and Leisure Grant (RHLG) – Scotland only

As we have mentioned in previous updated, the Association of Self Caterers Scotland (ASSC) are lobbying the Scottish government in order to get parity with the rest of the UK in connection with the RHLG.

They are gathering data to aid with their efforts and should you have a self-catering property in Scotland, you may wish to take part. Details can be found via the ASSC link.

We are also aware that some councils in Scotland have yet to start paying out these grants as they are waiting for further guidance from the Government.

As the COVID-19 situation continues to evolve please do call us with and questions or if you need help.  You are not alone in facing the challenges that are affecting individuals and business alike.  We are here to help, so do not hesitate to get in touch.

Information correct as of 15 April 2020

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