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Business Impacts from COVID-19 [3]

Long awaited information has been given by the Government today in relation to self-employed personnel.

We do warn that these measures do exclude a number of people, but the base criteria are outlined below.

In particular, Directors operating businesses through limited companies appear, (at this point) to have been excluded from assistance, although detailed information has yet to be released. We do not know if the Government will change their stance on this.


Self-Employment Income Support Scheme (SEISS)

The government will provide self-employed people who have been adversely affected, a taxable grant worth 80% of their average monthly profits over the last three tax years (2016/17 to 2018/19), up to a maximum grant of £2,500 a month.

The grant will cover three months initially and could be extended if required.

The grant will be subject to the self-employed individual meeting all the following conditions:

  1. A Tax Return for 2019 must exist.
    • For those individuals who have not filed their 2018/2019 Tax Return, the Government is allowing them an extra 4 weeks to file, in order to be considered for the grant.
  2. Those whose trading profit exceeds £50,000 will be excluded
  3. The majority of an individual’s total income (i.e. more than 50%) must derive from self-employment

The government has stated that eligible individuals will be contacted directly by HMRC, and will then have to complete further declarations.

The grant is due to be accessible by the beginning of June (although this is a target date and could be subject to change). We acknowledge this is a long time for many clients to wait and we remind them of the Business Loan Interruption scheme which can be accessed via their bank.

The Chancellor alluded to the fact that due to the grants offered to Self Employed individuals, there is an intention to raise taxes in the future to fall in line with Employment taxes.


Directors of Limited Companies

Many readers have asked if Directors of Limited companies can become a FURLOUGH employee, where the government can provide them with 80% of their Director salary via the same grant offered to other employees.

It remains our understanding that this is currently not possible, because as a company director, the individual will continue to be involved in the on-going administration of the business; whether that is replying to emails, souring new income, making payments, etc.

It is a requirement that FURLOGH employees must not undertake any work for the business.

If there is more than one Director, we would deem it a reasonable argument that only one Director is required to continue company operations, and therefore any additional Directors could be FURLOUGH.

Again, the Government may provide more detail on this once their papers are published and these grey areas should be clarified.


We hope you find this update useful, and as always, we will update you as soon as we know more.


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