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Self-Employment Income Support Scheme (SEISS)

Updated: 4 days ago



This scheme does not apply to employees and employers. They have their own (CJRS) scheme. Similarly, directors of limited companies are not self employed; they are employees.

Find coronavirus financial support for your business at Gov.uk.


Self-employed to receive a third and fourth grant (updated 2 November 2020)


The SEISS grant is calculated every three months.


The second SEISS grant closed for applications on 19 October 2020.


Applications for a third SEISS grant, for the months of November 2020 to January 2021 will open on 30 November 2020.


The fourth SEISS grant is payable for the three months of February to April 2021. The grant should open for claims in February 2021 .


The self employed, May 2020, were initially entitled to claim 80% of their average quarterly profits based on the last three tax years with the grant worth up to £7,500. This reduced to 70% on the second claim in August 2020, with the grant worth up to £6,570. The third grant will now return to 80% again and be worth up to £7,500 (#).


(#) The first grant, for November 2020 to January 2021, was originally based on 20% of average monthly profits and was worth up to £1,875. On 22 October 2020, the rate and amount were doubled to 40% and £3,750 respectively. On 2 November 2020, the level of the third SEISS grant was boosted to 80% of average monthly profits for the month of November only and therefore the third grant is capped at £5,160 with a 55% third grant. On 5 November, the third SEISS grant was boosted to a full 80% of average monthly profits for the whole of the three months.


The new third and fourth grants are only available to self-employed people who are eligible for the existing scheme, are either (i) 'actively trading but impacted by reduced demand due to coronavirus' or (ii) 'were previously trading but temporarily unable to do so due to coronavirus.'


These two condition differs slightly from the previous two grants where you had to be 'adversely affected by coronavirus'. HMRC say that they will shortly be publishing guidance on what it means in practice'


HMRC is yet to publish legislation for the third and fourth grants. It is expected that the criteria will be:

  • The trader must have been eligible for the previous two SEISS grants, even if they did not apply for them.

  • If the trader is not currently trading then there must be an intention to restart before April 2021

  • The trader has been adversely affected by Coronavirus in the quarter starting on 1 November 2020 to the date of their claim.

  • The trader has not ceased permanently at the date of the claim.


No details have yet been released concerning the fourth SEISS grant.


By the time the fourth grant is payable, it could be almost two tax years years , to 5 April 2019, since the trading results of the trader were included in the calculated profits. If a trader prepared annual accounts to say 30 April 2018, forming part of the tax year 2018-19, then it could be nearer to three years of profits that have been ignored when calculating the relevant income for the grant. We will have to see if the Chancellor will allow profits from 2019/20 to be included in the averaging calculation.


More details are to be provided by HMRC about claiming and applications in due course.


Traders may also consider applying for Universal Credit which can be received in addition to the SEISS grants.


HMRC target self employed who have closed their business (16 October 2020)


HMRC has started to contact self-employed business owners who applied for and received a SEISS grant. HMRC are asking them to confirm whether or not they are still trading.


If they have stopped trading, HMRC want to check whether they were eligible for the grant and may ask for the grant to be repaid.


People who receive letters from HMRC, and are still continuing to trade, will need to reply to HMRC’s request. They will be asked to provide evidence that they are still trading and in business.


There will be people who applied for the SEISS grant that had every intention to continue trading when making the application. However, due to many factors including financial, economic, legal and health reasons may have had to cease trading. This does not mean that they were not eligible for the grant.


People who received a grant before 22 July 2020 must tell HMRC by 20 November 2020 and those who received a grant on or after 22 July 2020 must tell HMRC within 90 days of receiving the grant. If the self-employed do not tell HMRC on time, they may receive a penalty charge.


One of the criteria in applying for the SEISS grant was that the person intended to continue to trade through coronavirus or would restart their business once they were able to reopen.


HMRC are targeting individuals who have permanently closed their business during the months that they received grants for and may therefore not be eligible for all or part of the grant.


HMRC are trying to target individuals who erroneously or fraudulently made a claim for the SEISS grant. Individuals can respond to HMRC by using their website.

Self-employed to receive a second grant of 70% of business profits in August 2020

(updated 11 August 2020)


The scheme has been extended. The government has announced that the self-employed will receive another grant, to cover an extra 3 month period (1 June to 31 August), if their business is still affected by Coronavirus.


If you were eligible for the first grant and can confirm to HMRC that your business has been adversely affected on or after 14 July 2020, you’ll be able to make a claim for a second and final grant from 17 August 2020.

The eligibility criteria for the grant will be the same as the original grant. However, rather than receiving 80% of average monthly profits, over the relevant tax years 2016/17 to 2018/19, the grant will be reduced to 70% of average profits.

The maximum amount will be £2,190 pm, rather than the original grant of £2,500 pm, for the three months. Applications for the second and final grant will open in August.

Businesses do not have to claim for the first grant in order to receive the second grant, e.g. if the business has only recently been affected by Coronavirus.


See the bottom of this article for practical details of how to claim.

Introduction

The government announced a support package for self-employed individuals and partnership businesses that have suffered a loss of earnings due to COVID-19.

Eligible individuals will receive a grant of up to 80% of their average monthly trading profits, capped at £2,500 pm. Initially the scheme will run for a 3 month period.

The scheme will not benefit all self-employed people. Those who started to trade in the tax year 2019/20, those who had profits in excess of £50,000 pa and those who had other taxable income e.g. employment income, substantial dividends or rental income that exceeds more than 50% of their total taxable income will not be eligible.

The scheme will also not benefit directors, who pay themselves a mixture of salary and dividends. However, they may benefit from the Coronavirus Job Retention Scheme if they are paid a salary through a PAYE payroll scheme.

Initially, the grant will cover a 3 month period (1 March to 31 May). HMRC will pay the grant directly into the individual’s bank account as a single instalment in June 2020. In the interim period, the self-employed will need to find other ways to pay their bills using other announced support measures. HMRC contacted those taxpayers who were eligible for the SEISS grant in early May.

The self employed were invited to apply for the grant online through an online portal which opened on 13 May. They were able to claim over the week starting on 13 May to 18 May 2020 with each person having their own claim start day.

The self employed have to confirm to HMRC that their business has been 'adversely' affected by the coronavirus. HMRC will use information they already hold on eligible self-employed taxpayers.


Any grants received will be form part of the self-employed individual’s taxable income and as a result would need to be included on their Self Assessment tax returns. The grant would also need to be included as taxable income on Tax Credit claim forms.

What is the support available due to the Covid-19 impact to those who are self-employed?

Those who are self-employed will get a taxable grant worth 80% of their average monthly taxable profits over the past three years. The grant will be up to £2,500 pm. It is the same capped amount of income as has been announced for furloughed employees.

HMRC guidance states that self-employed trading profits must also be less than £50,000 and that more than half of your income must come from self-employment to be eligible for the grant.

This is determined by at least one of the following conditions being true:

  • taxable profits in 2018-19 were less than £50,000 and those profits represented more than half of total taxable income in that year,

  • average taxable trading profits in 2016-17, 2017-18 and 2018-19 were less than £50,000 and those profits represented more than half of total taxable income in that same tax period

For those that started to trade part way through the period between 2016-17 and 2018-19 then the test will apply to the years for which returns were filed.

What are taxable profits?

HMRC has confirmed that it will use the taxable profits figures from the Self Assessment Tax Return. It will not use the accounting profits shown within Financial Statements as these often need changing for taxation rules.

HMRC will take the trading income (turnover) and then deduct allowable business expenses and capital allowances from capital equipment expenditure.

Taxable profits will also be calculated after claiming any flat rate expenses, the £1,000 trading allowance (if applicable) and any capital allowance claims. Profits will be before deducting the income tax personal allowance.

If trading losses brought forward are used in any of the relevant three tax years, 2016-17 to 2018-19, to reduce trading profits, HMRC will ignore the loss relief claim. Therefore, an individual would still receive the grant even if they did not pay tax on net profits after deduction of losses brought forward.


However, if a trading loss was made during 2016/17, 2017/18 or 2018/19, then it will reduce the average trading taxable profits and therefore the grant.


Most self-employed individuals should be able to find their relevant taxable profits on the face of their HMRC tax calculation or self employment pages of their Tax Return.

Are there any conditions to claim this support scheme?

Yes. The self-employed can apply for the scheme if they:

  • have submitted their Self Assessment tax return for the tax year 2018-19

  • traded in the tax year 2019-20

  • are trading when they apply, or would be except for Covid-19

  • intend to continue to trade in the tax year 2020-21

  • have lost trading profits due to Covid-19

In addition to above, they must also satisfy the £50,000 profit limit test and other rules noted in section above.

Are the recently registered self-employed who have not filed any tax return yet (i.e. 2019-20 being first return) eligible for this support?

No. According to the Treasury, it is very difficult to assess the amount of the benefit for recently registered self-employed people. They may have to look at the alternative financial support i.e. Universal Credit or Employment and Support Allowance.

Can the self-employed amend the already submitted returns?

To avoid the abuse of the scheme, HMRC will use data on the 2018-19 tax return already submitted.


Can a director of a company claim this grant?

No, not under the self-employment scheme. A director of their own company who is paid through PAYE may be eligible to get support using the Job Retention Scheme. More detail on the position of director-shareholders is expected to be announced.

Does this grant need to be included in the existing tax credit claims in July 2020 declaration?

Yes, this is a taxable grant and it will need to be included as income for the existing tax credit claim.

Making a claim under the Self-Employment Income Support Scheme

On 4 May, HMRC announced that the self-employed cannot ask their accountant to make the claim on their behalf using the accountant’s agent account with HMRC.


Instead, self-employed clients will have to use their own Government Gateway account. Therefore, the self-employed must set up an account with HMRC as soon as possible to be able to make a claim.

Check if you are eligible to claim

You can check if you can claim a grant through the Self-Employment Income Support Scheme. You can use the HMRC online tool to find out if you are eligible to make a claim.

You will need your Self Assessment 10-digit Unique Taxpayer Reference (UTR) number and your National Insurance number. You will receive an immediate answer.

When you make your claim

The online service opened to make a claim from 13 May 2020.

You’ll only need your:

  • Self Assessment 10-digit UTR

  • National Insurance number

  • Government Gateway user ID and password

  • Bank account number and sort code you want the grant paid into

You will have to confirm to HMRC that your business has been adversely affected by coronavirus.

A business could be adversely affected by coronavirus, for example, if you are unable to work because you:

  • are shielding

  • are self-isolating

  • are on sick leave because of coronavirus

  • have caring responsibilities because of coronavirus

  • you have had to scale down or temporarily stop trading because:

(a) your supply chain has been interrupted

(b) you have fewer or no customers or clients

(c) your staff are unable to come in to work


Once you have made a claim then you will need to report the grant:

  • on your Self Assessment tax return

  • as self-employed income for any Universal Credit claims

  • as self-employed income and that you’re working 16 hours a week for any tax credits claims.

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