Self-Employment Income Support Scheme
Last updated Monday 8 March 2021 - 10:09
At the Budget it was confirmed that the fourth SEISS grant will be set at 80% of 3 months’ average trading profits, paid out in a single instalment, capped at £7,500. The fourth grant will take into account 2019/20 tax returns and will be open to those who became self-employed in the 2019/20 tax year.
Eligibility for the scheme will now be based on the 2019/20 tax return. This may affect the amount of the fourth grant which could be higher or lower than previous grants received.
Eligibility for the fourth grant will first look at the 2019/20 Self-Assessment tax return. Trading profits must be no more than £50,000 and at least equal to non-trading income.
If an individual is not eligible based on the 2019/20 Self-Assessment tax return, the 2016/17, 2017/18, 2018/19 and 2019/20 tax years will then be reviewed.
To qualify, an individual must also have traded in both tax years:
- 2019/20 and submitted their tax return by 2 March 2021
To be eligible for the Grant, self-employed individuals, including members of partnerships, must:
- be currently trading but be impacted by reduced demand due to coronavirus
- have been trading but be temporarily unable to do so due to coronavirus
They must also declare that:
- they intend to continue to trade
- they reasonably believe there will be a significant reduction in their trading profits due to reduced business activity, capacity, demand or inability to trade due to coronavirus
An individual does not need to have claimed any previous grants to receive either of these additional grants. For example, they may only have been adversely affected by coronavirus (COVID-19) in this later phase.
The online claims service for the fourth grant will be available from late April 2021 until 31 May 2021.
HMRC will contact eligible individual’s in mid-April to give them their personal claim date.
The UK government has also announced that there will be a fifth and final grant covering May to September.
Individuals will be able to claim from late July if they are eligible for the fifth grant.
The amount of the fifth grant will be determined by how much the individuals’ turnover has been reduced in the 2020/21 tax year.
The fifth grant will be worth:
- 80% of 3 months’ average trading profits, capped at £7,500, for those with a turnover reduction of 30% or more
- 30% of 3 months’ average trading profits, capped at £2,850, for those with a turnover reduction of less than 30%
Further details will be provided on the fifth grant in due course.
Who can claim?
Those who are a self-employed individual or a member of a partnership and:
- carry on a trade which has been adversely affected by coronavirus (either through reduced demand or being temporarily unable to trade)
- reasonably believe there will be a significant reduction in their trading profits due to reduced business activity, capacity, demand or inability to trade due to coronavirus
- traded in the 2019/20 tax year and submitted their Self-Assessment tax return on or before 2 March 2021
- traded in the tax year 2020/21
A business can be adversely affected by coronavirus if, for example:
1. The individual is unable to work because they:
- are shielding
- are self-isolating
- are on sick leave because of coronavirus
- have caring responsibilities because of coronavirus
2. Or, the business has had to scale down or temporarily stop trading because:
- the supply chain has been interrupted
- it has fewer or no customers or clients
- staff are unable to come in to work
It is understood that the significant reduction in trading profits test is to be applied to the accounting period as a whole.
An individual’s tax agent or adviser cannot make the claim for them. The individual must make the claim themselves. Please contact us should you require any help or assistance.
How different circumstances affect the scheme
Certain circumstances can affect eligibility, including:
- if the individual’s return is late, amended or under enquiry
- if they are a member of a partnership
- if they are on or took parental leave
- if they have loans covered by the loan charge
- if they claim averaging relief
- if they are non-resident or chose the remittance basis
- if they are above the state aid limits
Additional details can be found here.
Checking eligibility to claim
Individuals can use HMRC’s online tool to find out if they are eligible to make a claim. As your tax agent, we can also use the online tool on your behalf but, we cannot make the claim.
To check eligibility, an individual will need:
- Self-assessment Unique Taxpayer Reference (UTR) number.
- National Insurance number
If an individual is eligible, HMRC will confirm the date that they will be able to make a claim from and ask the individual to add their contact details. HMRC will use these to remind individuals when the online service will be available.
If HMRC state that an individual is not eligible to make a claim, they can ask HMRC to review this after they have used the online tool.
How to claim
Eligible individuals will be contacted by HMRC and more information on how to claim will be provided. Individuals do not need to contact HMRC now.
If an individual receives texts, calls or emails claiming to be from HMRC, offering financial help or a tax refund and asking them to click on a link or to give personal information, it is a scam. They should email it to email@example.com and then delete it.
Making a claim
The individual will need:
- Self-assessment UTR
- National Insurance number
- Government Gateway user ID and password – individuals who do not have a user ID will need to create one (this can be done when they check their eligibility online)
- bank account number and sort code that they want HMRC to pay the grant into (only bank account details where a BACS payment can be accepted)
The individual will have to confirm to HMRC that the business has been adversely affected by coronavirus.
Once the claim has been submitted, the individual will be told straight away if the grant is approved. HMRC will pay the grant into their bank account within 6 working days.
Individuals must keep a copy of all records in line with normal self-employment record keeping requirements, including:
- the amount claimed
- the claim reference number
- evidence that the business has been adversely affected by coronavirus
Individuals will need to report the grant:
- on their Self-assessment tax return
- as self-employed income for any Universal Credit claims
- as self-employed income and that they are working 16 hours a week for any tax credits claims