[Amended 25/11/20] The Self-Employment Income Support Scheme will now be extended from November 2020 to April 2021.
If you’re eligible for the third grant, you’ll receive a grant worth 80% of your Average Trading Profit paid out in a single instalment covering 3 months’ worth of profits, and capped at £7,500 in total. The level of the fourth grant is to be kept under review and announced in due course.
Claiming the third grant:
The online service for the third grant will be available from 30 November 2020. You must make your claim on or before 29 January 2021.
From the 30 November 2020, you will be able to use the portal to check your eligibility. To work out your eligibility, HMRC will look at your 2018 to 2019 Self Assessment tax return. Your trading profits must be no more than £50,000 and at least equal to your non-trading income.
If you’re not eligible based on the 2018 to 2019 Self Assessment tax return, they will then look at the tax years 2016 to 2017, 2017 to 2018, and 2018 to 2019.
In order to then claim the third grant, the taxpayer:
HMRC has specifically said that a reduction in profits due to increased costs (such as having to buy masks) does not count for this purpose.
No claim can be made where the reduced activity, capacity or demand is caused solely because the person is required to self-isolate, or care for a person required to self-isolate, as a result of travelling to the UK.
The scheme has not been extended to businesses that were not eligible for the first and second grants and information from 2019/20 returns will not be taken into account.
Claims for the second SEISS grant have now closed and HMRC has temporarily withdrawn guidance on the scheme while it develops guidance on the third and fourth grants.
The Chancellor has announced a second and final grant under the Self-employment Income Support Scheme (SEISS).
The grant will be based on 70% of earnings for three months (June to August) capped at £6,570 with applications due to open in August.
HMRC has confirmed the same eligibility criteria will be used to establish entitlement to the further SEISS grant. We remind you that self-employed individuals, including members of partnerships, are eligible if they:
The government has not moved to extend the scheme to those who were not eligible for the first payment, however an individual does not need to have claimed the first grant to be eligible for this second and final payment. Those claiming both the first and the second grant have to confirm that they meet the eligibility criteria, in particular that their business has been adversely affected by coronavirus.
HMRC’s guidance indicates that this includes being unable to work because the taxpayer is shielding, self-isolating or is on sick leave or has care responsibilities because of coronavirus. It also includes scaling down or temporarily stopping trading because the supply chain has been interrupted, the business has fewer or no customers or staff are unable to work.
UPDATE 13/06/2020: On 12 June HMRC published examples to show when the “adversely affected” criteria for the first and second SEISS grants will be met. It confirms that those who are self-employed and able to return to work as normal in June will not be eligible for a second grant, although they can claim a grant for the first period.
What you need to know
Who can claim:
Self-employed individuals or a member of a partnership (as long as certain criteria are met, see below). Limited companies and trusts are not entitled to claim.
How much can be claimed:
80% of trading profits up to a maximum of £2,500 a month.
How long does the scheme run:
Three months (March to May), but it may be extended.
When can claims be made:
The application portal opens in phases between 13 and 18 May.
When will grants be paid:
By 25 May or within six working days of claim.
Who makes the application:
Claims have to made by the taxpayer themselves and cannot be made by agents.
Who does the calculations:
HMRC does all the calculations needed for the claim, using the information in the submitted tax returns. The taxpayer does not have to provide any figures.
Is the grant taxable:
Yes, the grant is subject to income tax and self-employment national insurance contributions. HMRC’s policy intent (subject to legislation being enacted) is that the grant is taxable when received and there is no requirement to allocate the grant to the months to which it nominally relates (March to May). HMRC does not expect any element of the grant to be reported on 2019/20 self assessment tax returns.
Self-employed individuals, including members of partnerships, are eligible if they:
HMRC has provided some guidance on the meaning of ‘adversely affected’. This includes being unable to work because the taxpayer is shielding, self-isolating or is on sick leave or has care responsibilities because of coronavirus. It also includes scaling down or temporarily stopping trading because the supply chain has been interrupted, the business has fewer or no customers or staff are unable to work. It is also important to keep evidence in this case, such as:
The taxpayer's trading profits must be no more than £50,000 and more than half of their total income for either:
The amount of the grant is based on the average trading profits for the relevant years. Examples are available in HMRC’s guidance. Note that the grant is calculated using the trading profits shown on the tax returns; no adjustment is made if the taxpayer traded for only part of a tax year.
How to apply:
From 4 May HMRC will contact taxpayers that it believes may be entitled to claim for a SEISS grant. However, HMRC will not necessarily know whether the taxpayer meets all the conditions of the scheme and the result is subject to meeting the eligibility criteria mentioned above.
The SEISS application portal opens to taxpayers on a staged basis between 13 and 18 May, with the portal opening on different days for different taxpayers. HMRC is sending reminder emails to taxpayers who have provided an email address to confirm when the portal is open. Taxpayers can also use the eligibility checker at any time to check whether the application portal is open for them and to register an email address to prevent any delays in accessing the portal.
Taxpayers then log in to their government gateway account (or select the option to create an account) to complete the application process. They are presented with a calculation of the amount of the grant and are asked to:
The taxpayer does not need to provide any information about their income – the calculations are all done by HMRC based on the tax returns submitted. HMRC will check the claim and expects to make payments by 25 May 2020 or within six working days of the application being submitted.