Owners of newly formed limited companies are unlikely to be eligible for the Self Employed Income Support Scheme (SEISS) grant – even if HMRC contact them and the eligibility checker says they may qualify. The Low Incomes Tax Reform Group (LITRG) warning comes as HMRC contact people inviting them to check their eligibility and claim for the SEISS grant.
To qualify for SEISS you must be a self-employed individual or a member of a partnership. HMRC’s eligibility checker confirms that people may be eligible based on the information HMRC holds from tax returns for 2018/19 or earlier – but it does not check the other qualifying conditions, the LITRG said. Instead, claimants are required to declare they meet three other conditions when they apply through the claim tool – including that they:
- Traded in the tax year 2019 to 2020;
- Intend to continue to trade in the tax year 2020 to 2021; and
- Carry on a trade which has been affected adversely by COVID-19.
Business owners who were self-employed but have recently incorporated are not still self-employed. As a result, they are unlikely to meet the additional conditions, even if they think of themselves as continuing to trade.
LITRG said it had been contacted by people confused about this distinction and the tax campaign group is calling on HMRC to clarify what ‘self-employed’ means in their SEISS guidance – and specifically, that if you have your own company, which you work for, you are not self-employed.
It suggests that limited company owners, who are usually employees of their own limited companies, look to the Coronavirus Job Retention Scheme instead, to the extent that they pay themselves a salary and meet the conditions of that scheme.
LITRG is offering the following pointers to limited company directors who find that they do not qualify for any individual support:
- You may be eligible for welfare benefits, so speak to a welfare rights adviser (https://advicelocal.uk/) who will be able to go through things in detail with you and help you identify your best options.
- Check out other government support available to businesses (see https://www.gov.uk/coronavirus/business-support) to help you through this difficult time.
- If you need help in regularising your own/your limited company’s tax affairs, see https://www.litrg.org.uk/getting-help.