HMRC Covid 19 Second Government Grant For The Self Employed

Those eligible for the scheme will be able to make a second and final claim under the scheme in August.
The grant will be worth 70% of their average monthly profits paid out in a single installment covering 3 months and capped at £6,570 in total

Example
Average of three years profit in first claim £14,500

70% £10,150
Per month (£10,150/12) £845.33
Grant receivable (£845.33*3) £2,537.50

Important Points
• The first grant can be applied for until 13th July
• Applications for the second grant will start in August
• Eligibility criteria for each grant is the same –you need to prove you have been adversely affected by COVID 19

You do not need to have claimed the first grant to be eligible for the second grant –if you can prove you have only been affected by covid 19 in the later phase you can make a claim

Further guidance on the second grant will be issued on June 12th

Extension of job retention scheme (CJRS)
From 1 July 2020 employers will have the flexibility to bring employees back part-time
Individual firms can decide the hours and shift patterns the employees work and will be responsible for paying employees for these hours
For June and July, the government will continue to pay 80% of furloughed employees employment costs (that is salary, NIC and pension)

The government grant scheme under CJRS is being tapered down from August 2020

The following will apply for the period people are furloughed:
• June and July –government pay 80% of the wages plus Employers National Insurance and pension contributions-capped at £2,500-employers are not required to pay anything

• August –government pays 80% of the wages-capped at £2,500.
The employer has to pay the employers National Insurance and pension contributions (this represents a cost to the employer of approximately 5% of employment costs had the employee not been furloughed)

• September –the government pays 70% of the employee’s wages up to a cap of £2,187.50.
Employers pay 10% of wages plus employers National Insurance and Pensions to make up the 80% (capped at £2,500 per employee) This represents on average 14% of the full employment cost had the employee not been furloughed

• October: The government pay 60% of employee’s wages up to a cap of £1,875
Employers pay Employers National Insurance and Pensions and 20% of wages up to a cap of 80%. For any average claim, this represents 23% of the gross employment cost had the employee not been furloughed

If an employee is furloughed for the whole 8 month period the total cost of employer contributions under the scheme would represent around 5% of the gross employment costs an employer would have incurred had the employee not been furloughed.

UPDATE – 17th August –a date to remember

If you are self-employed and your business has been adversely affected by Covid-19 on or after the 14th July 2020 you may be eligible for the 2nd payment under the government’s self-employed income support scheme (SEISS).

You can make a claim for the 2nd payment even if you did not claim for the first payment.

Claims can be made from 17th August and the closing dates for claims are 19 October 2020.

The claim is calculated as 70% of your average trading profits for the 3 years to 2018/19 and is capped at £6570.

Who can apply? These criteria remain unchanged.

The self-employed or members of a partnership who:

• Have submitted 2018-19 tax return

• Have traded in 2019-20 tax year

• Are trading now (or would be except for COVID 19)

• Intend to continue trading in 2020-21

• Have lost trading profits due to COVID 19

Profits must be less than £50,000 and more than half of your income from self-employment which is determined by one of the following being true:

• Having average trading profits in 2018/19 of less than £50,000 and these profits constitute more than half of your total taxable income

• Having average trading profits in 2016/17,2017/18 and 2018/19 of less than £50,000 and these profits constitute more than half of your average taxable income in the same period

If you started trading between 2016 and 2019 HMRC will only use those years for which you filed a self-assessment tax return

What does the government mean by “adversely affected”?

Your business is adversely affected if:

• Your trade closed due to government restrictions.

• You cannot organise the workplace for staff to work safely.

• You cannot serve customers di=due to social distancing.

• Restrictions are affecting your customers/staff.

• Your supply chain is interrupted due to a shortage of products –ppe etc.

• One or more of your contracts have been canceled.

• You have fewer/no customers.

Or, for you personally:

• If you have been ill.

• If you have had to care for others who are ill.

How do you apply?

Use the Government’s SEISS claims portal

For more information, please call us on 0121 794 2289 or email us at tax@intellectbiz.com

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