HM Revenue & Customs will write to 3.5 million taxpayers in the coming days, inviting them to check their eligibility for the self-employment income support scheme (SEISS) and find out when to apply.
“We are confident the checker is accurate and working well,” an HMRC spokesperson told Tax Notes in an emailed statement on May 6 following reports that an eligibility tool released on May 4 had rejected hundreds of people who believe that they should qualify for the SEISS grant.
“We encourage people worried about their eligibility to review our guidance, speak with their accountant if they have one, or to access our help services, including webinars and web chat. There is also wide-ranging government support available for those who can’t use SEISS, such as 'bounce back loans,' tax deferrals, and universal credit,” the spokesperson added.
The consumer website MoneySavingExpert.com reported that “complaints have flooded in over the past 24 hours — including from people whose income is well below the £50,000 earnings threshold.”
“We are aware that the SEISS eligibility checker is showing some self-employed [workers] as not being eligible when they should be. Don’t panic,” the charity TaxAid tweeted May 6, adding that potential claimants should “try again in a day or two.”
HM Treasury published on May 1 a direction setting out the legal framework for the SEISS. Self-employed people who went into business in the 2019-2020 tax year are excluded. The government argues that relying on 2019-2020 tax returns would involve “significant risks for the public purse,” Financial Secretary to the Treasury Jesse Norman said. Also, a claimant’s average trading profits must be no more than £50,000 and must be at least equal to their non-trading income, according to HMRC guidance updated on May 4.
HMRC estimates that 95 percent of people for whom self-employment is the main source of income will qualify for the SEISS. The House of Commons Library has updated a research briefing on the scheme.
Tax agents will be “very disappointed” that they are unable to make SEISS claims for their clients, the tax faculty of the Institute of Chartered Accountants in England and Wales said in a May 5 briefing note. The faculty understands that the need to make payments as soon as possible “resulted in HMRC taking the decision that claims would have to be made by the taxpayer only,” it said, adding that claims should be simpler than employers’ claims under the coronavirus job retention scheme (CJRS) because HMRC will be calculating the SEISS grants.
“Agents still have a potentially important role in helping their clients with the SEISS,” the faculty said. Agents can use the eligibility tool on behalf of a client and can request a review if the checker gives a “not eligible” result when the agent thinks the client should be eligible, and clients may also need help in understanding the calculation, it added.
HMRC reported on May 4 that 800,000 employers had applied for grants under the CJRS and 6.3 million jobs had been furloughed.
Chancellor of the Exchequer Rishi Sunak is preparing to wean businesses and workers off the CJRS “by cutting wage subsidies amid concerns that the nation has become ‘addicted,’” The Times reported on May 6, adding that Sunak is expected to announce during the week of May 11 plans to wind down the CJRS starting in July.
Options discussed among officials include cutting the 80 percent subsidy and reducing the £2,500-per-month cap on payments, according to the newspaper. Treasury is also considering reducing the SEISS profits threshold to £30,000, it added.
Other Developments
HMRC published guidance on income tax and reporting requirements for expenses and benefits paid to employees because of COVID-19.
Members of Parliament approved regulations allowing the government to increase the employment allowance by one-third, or £1,000. Norman noted that more than 1 million small and medium-size businesses will now be entitled to “up to £4,000 off their employer national insurance contributions bills.”
A business rates revaluation scheduled for 2021 has been postponed, the Ministry of Housing, Communities & Local Government announced. The government is continuing work on the fundamental review of business rates, it said, adding that a call for evidence will be published in the coming months. “This announcement will come as a relief to thousands of small business owners who are undergoing the toughest trading period they’ve ever seen,” said Mike Cherry, national chair of the Federation of Small Businesses.
Treasury announced that more than 69,000 bounce back loans worth over £2 billion were approved in the first 24 hours of the scheme. The popularity of the scheme “raises questions for the government in the future, with worries among senior bankers that the light touch checks on borrowers will mean that money is lent to those who cannot afford to pay it back,” the Financial Times reported on May 6, adding that fraud is also a concern.
The Department for Work and Pensions announced that, since the coronavirus pandemic began, around 1.8 million universal credit claims have been made, and the department has made almost 700,000 advance payments.