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Self employment income support scheme (SEISS) Updated 28/10/2020 – see whether you may qualify

Home- Insights- Blog- Self employment income support scheme (SEISS) Updated 28/10/2020 – see whether you may qualify

The Chancellor of the Exchequer has issued a financial package targeted at those who derive the majority of their income from self-employment who are facing hardship due to the Covid-19 pandemic, called the Self Employed Income Support Scheme (SEISS).  The self-employed includes partners in a partnership.

The Government have now announced an extension to the previous scheme. It will last for six months from November 2020 to April 2021 and will be paid in two lump sum instalments, each covering a 3 month period.

LATEST UPDATE ON THE SELF EMPLOYED INCOME SUPPORT SCHEME (SEISS) grant extension

The Chancellor has confirmed that that the self-employed income support scheme (SEISS) is to be extended with 2 grants being available to cover the periods November 2020 until the end of January 2021 and then for the period February 2021 to April 2021.  We are sure this is welcome news as grants will be available to those who have been adversely impacted by Covid 19 until that date.

The criteria for qualification has not changed which may mean that some will continue to miss out.  This will include most of those whose self-employment commenced post 6 April 2019 and owner managed business owners who derive the majority of their income from dividends.

You do not need to have claimed for the original 2 grants to qualify for the Grant Extension, but you will have had to have qualified for them.

You will have to declare that you 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

See if you qualify by clicking here.

Although the criteria for qualifying for the SEISS has not changed, the level of grants payable have, and they have unsurprisingly gone down even further.  For the Grant for the period of November 2020 to January 2021 individuals will be entitled to a grant worth 40% of average monthly turnover, with a ceiling of £1,250 per month.  As such, those that qualify will be entitled to a maximum of £3,750 for the 3-month period.  This will represent taxable income and need to be reported on future tax returns. The level of the second extension grant will be reviewed and set by the government in due course, we will keep you updated on this page once we get further details.

Deadline for applications

DEADLINE FOR APPLICATIONS

We are awaiting details for claiming and deadline dates, but again will update this page once we have details.

The Chancellor has confirmed that there are no further plans to extend the scheme after April 2021. There is, however, still the following help available to those that are self-employed:

Do you qualify for the scheme?

Any grant paid will be subject to income tax as well as National Insurance, and will need to be reported on a future tax return.

To qualify, the individual must have been self-employed for the 2018/19 tax year, still trading in the current tax year, and anticipate trading in the 2020/21 tax year.  If you were not self-employed in 2018/19, you will not qualify under the rules as they stand and as announced. 

One of two tests must be passed:

number 1

Taxable trading profits for the individual in 2018/19 of less than £50,000 and these profits constitute more than half of the total taxable income; OR

number 2

Average taxable trading profits for the individual in 2016/17, 2017/18, and 2018/19 of less than £50,000 and these profits constitute more than half the average taxable income in the same period.

Where the individual has not been trading for the previous 3 years, HMRC will only use those years for which tax returns have been filed.

Finally, HMRC have confirmed that you can only claim if your trade has been adversely affected by Covid-19.  Examples have been provided, and include instances where:

  • You are shielding, self-isolating, on sick leave because of coronavirus, have caring responsibilities because of coronavirus; or
  • You had to scale down or temporarily stop trading because:
  • your supply chain has been interrupted
  • you have fewer or no customers or clients
  • your staff are unable to come in to work

How to submit your SEISS Claim

HMRC have now updated their guidance so that individuals can log in and check if they are eligible for the self-employment income support scheme grant. HMRC’s system will also provide a time and date from which individuals can apply for the grant, if they are deemed eligible. We have created a supporting guide which you can follow to check your eligibility and also ensure you are prepared when the time comes to make your online claim.

How will the grant process work?

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HMRC will contact taxpayers directly, as they should have the information readily available from previous tax returns filed to calculate the quantum of any grant. 

It will only be possible to claim using the GOV.UK online service.  If you have not set up a Government Gateway Account, please contact us at the earliest opportunity and we can provide a help sheet to walk you through the process.

If you receive texts, calls or emails claiming to be from HMRC, offering financial help or a tax refund and requesting you to click on a link or to give personal information, we suspect it will be a scam.

Once the taxpayer has lodged a claim with HMRC, the SEISS grant will be paid within 6 working days. 

Are there any barriers?

branded menzies icon of female

There are not any barriers for a self-employed individual to continue trading during the period, which differentiates this from the Coronavirus Employee Retention Scheme. 

However, the Chancellor has inferred that when Covid-19 is a distant memory, he does plan to overhaul self-employed taxation and put them on the same footing as the employed, who are paid under PAYE.  This could well mean increases in National Insurance but we will have to wait and see.

Complete the below calculator to see if you may qualify for a self-employment grant

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David Truman - FCCA

Partner

David Truman is Menzies Private Client Tax Partner specialising in private client and personal tax planning services for individuals.