Self-Employed HMRC update

[Snorkelface]

HMRC has added a few updates for the self employed grant scheme.

www.gov.uk/guidance/claim-a-grant-through-the-coronavirus-covid-19-self-employment-income-support-scheme

While HMRC will be contacting eligible claimants directly over the next couple of weeks with more specific details you can now see if you're eligible to claim and what date you'll be able to lodge your claim by using their on-line tool (about half way down their web page).

You'll need your UTR and NI number to do this and it will also give you the opportunity to set up your Gateway account if you don't already have one and to update your contact details. It's a good idea to set this up now as the website is likely to get very busy when it goes live on 13th May.

You can find both your UTR and NI number on your tax return. If you're setting up your Gateway at the same time you'll need to provide email/mobile details and you'll need to set up additional security measures to identify you using either security questions or drivers license details or your passport. The system can time out so it's a good idea to have all the details to hand.

Hey @Brabraboo - it was 6 working days before but some people got it immediately, others had to wait the full 6 days. It also just said they would just 'check' the claim. The wording has been a bit different every time for the grants.

Can I ask a really basic question here.

What happens if someone receives the grant but their income hasn't significantly dropped between February and April? My dh has received the other grants but we aren't sure that he qualifies for this. His work has gone from 5 days a week to 4.

@Snorkelface thank you for keeping me right there! Is useful to know!

@Motnight - it's a good question!

Firstly has his work reduced from 5 days to 4 because of the impact of coronavirus or for a completely different reason?

Secondly will that result in reduced profits of about 20% too (as in is he hasn't been able to up his rate or find another way to compensate for the lost income)?

HMRC has given a some examples of what may or may not qualify in terms of reduced profits/activity but what they haven't done is define what kind of amount or percentage they'd consider a 'significant reduction' in profit- and that's up to you to decide. HMRC have acknowledged they're leaving this up to the individual rather than giving some kind of threshold by saying 'HMRC cannot make this decision for you because your individual and wider business circumstances will need to be considered when deciding whether the reduction is significant.'

For me a 20% reduction in profits would be a significant reduction, for others it could cause chaos in their business, others no difference at all but it's your call!

If you do claim and then change your mind you can voluntarily pay it back.

@Snorkleface thank you so much for your detailed reply. It is really useful, and given us a few things to think about.

Did anyone who applied today get an email confirmation?

@bookgirl1982 nothing here.

No confirmation here either. I presume the claims process has changed this time.

I remember on the last one it took a few days for my confirmation email to arrive after I'd put in my claim. No idea if it's a 'thing' or just random. To be honest email confirmations on other HMRC processes aren't always that consistent.

I find it hard to judge too, because my profits haven't necessarily gone down, but I would have expected them to have gone up this year. So I claimed the last one, as I had some cancelled work (though a bit hard to prove), but my overall figures won't be lower (in fact higher, given the previous grants, as they are all or nothing).

And the effect on my business now is the lack of new clients having initial sessions, which doesn't affect profit hugely at the moment, but will have a knock on effect for a whole year or more, but I don't feel I can claim it now, if it's not affecting profits at the moment (partly because I took some extra temporary work that helps for a time but doesn't solve the problem of not having new clients starting, but does mean that profits don't go down, even if it's not for sustainable reasons that will continue). And yet by next year I know that I'll be noticing the effects - but if I claim it now and they investigate, I'd worry they would say I was fraudulent, but by next autumn, there won't be any more grants!

Just for anyone that was wondering RE the confirmations etc.

Just got an email this morning to say they have confirmed the application and are processing the claim and that it will now be paid within three working days.

Hope that’s helpful to others waiting. I think the email is now sent once they confirm it and then the payment comes three working days after

I can’t claim until next week.

Although the support has been a lifeline, the timing of this payment is really making life difficult. Last grant was received at the start of December, and much of that went straight back to hmrc in tax for my last return. So very little to survive on for five months in reality.

My husband claimed yesterday but hasn't received the confirmation email yet. Really hope it is soon and money in 3 working days. Considering it was to cover February, March and April it's not great to wait until May for any money

@FlattestWhite - I know you've looked at your numbers from all angles already but just in case remember the impact etc refers only to Feb/Mar/Apr this year so it certainly sounds like you qualify on the impact side if you have less clients having initial sessions (Proof would be good obviously). The reduction in trading profit refers to the overall year you would report those months in. HMRC have said to consider your individual and wider business circumstances when considering if a reduction is significant. I know it just ends up with you playing devil's advocate with yourself to make a decision, which doesn't help!

@Lonelycrab - I agree, this one's been a bit of shitshow for a lot of people, both with the delay in announcing details and the long wait. Don't get me started on the two missing months of support from last year and the two missing months when the 5th grant covers 5 months instead of 3!

Yes it's really hard to make that decision. I think I got enough temporary extra work in those months so that my profit isn't affected, but it's the fact that it was the initial sessions that are missing that will have the long term effect (as those lead to ongoing work, whereas the extra ones were short-term people wanting extra sessions). So it's quite hard to prove, when really it's the absence of a certain type of work that is the problem.

I claimed for the previous one as well, when my profits ended up the same, when actually I had expected them to go up this year, which probably looks a bit dodgy, especially as combined with the first two grants (where you only had to have extra expenses), I was well above my normal takings for the year. But next year is going to be way down as a result, so I've justified it to myself. But it's them I might have to justify it to, and they might see that I've actually made more money this year than previously - though looking at my client list, it's half the size as normal. Some of them have had far more than the normal number of sessions, which is great for short term work, but not as an ongoing business consideration, because it's not sustainable for them to keep doing that, and they won't be replaced by new clients as they've not been coming for initial sessions.

I'm worried that they could say I've been fraudulent or something, when partly it was that I didn't know what will happen in the next few months.

Got confirmation email but it was in junk mail.

I applied on Friday, got the confirmation email this morning.

That’s mine paid in now. So two working days after the confirmation email. X

I claimed Friday, got my confirmation email this morning. No money yet.
Adding 19/20 tax year added 20% to my grant this time though, so that's something.

@InMySpareTime - that reminds me!

Anyone claiming the 4th grant who has been eligible and claimed before - the percentage is the same as the last one (80%) but the actual amount you'll be paid may be different from previous claims as this one is based on an average of 4 years tax returns, not 3.

Most people I know had a really good year in 19/20 so that's bumped up the average and they've have all seen a bit of an increase in the amount they've received for the 4th grant, me included. However there's going to be some people who didn't have a good year in 19/20 and that will reduce the amount they receive for the 4th grant. If you've got all your tax returns to hand you can easily work out what you should be getting before applying.

Put my claim in this morning. Good to see people are starting to see their grant payments arrive quickly. especially for those who are finally accessing some support for the first time.

And another thing.........

This is possibly quite IMPORTANT! And for 2 whole reasons!

If you are envisaging needing to apply for the 5th grant (July) or would normally be paying another tax bill in July get on with your tax return for 20/21 now.

I'm the world's greatest procrastinator when it comes to doing my tax return, in a normal universe, and merrily leave it until the 30th January and then panic. Don't do this, don't be me, be someone super organised.

The full details for the 5th grant haven't been announced yet but the big shift is that there's going to be a type of turnover test involved - yes turnover, not profit - so that's comparing one year's turnover with a previous period of time's turnover. Until they give more info that's all rather vague. But it's likely to involve comparing the turnover for 20/21 with either 19/20 or an average for the previous few years tax returns. So your 20/21 tax return will be important. The actual grant will still be based on average profits as before but it's either an 80% grant (big drop in turnover) or a 30% grant (small drop in turnover). Without more details being released it's impossible for anyone to actually calculate anything or know exact eligibility but with the 20/21 figures likely to form a part of this it's worth getting those together now. And also because you'll feel smug when you've done them early if you usually leave them until January!

Your 20/21 tax return is also important because it effects how much tax you may need to pay this July as well, which is the second tax payment on account. And for a lot of people that's going to be less than predicted or nothing at all or a rebate, imagine! But you won't know unless you do your tax return.

So get on with your 20/21 tax now, you don't have to file it yet if you don't want to but at least get the figures together so you know what you'll need to pay in July (if anything) and how big a slump in turnover you have from previous years.

I've filed my 20/21 tax return

I had a massive drop in turnover as Social Distancing makes my work nearly impossible (Storytelling). Not counting my grant income I earned £100 last tax year!

oh I think I'll definitely not be eligible for that one then, as by claiming the first grants, my turnover has actually increased - they were all or nothing grants, and given that the nature of my work means that this coming year is what is going to be more affected, I claimed them when they were available. I had expected business to increase a fair bit last year for various reasons, but some work was cancelled and it didn't so there was an effect, just not lower than normal profit (partly also because of extra short-term work). I hoped that would help for next year when things will be harder because of the lack of new clients having initial sessions now, and I think I won't be claiming either the fourth or fifth grant, but a bit worrying if I then also have to pay the third one back. Certainly including the previous grants will make my income greater than previous years and if they are looking at that as a way to judge, I could be in trouble.

Am I right in thinking that the Feb-April 2021 grant should be based on the 4 previous years, i.e. including March and April 2020 when income was massively reduced due to Covid and lockdown?
That really brings the expected average right down and makes it harder to give evidence of a relative drop for March and April 2021 surely.
Or am I missing something?
I have worked out averages for Feb, March and April, but if I include 2020 in the figures the average comes right down and so 2021 doesn't look so bad.
The logical thing is to not include March and April 2020 in a reflection/illustration of what 'normal' trading figures/profit would be.

Lockdown 1 was 23rd March, Tax year ended 5th April so it shouldn't have had that much effect on invoiced work within the tax year.