can tailor content to yourself and give you the best possible experience.
WHAT DOES THE SEISS EXTENSION MEAN FOR YOUR CLIENTS?
Last updated: 04 Aug 2020 02:35
Posted in: Partners
Just a month after the government announced support for sole traders in the form of the Self-Employment Income Support Scheme, or SEISS, 2 million claims were made, totaling £6.1 billion in government support.
Now, with a second grant opening in August 2020, a number of sole traders are set to benefit from further financial assistance. Is your client one of them?
Quick dates to remember
17 August 2020: Applications open
19 October 2020: Applications close.
We’ve asked Mike Parkes from AIA Partner, GoSimpleTax, to explain the terms and help you and your clients claim.
So how does the SEISS work?
To re-cap the scheme is available to all self-employed individuals that have been adversely affected by COVID-19. This is provided that they:
Earn the majority of their income through self-employment
Have average annual trading profits of less than £50,000
Have filed a tax return for the 2018/19 tax year
Have traded during the 2019/20 tax year and intend to continue trading in 2020/21
To determine whether or not your clients were affected by COVID-19, any of the following must apply:
Government orders have meant that your trade or industry had to close or be restricted in such a way that your trade closed – or is otherwise adversely affected
You cannot organise your work, or your workplace, to allow staff to work safely
Your staff or customers are no longer able to purchase from you due to restrictions
Social distancing has meant that you are not able to safely serve customers
You’ve had contracts cancelled as a result of COVID-19
You have either had to care for others since lockdown or have been self-isolating
The first grant ended on 13 July 2020, and claimants could receive either £7,500 or 80% of their average monthly profits over the 2016/17, 2017/18 and 2018/19 tax years (whichever is the lower amount).
Applications for the second grant will open on 17 August 2020, but you must have confirmed by 14 July 2020 that you have been adversely affected by COVID-19.
Why is there a phase two?
While the government set a three-month cap on the support, it has since been agreed that COVID-19 is still impacting the earnings of some sole traders. As a result, it is necessary for them to receive another grant in order to stay afloat.
It will also help to support those who may not have initially been affected by lockdown (and so did not claim the first grant) but have subsequently suffered a loss of business.
What’s the difference?
The differences between phase one and two are limited, although the second grant will be worth 70% of your average monthly trading profits. It’ll still be paid out in a single instalment that covers three months’ worth of profits, but will be capped at £6,750 total – almost £1,000 less than the phase one grant.
Additionally, your client can only claim the second grant if your business was adversely affected on or after 14th July.
Can clients continue working and still claim?
Yes, they can continue to work as long as they intend to continue trading in 2020/21 in the self-employed role they are claiming for. They can even take up other employment if necessary, provided that the SEISS payments still cover the majority of the income. HMRC will not penalise your clients for topping up their income with a little additional earnings to sustain their household.
Phase two will have a deadline of 19 October 2020. You can find out more about it on the GOV.UK site. If your clients are still losing out on income or opportunities to earn, we massively recommend they claim the second grant. This is unprecedented levels of government support and could make the difference between staying afloat or falling behind.
GoSimpleTax software submits directly to HMRC and is the solution for accountants and sole traders alike to log all their income and expenses. The software will provide you with hints and tips that could save you money on allowances and expenses you may have missed.
Trial the software today for free - add up to five income and expense transactions per month and see your tax liability in real time at no cost to you. Pay only when you are ready to submit or use other key features such as receipt uploading.
AIA members receive a 25% discount – to get your discount code simply sign-up to try our software above and it will be emailed to you. Volume Discounts are available.
Furthermore, AIA members who sign up to try the software throughout August 2020 will be eligible for a free one to one session providing an insight to our software and answering any questions you may have – sign up now www.gosimpletax.com/tax-aia
Applications for the second grant of the Self-Employment Income Support Scheme open on the 17 August and close on the 19 October.