Self-Employed Income Support Scheme
The UK Government announced measures to support the self-employed on 26 March 2020, since when there have been a number of updates. The latest information is below.
Eligible self-employed individuals and members of partnerships can now apply to HMRC for financial support through the Self-employed Income Support Scheme (SEISS). HMRC have used existing information to invite potentially eligible individuals to apply.
The scheme opened in early June and has been extended; individuals may now apply for a third grant if they are eligible. Each self-employed individual must make their application themselves; not through a proxy or agent such as a tax agent, adviser, or accountant. Doing so will trigger a fraud alert, and this will cause payments to be delayed.
For the purposes of this grant, Company Directors are treated as employees, and not self-employed.
This temporary scheme allows eligible applicants to claim:
The first grant – a taxable cash grant of 80% of their average monthly trading profits which is paid out in instalments covering three months each. The grant is capped at £7,500 in total. The deadline for application for this grant was 13 July 2020.
The second grant – a taxable grant worth 70% of their average monthly trading profits, paid out in a single instalment covering a further 3 months’ worth of profits, and capped at £6,570 in total. The application portal for the second grant is now open. The deadline for applications for this grant was 19 October 2020.
The third grant – a taxable grant calculated at 80% of three months’ average monthly trading profits, paid out in a single instalment and capped at £7,500 in total.
The fourth grant – details will be announced about the level and eligibility criteria for the fourth grant in due course.
While the grants do not need to be paid back, they are subject to Income Tax and self-employed National Insurance.
Claimants are judged to be eligible for the third grant if they are a self-employed individual or a member of a partnership, and ALL of the following apply:
- they have been previously eligible for the SEISS first and second grants (see criteria listed below), although they do not need to have claimed either of the previous grants.
- they intend to continue to trade and either:
- are currently actively trading but are impacted by reduced demand due to coronavirus
- were previously trading but are temporarily unable to do so due to coronavirus
Eligibility criteria for the first and second grant were as detailed below:
- their trading profits in the relevant tax year(s) must not exceed £50,000
- their trading profits in the relevant tax year(s) must be at least equal to their non-trading income
- they traded in the tax year 2018/19, and submitted their Self-Assessment tax return on or before 23 April 2020 for tax year 2018/19
- they traded in the tax year 2019/20
- they intend to continue to trade in the tax year 2020/21
- their trade has been adversely affected by coronavirus (for the second grant, trade must have been affected on or after 13 July 2020)
Self-employed parents whose trading profits reduced in 2018/19 because they took time out to have children will now be eligible to make a SEISS grant application based on trading profits from a different specified time period.
Parents and adopters who took time out of trading to care for their children in the first 12 months since birth / adoption placement will now be able to use either their 2017/18, or both their 2016/17 and 2017/18 self-assessment returns as the basis for their eligibility for the SEISS.
Those who are NOT eligible for this grant include:
- those operating limited companies
- those operating a trade through a trust
- those who pay themselves a salary and dividends through their own company
Grants under the SEISS are not counted as ‘access to public funds’, and the grant can be claimed by individuals on all categories of work visa.
Individuals can use the government’s online eligibility checker to see if they are eligible. To do so, individuals will need:
- their Self-Assessment Unique Taxpayer Reference (UTR) number
- their National Insurance number
If the eligibility checking tool indicates that an individual can apply, they will need:
- their Government Gateway user ID and password
- full UK bank details (the account must be able to accept Bacs payments)
There is no need for an individual to make any calculations before applying; HMRC will calculate how much of a grant each person should receive if their application is accepted.
If an individual is successful in their application and receives the grant, they can:
- continue to work to whatever extent is possible
- start a new trade
- take on other paid employment
- take on voluntary work
- assume duties as an armed forces reservist
For further detailed information about this scheme, please see the government’s Self-employment Income Support Scheme webpage.
You should immediately advise the HMRC if you believe that you have received a grant overpayment; if you do not, you may be subject to a penalty. Further guidance will shortly be available.