On 26 March 2020, the Chancellor provided details about a scheme to provide grants to individuals who are self-employed or who are members of a partnership; the Self-Employment Income Support Scheme (SEISS).
The scheme opened for claims for a first grant on 13 May 2020 and closed on 13 July 2020. A second grant was available for claims between 17 August 2020 and 19 October 2020. Individuals who did not make a claim for the initial grant were still entitled to claim for the second grant provided they met the eligibility criteria.
On 24 September 2020, the Government announced a further extension of the scheme from 1 November 2020. We’ve set out guidance below about who’s eligible and how to make a claim below.
STOP PRESS: On 22 October 2020, the Government announced that it is increasing the amount of grant available under its extension of the scheme from 1 November 2020.
What is the Self-Employment Income Support Scheme?
It’s a temporary scheme to provide financial grants to self-employed individuals whose income has been negatively affected by the COVID-19 outbreak. This includes members of partnerships.
Am I eligible for the Self-Employment Income Support Scheme?
You will be eligible if you are either self-employed or a member of a partnership and all of the following requirements are met; note that HMRC has developed an online tool you can use to check your eligibility:
- you have traded in the 2019-20 tax year;
- you traded in the 2018-19 tax year and submitted your self-assessment tax return for that year on or before 23 April 2020 (you will not be able to claim if it was submitted after this date);
- you are currently trading (or would be if you hadn’t been impacted by COVID-19);
- you intend to continue trading in the 2020-21 tax year;
- your business has been adversely affected by coronavirus (you will need to confirm this in your application). This could be because you’ve had to stop work because you are shielding, self-isolating, sick or caring for dependants, or because your trade has been affected (eg due to supply chain interruptions, reduced demand or staff unable to work). You can find examples of how this criteria might be met on the Government’s website. Note that to be eligible for the second grant, your business must have been adversely affected on or after 14 July 2020 for you to be able to make a claim; and
- at least half your income comes from self-employment, and your self-employed trading profits are no more than £50,000.
HMRC will look at your 2018-2019 tax return to work out your eligibility. If you’re not eligible based on that return, it will instead look at your average trading profits in the 2016-17, 2017-18 and 2018-19 tax years.
Any tax returns submitted after 23 April 2020 will not be taken account of. Equally, if you amended your submitted tax returns after 6pm on 26 March 2020, those amendments will not be taken into account for the purposes of determining your eligibility for the scheme or the amount of any grant you receive.
For members of partnerships, HMRC will work out eligibility based on an individual’s share of the partnership trading profits. Full details about partnership eligibility are beyond the scope of this article.
Note that if you only started trading between 2016-19, HMRC will look at your continuous periods of self-employment and use your self-assessment tax returns for those years only (eg 2017-2018 and 2018-2019, or 2018-2019 only). If you were self-employed in 2016-2017 and 2018-2019, but not in 2017-2018, HMRC will only use your 2018-2019 tax return.
The Government has confirmed that payments under the scheme will not count as ‘access to public funds’ so you are not prevented from claiming the grant if you are on a work visa.
For information about eligibility for the Self-Employment Income Support Scheme Grant Extension, see below.
Will a period of parental leave affect my eligibility?
If, since 6 April 2019, you have taken a break from your trade to take a period of parental leave, HMRC will treat you as still trading and this will not affect your eligibility for the scheme, provided all of the other criteria are met.
Equally, claims for Maternity Allowance will not affect your eligibility for the scheme.
Note that if having a new child meant that you did not submit a 2018-2019 tax return or affected your reported trading profits or income for that year, you may still be able to make a claim provided you submitted a self-assessment tax return for the 2017-2018 tax year. For further information about this, see the Government’s guidance.
How do I apply for the Self-Employment Income Support Scheme?
The scheme has now closed for claims for the first and second grants. For more information about how to apply for the grant extension, see below.
You can use HMRC’s online tool to assess your eligibility. Note that if HMRC tells you that you’re not eligible to make a claim, you can ask it to review this decision after you’ve used the online tool. If you are unable to claim online, HMRC will make an alternative application available.
What information will I need to make my claim?
To make a claim, you will need the following information:
- Self-Assessment Unique Taxpayer Reference (UTR) number;
- National Insurance number;
- Government Gateway user ID and password; and
- Your bank account details (this must be an account which can accept a Bacs payment).
If you do not have any of this information, see HMRC’s guidance to find out how to get hold of it.
You will also need to confirm to HMRC that your business has been adversely affected by the pandemic.
I’m eligible for the scheme, how much money will I get?
If you were eligible for the first grant, you’ll get a grant from the Government equivalent to 80% of your trading profits, up to a cap of £2,500 per month, to cover 3 months. This means that the maximum you could receive is £7,500.
If you were eligible for the second grant, you’ll get a grant from the Government equivalent to 70% of your trading profits, up to a cap of £2,190 per month, to cover 3 months. This means that the maximum you could receive is £6,570.
Your trading profits will be calculated as an average of your profits over the 2016-17, 2017-18 and 2018-19 tax years. Note that if you started trading between 2016-19, HMRC will use those years for which you were continuously self-employed and have filed a self-assessment tax return (by 23 April 2020) to make its calculation. Bear in mind that if you amended your submitted tax returns after 6pm on 26 March 2020, those amendments will not be taken into account for the purposes of determining your eligibility for the scheme or the amount of any grant you receive.
HMRC will then calculate 80% (for the first grant) or 70% (for the second grant) of that average trading profit and divide it by 12 to get to the monthly figure. If that monthly figure is greater than £2,500 (for the first grant) or £2,190 (for the second grant) then the monthly grant payment will be capped at £2,500 or £2,190 respectively.
To find out how much you will receive under the grant extension, see below.
Are the grants subject to income tax and National Insurance?
Yes. The grants are subject to income tax and self-employed national insurance in the usual way.
How will I be paid?
The Government will pay each grant in one instalment (to cover 3 months) directly into your bank account.
When will I get paid?
Approved claims will be paid within 6 working days of completion of the claim.
Will I need to repay the grants?
Can I still work if I receive a grant under the scheme?
Yes. The Government guidance confirms that individuals who receive a grant under the scheme can continue to work and/or take on other employed work, including volunteering.
What records do I need to keep?
You should keep records of your claim, including the amount you have claimed, your claim reference number and evidence that your business has been adversely affected by the pandemic.
Remember that any grant money that you receive is subject to income tax and national insurance, and you will therefore need to report it on your self-assessment tax return.
What if I am overpaid?
If you think that you have been overpaid or that you were not eligible for the grant, you must tell HMRC and repay the grant or you may have to pay a penalty.
If you received the grant before 22 July 2020, you have until 20 October 2020 to inform HMRC about the overpayment. If you received the grant on or after 22 July 2020, you must tell HMRC within 90 days of you receiving it.
What is the Self-Employment Income Support Scheme Grant Extension?
It is an extension of the scheme to provide two further grants to eligible self-employed individuals to cover the periods from 1 November 2020 to 31 January 2021 and 1 February 2021 to 30 April 2021.
Am I eligible for the grant extension from 1 November 2020?
If you are currently eligible for the Self-Employment Income Support Scheme (see above), you will be eligible for the grant extension provided that you make a declaration that you intend to continue to trade and either:
- you are currently actively trading but your business has been impacted by coronavirus between 1 November 2020 and the date of your claim; or
- you were previously trading but are temporarily unable to do so due to coronavirus.
Note that you do not need to have previously made a claim under the Scheme to be eligible for the grant extension.
How do I apply for the grant extension?
No information has yet been provided by the Government about how applications can be made for the grant extension.
I’m eligible for the grant extension, how much money will I get?
If you are eligible for the grant extension, you will receive two lump sum grants, each covering a 3 month period (from 1 November 2020 to 30 April 2021).
The first of these grants will be the equivalent of 40% of your average monthly trading profits, paid in a single instalment to cover 3 months, up to a total cap of £3,750 for the three month period.
HMRC has not yet confirmed the level of the second grant under the grant extension.
Are the grants subject to income tax and National Insurance?
Yes. The grants will be subject to income tax and self-employed national insurance in the usual way.
What do I need to do now?
You can use HMRC’s online tool to check your eligibility for the scheme.
We will provide further guidance about the grant extension once more information is released by HMRC.
If you require financial assistance in the meantime, use our financial eligibility checker for details about other schemes that may be available to you and to find out what you’re eligible for. Specifically, the Government has said that the self-employed will be able to access increased amounts of Universal Credit, but bear in mind that any grant money you receive under the Self-employment Income Support Scheme will be treated as part of your income for the purposes of your Universal Credit assessment.