The second round of support under the Self-Employed Income Support Scheme (SEISS) has opened, offering a one-off grant of up to £6,750.
The scheme is open to the self-employed (including partners in a partnership) whose business has been adversely impacted by Covid-19 since 14 July.
A one-off government grant of 70% of average monthly trading profits over three months will be paid to those who are eligible for the scheme and subject to the cap above. Applications must be made by 19 October.
“The eligibility criteria are the same as for the first round, but the payment is reduced, and those eligible should be contacted by HMRC to notify them of the availability of the funding,” said Martyn Dobinson, partner with accountant Saffery Champness.
Any claims suspected of having been made falsely will be investigated by HMRC.
The qualifying conditions are the same as for the first round of funding, said Mr Dobinson, whereby applicants must:
- Be self-employed or a member of a partnership (and not operate through a company or trust)
- Have been adversely affected by the coronavirus epidemic on or after 14 July 2020
- Have traded in 2018-19 and submitted a tax return for that year in advance of 23 April 2020
- Have traded in 2019-20
- Intend to continue trading in 2020-21
- Have trading profits for 2018-19 of no more than £50,000, which must represent at least half of total income (if this condition is failed, then the average of the three years up to and including 2018-19 will be considered).
The second condition is the key one. “Meeting the rest of the conditions is a clear matter of fact, but have they been adversely affected by Covid-19?” said Mr Dobinson.
“Claimants will need to be able to provide business evidence of that fact, and HMRC will take any fraudulent claims seriously.
“How HMRC will go about checking claims is unclear. The HMRC guidance states that the claimant is expected to make an honest assessment.
“Typically, being adversely affected will mean lower income or higher costs as a result of coronavirus.”
Illness is part of evidence
He said evidence might include having been ill with the virus, having needed to self-isolate or shield due to the virus. “Similarly, if staff availability has been an issue, or supplies or sales have been impacted, then that is clear evidence.”
HMRC guidance states that there is no minimum threshold that needs to be breached, so there is wide scope to make a claim under the scheme, said Mr Dobinson.
“On that basis, I expect that many farmers will have been impacted in some way and should have a valid claim.”
Government loans deadlines
The Coronavirus Business Interruption Loan Scheme (CBILS) is expected to close at the end of September, while the Bounce Back Loan Scheme (BBLS) will close to new applications in November.
The scheme provides:
- Loan funding of between £50,000 and £5m for UK businesses with an annual turnover of up to £45m
- 12 months’ interest and fees covered by the government
- 12-month repayment holiday if needed
- Loan term of up to six years.
The scheme provides:
- Loan funding of between £2,000 and £50,000, up to a maximum of 25% of annual turnover
- 12 months’ interest and fees are covered by the government
- 12-month repayment holiday is available
- Lloan term is up to six years
- Expected to close to new applications on 4 November.
“With the full impact of Covid-19 yet to be felt by many farming and rural businesses, these loan application deadlines may come too soon.
“Unlike funding under the Coronavirus Job Retention Scheme (CJRS) or SEISS, the loan funding will need to be repaid and, therefore, many will have attempted to negotiate this phase by using their own resources without resorting to emergency debt finance, however appealing it may have seemed.
Additional funding needed
“However, as the crisis continues and the impact takes hold, it’s likely that many will realise that they will need to access this additional funding to stay afloat after all.
“Other factors affecting farming businesses, including the weather, pricing of inputs, such as fertiliser and feed, and market and commodity price fluctuations may pose additional risk to these businesses during the coming months.
“Similarly, those that have diversified into other areas, such as events, holiday accommodation, attractions and tourism, for example, may not have felt the full impact of the virus yet. A seriously shortened season will pose a severe challenge in terms of turnover and profitability.
“Budgeting and cashflow forecasting has never been more important and will help to determine whether there is a need to access funding through these loan schemes, which could be crucial for many businesses as the winter bites. There will certainly be rural businesses needing to take advantage of every possible measure of support available.”
While it was possible that both these loan schemes could be extended, anyone wishing to benefit from this funding should take advantage within the previously advertised life of the schemes, and make their applications in good time, advised Mr Dobinson.