To be unsure whether to claim the self employment income support grant or not?

[SEISSquery]

Will try to keep it brief. I'm self employed (run my own craft business) and s single parent of a disabled primary age child and a teenager doing A levels. I claimed the first SEISS grant as all the events I usually sell at over the summer were cancelled.

However, I have managed to successfully build up the online side of my business over lockdown and sales are really good. I've just looked over my accounts for the first half of this tax year though and although business turnover is higher so far than at this point last year, my actual profit is down. This is a combination of factors, mostly Covid related.

Supply chains have been disrupted the costs of my materials have gone up, which means I'm paying out more for materials and also I'm bulk buying when I can get hold of things that are hard to find. I've introduced a couple of new ideas (subscription services) that have helped stabilise and hopefully future-proof my income to some extent, but these have involved significant extra outlay in bulk purchasing of materials to ensure I can fulfil orders even if supply chains are disrupted further (looking increasingly likely especially with no deal brexit on the cards ). I've also had to buy a dedicated work computer for managing online orders/spreadsheets etc as the family one (a basic indestructible type thing that we shared) was needed by my children for online work during school closure. I anticipated some of the bulk buying due to brexit and had booked extra events for this summer to try and up my income to cover costs, but obviously they were all cancelled. I've also managed to diversify slightly into a related area but this involved the purchase of an expensive bit of kit - over about 18-24 months this should pay for itself but right now it's a dent in my profits.

So from April 1st to September 30th, although my business income was higher than at the same point last year (by about £2k) I've only made an average of £45 a week profit. In theory this should significantly increase over the second half of the tax year as I now have the materials and equipment and more of the income from sales/work will be profit, but this only works if people carry on buying from me at the rate they have been - and that isn't certain at all, as job losses start and forlough ends etc. What I make and sell is very much a nice-to-have not an essential!

I claimed the first SEISS when things looked very uncertain for my business at the start of May and got £1300, so the second one would be about £1100. I don't know whether to claim it or not

WWYD?

I find this hard to get my head around. If I’m an employee and get made redundant then it’s my duty as a responsible citizen to go and mitigate my loss and find another job.

If my industry is adversely affected I look somewhere else. Why should the government prop up a “nice to have” craft business in a global pandemic? I’m not saying the OP isn’t entitled to claim but there’s no magic money tree and this money has to come from somewhere. As an employee yes I have a small statutory redundancy payment if I lose my job but the OP self employed business owner has had the benefit of flexibility of being self employed previously. You take the rough with smooth and good business save money for bad times. Self employed businesses have to weather all sorts of storms in the past with zero support. Isn’t there a point you go it’s not viable and go do something else?

I am expecting to get flamed and I’m usually very liberal but I am genuinely worried about long term effects here.

Panic not. The other criteria include things like having traded for some time and continuing to trade. There were also minimum and maximum amounts earned. And, for a hobby business, who may not even be legally HMRC registered, the amounts would be very small, and would be smaller when taxed.

That and you are conflating losing custom during a crisis with being made redundant. You should be comparing it to furlough. Both of which could lead to redundancy, but not necessarily.

You may not view craft based businesses as viable, and many are not, but many are and, like all other self employed, sole traders,.are entitled to SEISS support.

I think the point at when you go and do something else is reflected by the next stage of measures - from October, HMRC will only support 'viable' businesses that are able to function, and you get a much, much smaller subsidy of support. If I can't turn it around, I will look for employment or come up with something else self employed.

Craft businesses are like any other business that provides an income and enables someone to support themselves. Mine isn't 'nice to have' as such, and I am training to so something less manual and more intellectually engaging for the next stage of life, but it has enabled me to work around primary school hours, and in the evenings and weekends, by being done from home.

The problem with the two payments so far is that it's pretty much left to the individual to decide whether they've been 'adversely affected' or not, and therefore whether they should claim. For me, there was no question, as several of my main clients closed down their offices and furloughed their full time staff, so my work has been minimal throughout. I definitely qualified for both payments.

If you are struggling, absolutely apply for it. It will help you!

I think you should definitely claim as your main business line has been curtailed through Covid and through no fault if your own .It has cost you extra to diversify into online sales and your profits have been reduced due to set up costs

To the person being a bit nasty about craft businesses- many are successful , profit making , tax paying and bring happiness to customers . They also suit people with caring responsibilities such as the OP-
Anyway OP after we are back to any semblance of normality- your business should hopefully bounce back and you will have a new online business too- Well done !

What I make is a nice-to-have.

For five years my business has brought in a income that helps support me and 2 children. I've had to be self employed due to my youngest child's disabilities - if I had an actual job with an employer, I'd have been sacked long ago. Try working when you're being called into school at least 3 times a week to deal with a crisis or collect a distressed child early because they've had a meltdown that the staff can't handle.

So yeah, I might make and sell a luxury product but my business itself is not a luxury. It literally puts bread on our table.

Exactly, loads of industries aren't essential in an economy but of consumerism - I don't see the difference between producing something people don't need as such, as long as it's something there is, in ordinary times, a market for. I think there is a bit of an unhelpful notion about those of us who work in craft doing it as a bit of fun, although the reality is that many of us it is our only income source, and we wouldn't actually be able to afford to buy the products we make! But it's enough to get by, and that is worthwhile.

'built on consumerism' not but of...

Ha, I have thought the same - I own lots of what I make, but would never be able to afford to buy them! I'm not doing it for fun, unless you call working into the early hours after getting an autistic child into bed knowing you've got to start again at 6am "fun". I could give it up tomorrow and claim carers allowance but I've always wanted to work because I've got an eye on my future when hopefully things will be easier and my youngest won't need the same level of care.

Is this the grant where you will have to pay a higher rate of tax later on? If so I would do whatever you can to manage without it. If it isn't or if it wont affect you as you won't earn enough or you can't manage without it then go for it.

So this is from Money Saving Expert, but it's totally counter to what I assumed which was that your business had to be doing worse than in previous years for you to be eligible!

No, that's just the easiest way to show you have been affected.

Had I lost no work at all I would still have claimed. My simple little table shows a steady increase in turnover year on year and I still have capacity as a sole trader to do more (as in I have timeslots that are not filled). So I would have claimed SEISS because I lost this year's growth. I did not get the work I reasonably expected to get.

The next stage payment is only 20% (I think). That will top me up to a viable level, I think I am about 40% down on my usual turnover, so it will be berable. But for many it will not be enough and they will have to make other decisions.

Oddly one of my decisions is to use the time I now have to start the craft business I originally intended to do when I left teaching

@ToelessPobble

Is this the grant where you will have to pay a higher rate of tax later on? If so I would do whatever you can to manage without it. If it isn't or if it wont affect you as you won't earn enough or you can't manage without it then go for it.

SEISS is taxed as part of your usual earnings. I am not sure which grant you are referring to but I have read quite a lot about people not realising that it is taxable, which could lead to issues later when 25%+ is sent back to HMRC in tax.

But it is not taxed any differetly from your other earnings and, as it is for those with less than £50K profits, it won't be at the higher tax bracket unless you REALLY didn't need it in the first place.

Why should the government prop up a “nice to have” craft business in a global pandemic?

Do you feel the same about the furlough scheme?

Step down, userxx it's just not worth it

@CuriousaboutSamphire And breathe...... 🤣

Well indeed! Loads of businesses are not "essential" but the work they create for the people who staff them is pretty bloody important. Luxury hotels? Hairdressers? I'd call a hair cut a "nice to have" but that doesn't mean hair dressers themselves don't need the income that comes from cutting the hair of people who can afford the "nice to haves" in life!!

My husband claimed the first 2 lots, he received just over £7,000 in total. My 24 year old son has been furloughed all through and has received over £12,000. The next 2 self employed grants are going to be a lot less than the first 2, but my husband is going to claim because his work has suffered as most of his customers no longer want trades people in their homes. With what he has earned this last year and the grants, the tax and NI he will pay on this will cover the grants he received in one year.

Claim.

The test is just have you been adversely affected by covid. You clearly pass.

My husband is also self employed in the craft sector and has claimed. Shows cancelled, some he lost deposits on, galleries and shops closed, now shops and shows are starting again but footfall is down due to distancing. He is also having to invest time and money to enable him to trade more online going forward as shows are unlikely to recover.

Claim. If your natural costs have gone up due to COVID. For example DS worked in demolition. The specialist dust masks they need to work were rightly diverted for NHS PPE use. The masks are made in Germany, Germany kept them and no longer exporters to The UK. Had to resort to paying £65 for one in eBay (normally £15) also price of disposable gloves, purchase of antibacterial wipes, sanitiser, special hand wash +and more of it than pre-Covid) increases your business costs and potentially reduces your profits. You can claim it takes 15 minute s. AS applied in Monday and his grant arrived Thursday. Well done HMRC! There is also an option to change your mind and repay. I think they are more worried the grant gets into the wrong hands and not the trader.

Some people have said they are doing two more grants? When will these be?

@SpringSunshineandTulips some time in November. But they have not been widely publicised yet. There is little info, but this is the government page about it!

www.gov.uk/government/publications/self-employment-income-support-scheme-grant-extension