Individuals receiving the grant are able to continue to work, start a new trade or take on other employment, including voluntary work, or duties as an armed forces reservist.
The grant will be subject to Income Tax and self-employed National Insurance (NI).
HMRC will determine the eligibility of individuals, and how much they may receive but the guidance explains how it will do this.
Who can claim
Individuals can claim if they are self-employed or a member of a partnership, and:
• Carries out a trade which has been negatively impacted by coronavirus • They traded in the tax year 2018-19, and submitted that year’s Self-Assessment tax return on or before 23 April 2020 • They traded in tax year 2019-20 • They plan to continue trading in tax year 2020-21 Businesses can be adversely affected by coronavirus, for example if an individual is unable to work because they’re shielding, self-isolating or are on sick-leave due to coronavirus. Similarly, they may be unable to work because they have caring responsibilities because of coronavirus. Businesses may have had to temporarily stop, or reduce trading if the supply chain has been interrupted, if they have fewer or no customers or clients or if staff are unable to attend work.
The grant should not be claimed if the business is above state aid limits or operating a trade through a trust.
To determine eligibility, HMRC will first look at the Self-Assessment tax return for tax year 2018-19. Trading profits should not exceed £50,000 and should be at least equal to non-trading income. If, at this point, there is no eligibility, then HMRC will assess tax years 2016-17, 2017-18 and 2018-19. There is additional guidance available on how HMRC will make these calculations.
Grants under the SEISS are not counted as ‘access to public funds’ and can be claimed on all categories of work visa.
Tax agents and advisers cannot make the claim on behalf of an individual, and they must make the claim themselves. Individuals who do use an agent, should contact them if they require assistance or support.
Different circumstances that affect the scheme
There is additional guidance on different circumstances that affect the scheme, including where:
A return is late, amended or under enquiry Individuals are a member of a partnership
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• Individuals are on, or have taken, parental leave • Individuals who have loans covered by the loan charge • Individuals claim averaging relief • Individuals who are a non-resident ,or who chose the remittance basis • Individuals are above the state aid limits
How much can be claimed
A taxable grant will be given based on the average trading profit over the tax years 2016-17, 2017-18 and 2018-19.
The average trading profit will be calculated by adding together total trading profits or losses for the three tax years and dividing by three.
The grant will be 80% of average monthly trading profits, at a cap of £7,500 (for the three month period). This amount will be paid directly into an individual’s bank account, in one instalment.
There is further guidance available on how HMRC will calculate average trading profits.
How to claim
The Chartered Institute of Payroll Professionals
Payroll: need to know
cipp.org.uk
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