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.

But the grant for 2021 is all of April, so don't we have to compare with all of the Aprils 2017-2020?

So all of Feb-April 2021 is compared with the figures for all of Feb-April 2017-2020?

I don't mean for the 5th July grant that Snorkelface refers to, which is likely to be based on annual figures.

I mean for the current Feb-April grant that is for 3 full months (but only in relation to those 3 full months of a 'normal' year surely).

That is how I have been deciding whether to claim for each of the previous grants. The 3 months in question compared to the equivalent average 3 months of a non-pandemic year (2017-2019 for the previous grants). But HMRC seem to be saying 2017-2020 for the Feb-April 2021 grant - which is at least 1 third pandemic time...

I hope I haven't done it all wrong, as I didn't really compare very specifically from year to year. For the third one, I just looked at the fact I had cancelled work. The previous years had all increased year on year, and I was assuming that one would too, so lack of increase plus cancellations seemed like an effect to me.

the first grant was March/April/May, but reported on the 20/21 return ,even though some of what it was replacing was March 20 income (some effects were felt from Feb onwards), so 19/20 could be slightly lower than expected, and 20/21 slightly higher, just from that, aside from all the other factors (for people who report work when it was done rather than when it was paid).

Now I am properly confused.

Plus now I have thought of something else. Do we include the 1st grant in our average for previous March-Aprils? (proportional share of the March-May 2020 grant)

Hope that makes sense. If we are expected to include 2019-2020 in our expected 'normal' income, then what do we do about March-April 2020 - those months were both affected by pandemic and also covered by a grant that we are supposed to include in our income for tax purposes.

V. confused.

I thought I had worked out a good method for establishing whether my figures were down, but it doesn't work now that HMRC seem to be including March and April 2020 in the comparative figures.

@InMySpareTime - get you! Well done! Story telling - oddly I saw something about a company who are ramping up in schools with some stuff soon, don't know if it's of any use to you.... Kit Theatre they're called.

@FlattestWhite - wait for the final details to be announced, I would imagine they're still working out exactly how they're going to do this, a small tweak in any direction makes a lot of difference to a lot of people.

@SEgrantquestion - the 4th grant will include your 19/20 tax return which would've included March 20 and a bit of April 20. It depends on what you do and how you get paid as to how reduced income was at the start of lockdown. Some people had been feeling it a lot earlier from cancelled work and deposits, other get paid months after completing work, we all do different things so not everyone will have had reduced income at that point, just reduced work. You're looking to show your work has been impacted in Feb, Mar, April, that could be no work, less bookings, whatever the reality is - and that you predict that that will impact your profits for the year you file those months in.

My post may have crossed over with other, just reading back........

the 4th grant will include your 19/20 tax return which would've included March 20 and a bit of April 20

yes, I agree everyone's income flow is different and I am not trying to tell anyone they are doing it wrong!

Just looking for advice on how to work it out for myself.

How I did it up to now (and what I ^thought6 the HMRC guidance was, but I haven't had any proper paid-for financial advice) was for each of the grants covering a specific 3-month period, I would look at the average for those 3 months in the years 2017-2020.

That method doesn't work now HMRC are specifically including 2019-2020 as a financial year in the grant calculations.
It either brings the average down considerably (if we think about the full months of March and April 2020) or it stays fairly similar (if we then include the fact that we (hopefully) received a grant to cover the losses for March and April 2020).

Well that post was as clear as mud, not helped by typos
*for those 3 months in the years 2017-2019

I should also clarify that I did experience more loss of income in March 2020 than others because much of my work comes from Europe, and their pandemic was several weeks ahead of ours....
Also means now they are in lockdown again, I have big loss of income right now, even though the UK is opening up again...

Ok, I"m a bit confused.

I think there's a couple of things getting merged here.

Firstly the previous years tax returns are what HMRC are basing the actual grant on in terms of how much they're paying you. HMRC has to use something to give the most reasonable figure for everyone using the quickest method possible on data they had already. That's what they came up with, one size fits all, they work it out, take it or leave it. So that's where your previous tax years come in, the grant calculation HMRC does.

No one is asking you to look at February 20 and then compare it to February 17 for instance. You could've completely changed what your business does in that time and so there's no comparison per se. Forget the individual monthly figures for a second. HMRC want you to decided whether Covid has negatively impacted your business in Feb/Mar/Apr. - so according to HMRC that means reduced activity, capacity, demand or inability to trade. That's activity based, no bookings, unable to work, phone not ringing etc. Now do you think that any impact on your work activity in Feb, Mar, Apr will result in a drop in profits for the year you file those months in, so do you think you will most likely end up with less profit overall in that tax year because it's been rubbish in Feb, Mar, Apr this year. Your best guess at this stage in the year.

Does that make any sense?

Thanks so much for clarification!

that's where your previous tax years come in, the grant calculation HMRC does I think I was focusing on this because of the need for 'evidence', so mine was comparing figures for one 3-month period with figures for a 'normal' 3-month period (worked for me because I have done the same work for years now).

do you think that any impact on your work activity in Feb, Mar, Apr will result in a drop in profits for the year you file those months in This still confuses because this grant covers 2 different financial years (if your accounting year is the same as the tax year).
Plus I haven't done my accounts for 2020-2021 yet, although as you point out, I will need to do these before the 5th grant.

@SEgrantquestion - again I think it's so different for everyone and that makes it a bit nuts. When you think about it HMRC have had to come up with a one-size fits all solution for a everyone from part-time childminders with regular clients to wedding planners who never know what the year will bring (and who hopefully don't have regular clients!)

The grant covering two financial years is messy and again for some people it won't make a difference as they may not get paid straight away for work.

So you do the best you can, knowing your business like nobody else does. You gather whatever evidence you can which can include anything you've got, an empty appointment book, the simple fact that you're not allowed to carry on your business due to Covid rules, the lack of income on your bank statement, it can be comparative if it's relevant but it won't be for everyone. Only you know if you've been impacted and it you think it's going to impact your profits overall.

OK, I am going to have to focus a lot less on the comparison between these 3 months and the equivalent 3 months in previous years just due to the logistics of 2 of last year's equivalent months being pandemic/lockdown months, plus grant being received for 2 of last year's equivalent months, plus this grant falling over 2 financial years. Otherwise my brain will break.
I will have to take a less literal approach and try to look at the bigger picture.

My grant is paid in now. Not too bad, I claimed it on the 23rd.

@InMySpareTime - excellent news! I got my email confirmation today so not far behind you.

Just a reminder that time is running out for claiming the 4th Grant. If you're eligible, want it and need it but haven't put in your claim yet you need to get a wiggle on. The claims process will close at midnight on 1st June - that's next Tuesday.

There are still no further details firming up exactly how the 5th Grant will work, or where the two missing months of support from last year are or the two missing months there'll be this year as well. Sunak has continued to steadfastly ignore questions about the missing months but will hopefully be providing further information about the 5th Grant over the next couple of weeks.

See below

It's not long now until the 5th grant.

Some people have started getting emails from HMRC about it, just a general one, not one with claim dates etc - but communication from them has been quite random so don't panic if you haven't had an email yet, or at all.

The 5th grant will be available to claim from the end of July, no actual date given as yet, and HMRC are meant to be allocating dates you can claim from. Again the claim date thing has been a bit random in the past so if you think you are eligible to claim and haven't been given a date by the end of the month you can always just log on like last time and the system should tell you when you can come back and claim.

The 5th grant is a bit different.

The eligibility criteria is basically the same, this time your profits need to have been impacted by Covid between May and September 2021. As before some of this will be guess work, you know your business better than any one else so only you can decide.

What's different is the way the amount you get is worked out. There are a lot of variables depending on individual circumstances but buckle up for the most straight forward version:-

Dig out your 19/20 and 18/19 tax returns and decide which one represents a normal trading year for you. For most people the 19/20 tax return will be fine with limited impact from Covid but if 19/20 was unusual for you for other reasons then use 18/19 instead. Now find the Turnover figure on the tax return. That's Turnover, not Trading Profits, very important.

Now think about 20/21. If you're a sensible organised person (not me) you'll have done your accounts already, if not you might want to do them now. You need your Turnover figure for 20/21 but don't, I repeat don't, include any previous SEISS or local authority grants. So Turnover is the money your business has received from trading, doing whatever it is your business does.

Now you've got two Turnover figures, one for 20/21 and one for either 19/20 (or 18/19). Now you have to work out if the 20/21 Turnover figure is down by 30% or more compared to 19/20 (or 18/19).

If your 20/21 Turnover is down by 30% or more you will receive 80% of your average trading profits based on the same years as the 4th grant, capped at £7,500. So basically the same as the 4th grant.

If your 20/21 Turnover is down by less than 30% you will receive 30% of your average trading profits based on the same years as the 4th grant, capped at £2,850. Which is better than nothing.

There are a lot of variables in this system, including partnerships, accounting dates etc so if you think you may have any different circumstances you'll need to check with HMRC, they're also still adding new bits and bobs to the details on their website.

This grant will be open to claimants until 30th September. Frustratingly it covers a 5 month period which is a bit shit compared to furlough. All support is coming to an end soon but clearly we're still finding our way through (hopefully the end of) the pandemic and the economic effects will be felt for a long time. So think carefully if you're considering not taking the grant if eligible. We're not out of the woods yet and could face further restrictions if the autumn and winter don't pan out so well. If that happens there may not be further support.

There's also another reason for doing your accounts now, as in right now. The July payment on account is due to be paid to HMRC in a few weeks and if you think you'll be paying more than you probably owe get your accounts in fast. Worst case scenario is you just end up in credit with HMRC and it'll all come out in the wash but if you're nervous about cashflow don't overpay HMRC if you don't have to. And also you'll have done your accounts already and can forget about them for feckin' ages.

Yikes@Snorkelface….thankyou!!

That makes so much more sense than the masses of paperwork I received in the post

I claimed round 5 today, I hadn't realised that while the claim covers the period May to October it only pays 80% of 3 months' profits. Where did the other 2 months go? Have the Self Employed lost out on yet another couple of months?
Admittedly my earnings will be higher less disastrously low this tax year than 20/21, but still a fraction of my Beforetimes earnings.

Yes, we've been diddled out of another 2 months, for the second time, Sept and October (I think) are still missing from last year as well. There's been a lot of shouting on Twitter about it and Martin Lewis raised it with RIshi Sunak but the government don't seem inclined to budge and the claims from Boris there would be parity for the self-employed are long forgotten. This time it's more noticeable in a way because the government set this grant out to specifically apply to May-Sept (5 months) whereas last autumn the missing 2 months sort of fell through the cracks when they thought they'd be winding up the scheme.

Can I ask when you mention turnover is that what you earned before your expenses are taken off so basically working out your net profit from last years tax return? Sorry if a dumb question thanks

Yes, it's just the top line, the amount of money before expenses. It's explained on the claim page.

So I've claimed mine today. For anyone claiming you'll need those figures to hand when you do it, the 20-21 turnover figure and the 19-20 turnover figure (or 18-19 if your 19-20 tax year figures weren't typical).

HMRC's claim portal was as zippy as before and I gave it an accidental extra test by completely forgetting my log-in details, which the system also dealt with straight away.

As before remember to grab a copy of your claim details before you log out, print it, download a copy, screen shot etc. One of the earlier grants did go a bit wrong by overpaying some people due to a glitch at HMRC so it's good to have a copy of their calculations just in case. HMRC should also send you a claim processing confirmation email after you put in your claim as well which will tell you when the grant should be paid.