All You Need to Know About Self-Employment Income Support Scheme

All You Need to Know About Self-Employment Income Support Scheme (SEISS)

In response to the global pandemic’s wide-scale effects, the UK government came up with a scheme to help self-employed. Under the ‘Self-Employment Income Support Scheme,’ self-employed get grants from the government to mitigate the pandemic’s effects. The main reason for introducing this scheme was to lower the burden for all the self-employed persons. The government has realized that the livelihood of such individuals had taken a massive hit due to Covid-19.
What’s The Purpose Of This Scheme?
The scheme aids the self-employed by giving them two grants for 3-month periods each. The government has already given two grants and extended to offer two new grant periods; Nov 2020 to Jan 2021, and Feb to Apr 2021.
Important Information About the Extension for SEISS
The UK government has decided to extend the project for six months, beginning from November 2020 to April 2021. Self-employed persons will get grants under the Self-employment Income Support Scheme in two installments; each will be for 3 months.
The third installment of the grant will be available for the period beginning 1st November and ending on 31st January. For this, the amount rewarded will equal 80% of average profits earned through trading every month. It will be awarded in one payment that will include the amount worth 3 months’ profits. One can get a maximum amount of £7,500. The government bodies have increased the grant amount from 55% to 80% just to help residents of the UK.
Initially, this grant was proclaimed at 40% but has since risen to 80% for November. Hence, through this change, the aggregate grant level is set to 80% of profits earned through trading. However, from Feb to April 2021, the percentage rate is still under review.
Afterward, the fourth grant session begins on 1st February 2021 and ends on 30th April 2021. The government will announce the exact details and package percentage of the Self-employment Income Support Scheme after completing the previous ones’ review and analysis.
These grants will act as taxable income and are to be treated as such.
Eligibility Criterion for Coronavirus SEISS
For self-employed people, inclusive of those running a partnership will be eligible for the claims. However, they must meet a few requirements to qualify for the Self-employment Income Support Scheme.
It does not make a difference whether they took the first two grants of this scheme or not. What matters is that they should have been competent for those two grants to claim the upcoming ones.
The concerned self-employed person should clearly announce that they will continue trading during and after the situation gets better. Besides this, they should fit into one of the following two categories;
They are, at the moment, actively trading, but the situation has impacted them
The claimants were trading before the pandemic. But they are now unable to continue the operations as a result of the situation caused by Covid-19
Procedure to Claim SEISS
From 30th November, the next installment’s complete details will be provided by HMRC and its online services regarding the applications and procedure of claiming for the grant and relevant guidance on the GOV.UK website.
Once the applicants have completed the application, they will get the grans within 6 business days from the date they have submitted the claim. Apart from this, if you are racking your brain on calculations, HMRC has taken the hassle to its shoulders. The taxpayer or claimant doesn’t need to provide any additional information as the calculations will be done based on the applicant’s tax returns in the due year.
Taxpayers should create a new government gateway account or log in to an existing one to start the application process. HMRC has made the process simpler to ease the applicant through the process. Following this, HMRC has also warned the applicants to submit the claim themselves and not ask any accountant, agent, or advisor to complete the process on their behalf.


VAT: Disbursement passed to the customers

VAT: Disbursement passed to the customers

EU nations utilize distinctive sorts of VAT rates namely standard, reduced and special rate. When you make payments on behalf of your clients, for products or services received and used by them, then you may regard these payments as “disbursements” for VAT purposes. Which implies that you don’t charge VAT on them when you make the invoice for the customer and they can’t even claim it back.

Disbursements: excluding cost from VAT

A payment made to providers in the interest of your clients is known as a “disbursement” on the off chance that you pass the expense on to your clients when you invoice them.

You may have the capacity to forget these payments from your VAT calculations since it’s the client, not you, who purchases and receives the goods or services; you’re simply acting as their mediator.

In order to treat payment as disbursement you must apply the following:

  1. The products and services you paid for are notwithstanding the expense of your own services
  2. You must show the expense separately on your invoice
  3. You made the payment to the supplier on your customer’s behalf and acted as the middle person

It’s typically just a favourable advantage to regard any payment as a disbursement if the provider didn’t charge VAT on it, or if your client can’t reclaim the VAT.

What isn’t covered in Disbursement?

There are numerous incidental costs your business may bring about that must be incorporated into VAT calculations when you invoice clients. These incorporate things like voyaging costs and your very own postage and conveyance costs.

Costs that your business acquires itself when providing products or services to clients are not disbursements for VAT. It’s you who purchases the products or services for use in your very own business.

It’s dependent upon you regardless of whether you itemise costs like these on your invoices. In the event that you do show them independently when you receipt your clients they’re termed as recharges and not disbursements. However, you need to charge VAT on them whether you pay it or not.

Some examples of recharges includes:

  1. A flight ticket that you purchase to visit a customer or to head out to a vocation, on the off chance that you recharge the expense to your customer you should charge VAT on the grounds that the flight was for you, and not for the customer
  2. Postage costs you acquire when you send letters to your clients, these are ordinary business expenses and you should include VAT on the off chance that you recharge them
  1. A bank exchange fee paid while exchanging cash from your business record to a customer’s record – despite the fact that the bank’s charge is excluded from VAT, if you recharge the fee, you should charge VAT, since it was for an administration given to your business and not to your client

When a cost or mileage claim is recognized as billable, then you can make an invoice you simply have to select the expense option from the rundown to include it.

  • Record your Billing expense

When you record your expenses in either business expense paid for utilizing personal money or business expense paid direct from a business account you have to choose the agreement that will be charged for the cost. When you make your next invoice you can choose the billable expense to include.

  • Invoice your Billed expense

When you make your invoice you can click “add invoice line” at that point select ‘billable expense’ from here you will have the capacity to choose the cost you wish to charge your customer for. The equivalent applies when billing mileage, select the ‘billable journey’ alternative.

In a nutshell, VAT should dependably be charged yet you should not charge VAT over VAT. On the off chance that you didn’t acquire VAT on the cost, you charge VAT. But if you brought about VAT on the cost, you don’t charge it once again.

Records needed to keep for VAT

In the event that you pass on any disbursement to your clients and don’t charge VAT on them, you should keep proof, for example, arrange forms and invoices, to demonstrate that you were entitled to let items out of VAT count when you invoiced your clients.

You should likewise have the capacity to demonstrate that you haven’t asserted back the VAT on things you paid for your clients’ behalf.


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