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 following periods the first period will cover November 2020 until the end of January 2021 and the second will cover 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.
To make a claim for this third grant your business must have had a new or continuing impact from coronavirus between 1 November 2020 and 29 January 2021, which you reasonably believe will cause a significant reduction in your profits.
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
- HMRC have confirmed that they expect you to make an “honest assessment” about whether you reasonably believe your business will have a significant reduction in profits. They will expect you to keep evidence to support this claim.
The level of grant payable for the third grant which covers the period of 1 November 2020 to 29 January 2021 will be an amount worth 80% of average monthly profit, with a ceiling of £7,500 for the 3-month period.
This will represent taxable income and need to be reported on future tax returns. The level of the later extension grant covering the period February 2021 to April 2021 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
The online service for applying for the third grant is now available and the closing date for this application is 29 January 2021.
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:
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
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?
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.