SEISS and offsetting tax to maximise UC

durrisdemon

At moneysavingexpert.com  /news/2020/04/benefits-help-coronavirus/ there is an example of Sally Selfemployed.  Neat.  Four questions
1. It seems odd to be able to offset tax against income (in the form of an SEISS grant).  Is this a peculiarity of the way UC is calculated?
2. Can you offset a Payment on Account in this way?  i.e. bring forward the July 31 POA to June to offset the SEISS grant.
3. Can you ALSO (or instead) pay some of your tax due for 19/20 in June?
4. If you don't do this and only pay your tax later (July...) are you actually losing out long-term?  You might not get the SEISS offset for UC calculation in June, but the tax will be offset in a later month, assuming you're still getting UC (which with the music festival season dead as a dodo, I probably will)?
TIA
.

theone999

durrisdemon said:

At moneysavingexpert.com  /news/2020/04/benefits-help-coronavirus/ there is an example of Sally Selfemployed.  Neat.  Four questions
1. It seems odd to be able to offset tax against income (in the form of an SEISS grant).  Is this a peculiarity of the way UC is calculated?
2. Can you offset a Payment on Account in this way?  i.e. bring forward the July 31 POA to June to offset the SEISS grant.
3. Can you ALSO (or instead) pay some of your tax due for 19/20 in June?
4. If you don't do this and only pay your tax later (July...) are you actually losing out long-term?  You might not get the SEISS offset for UC calculation in June, but the tax will be offset in a later month, assuming you're still getting UC (which with the music festival season dead as a dodo, I probably will)?
TIA
.

I have asked HMRC today whether you can defer claiming the SEISS grant and they said so far there is no cut off date.

Like you I do not want to claim the grant now and be kicked off UC back into an economy where I will earn next to nothing. Like you, I am highly reliant on the entertainment sector. Probably like you, my grant isn't "big", although big is a relative term, I am certainly not getting anywhere near £7500 so I do not want to swap UC for SEISS, get kicked off UC then have all the trouble of reapplying later.

I would rather stay on higher rate UC with no sanctions for failing to work / look for work and with the minimum income floor assumption removed from claim for as long as possible then claim my SEISS grant from HMRC on the 1st day after I leave UC when the government opens the economy fully.

Thrugelmir

Expect a long drawn out process. Rather than a light switch moment. The global pandemic is going to remain with us for the foreseeable future. 

durrisdemon

theone999 said:

I would rather stay on higher rate UC with no sanctions for failing to work / look for work and with the minimum income floor assumption removed from claim for as long as possible then claim my SEISS grant from HMRC on the 1st day after I leave UC when the government opens the economy fully.

Be really helpful if Martin (Lewis) could cover this in his guides.  Martin....?

calcotti

theone999 said: I do not want to swap UC for SEISS, get kicked off UC then have all the trouble of reapplying later.

Although a nil month for UC usually results in the claim being closed I believe that claims are being kept open at the moment. Even if your UC claim is closed you simply log back into your UC jou4nal andmake a rapid reclaim - it’s very simple.

Mckele

Anyone have any answer about whether it is definitely possible to pay tax with Seiss and declare it as business expense? 

durrisdemon

Any updates or reliable clarifications on this?

Jeremy535897

Income tax and NIC paid on self employed profits is a deduction for universal credit. See ADM H4:

"H4122 Any payment made to HMRC during the assessment period of
1. class 2 contributions or
2. class 4 contributions in respect of the trade, profession or vocation has to be deducted from the gross profits

H4123 Any payment of income tax made during the assessment period to HMRC in respect of the trade, profession or vocation has to be deducted from the gross profits."

durrisdemon

Big thanks.  Couldn't find the actual HMRC doc (yet) but found this which looks to be reliable (remove al spaces as I've not been here long enough to post a link(!)): https  /  revenue  benefits.org.uk     /pdf/Sellf_employment_May_2017.pdf

Jeremy535897

It is LITRG's take on the rules, and they are normally very reliable
https://revenuebenefits.org.uk/pdf/Sellf_employment_May_2017.pdf

The official document (ADM H4) is here:
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/878191/admh4.pdf

calcotti

Jeremy535897 said:

It is LITRG's take on the rules, and they are normally very reliable
https://revenuebenefits.org.uk/pdf/Sellf_employment_May_2017.pdf

The official document (ADM H4) is here:
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/878191/admh4.pdf

And H4122 which you quoted earlier reference regulation 57of the Universal Credit Regulations 2013
https://www.legislation.gov.uk/uksi/2013/376/regulation/57. This regulation sets out the method for calculating self employed earnings and includes:
"Step 3 Deduct from the amount resulting from step 1 or (if applicable) step 2 any payment made by the person to HMRC in the assessment period by way of national insurance contributions or income tax in respect of any trade, profession or vocation carried on by the person."

Worth adding that a pension contribution is also deductible (that is included as step 4).