HM Revenue & Customs has started contacting 3.5m people who may be eligible to receive a backdated cash grant worth up to £7,500 via the government’s Self-Employment Income Support Scheme (SEISS).
From this week, those who may be eligible will receive a letter, email or text message from HMRC with information about how to make an online claim when the SEISS service opens on May 13.
If a claim is successful, payments will reach bank accounts by May 25, or six working days after the claim is made, HMRC said, suggesting the scheme will be delivered ahead of the original schedule of “early June”.
The scheme will benefit self-employed sole traders or those in a partnership whose business has been adversely affected by coronavirus.
To qualify for support, individuals need to earn at least half of their income through self-employment, and have annual trading profits of no more than £50,000.
They must have traded in the 2018-19 tax year and submitted their self-assessment tax return for that year on or before April 23 2020.
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People who meet these criteria will be able to claim a taxable grant worth 80 per cent of their average trading profits up to a maximum of £7,500 (equivalent to three months’ profits) — which will be paid in one single instalment.
The rules of the scheme exclude some groups, including those who became self-employed after April 2019 and those who have annual trading profits above £50,000. Although limited company directors often consider themselves to be self-employed, income paid via dividends is not recognised by the SEISS or the job retention scheme for PAYE workers.
The Association of Independent Professionals and the Self-Employed (IPSE), a lobby group for freelancers, welcomed the announcement, but added that more needed to be done to help those unable to access the SEISS.
“It is excellent news that the government will tell people early if they are eligible for the SEISS. This is unexpected and welcome given just how complex it is to implement a new initiative on this scale,” said Andy Chamberlain, director of policy at IPSE.
“While many self-employed people will get a wave of relief from receiving these early notifications, it is vital we do not lose sight of the many others who are not getting the support they need. Limited company contractors, the newly self-employed and those who have earned just over £50,000 per annum have been left out in the cold and urgently need more financial support,” he said.
HMRC has said that where individuals are ineligible for the scheme, the tax authority will direct them to guidance to help them understand why this is so. It will also direct them to other support that might be available to them. such as income tax deferrals, rental support, universal credit, access to mortgage holidays and the various business support schemes that the government has introduced to protect businesses during the pandemic.