The Self Employment Income Support Scheme explained
The Treasury’s generous package of support for businesses has been a lifeline to many. The latest round of government grants under the Self Employment Income Support Scheme opened on Monday to help those who’ve had their business and livelihood negatively impacted by coronavirus since 14 July.
The Self Employment Income Support Scheme (SEISS) was announced in April after calls for better financial support for the self-employed, who couldn’t claim furlough pay if they’re not paid through PAYE. It has been broken down into two payments, with the first round launching in April, and access to the second now open to applications for those eligible. The scheme received claims from nearly 2.7 million self-employed people across the UK in May and June, totalling £7.8 billion.
If you’re self-employed, you may now be entitled to a second and final payment of £6,570. Below we go through the intricacies of the scheme, who’s eligible and how to get the grant if you are.
The Coronavirus Job Retention Scheme helped to support over 9 million workers, paying for 80% of their wages from April onwards. But self-employed people haven’t been able to access it if they’re not paid through PAYE.
In response, the Treasury designed the SEISS as a way to offer a similar level of support, paying out grants in two instalments. The first was worth 80% of an individual’s average monthly trading profits, covering 3 months’ worth of profits each and capped at £7,500. But the second and final grant is the equivalent of 70% of profits, capped at £6,570. This is roughly in line with how the CJRS is being wound down, too.
The second grant opened to applications yesterday and HMRC has promised that funds will arrive within six working days after an approved claim has been made. Rishi Sunak promised this second round of funds will protect people’s livelihoods and help them ‘get back on their feet as we return to normal’.
The same criteria is applicable for the second grant as the first. All eligible people must be self-employed or a member of a partnership, have trading profits below or equal to £50,000 and these profits must make up at least half of their total income. However, this second sum is open to anyone whose self-employed business has been affected negatively by coronavirus (such as self-isolating or supply chain interruptions), specifically since 14 July 2020.
Anyone entitled to support needs to have traded at least in the tax year 2018 – 2019 and submitted their Self Assessment tax return on or before 23 April 2020. You also need to have traded in the tax year 2019 – 2020 and you should be intending to continue trading this tax year too. If you’re not eligible from that tax return then HMRC will look at your returns from tax years 2016 – 2017, 2017 – 2018 and 2018 – 2019 together.
Unfortunately, the scheme doesn’t cover self-employed people who are limited company directors, those who are newly self-employed or freelancers who are paid through PAYE.
Although the same criteria apply for the second grant as the first, you don’t need to have claimed for the first grant to apply for this one. You’ll need to tell HMRC that your business has been negatively impacted by coronavirus since 14 July 2020, and they’ll assess your claim. If you’re contacted after applying you’ll be allowed to make a claim for the second SEISS grant until 19 October 2020, when the scheme closes.
To make your claim you’ll need your:
- Self Assessment Unique Taxpayer Reference (UTR)
- National Insurance Number
- Government Gateway ID and password (this can be made when you make the claim if you don’t already have one)
- UK bank details
On Monday morning, HMRC announced that nearly 33,000 people had already made successful claims.
You’re allowed to continue to work if you receive the grant, unlike with furlough, and you’re also allowed to start a new business or take on new work. Although the grant doesn’t need to be repaid, you’ll need to apply Income Tax and National Insurance to the amount.
The taxable grant is based on your average trading profit. HMRC works out the amount you’re eligible to receive for you. Your grant reflects the average monthly profit, which they calculate by adding together your total trading profits or losses for the past three complete tax years and dividing this figure by three. There’s more information on how HMRC calculates this if you haven’t traded in every year over the past three tax years here.
Anyone whose business and income has been adversely affected by coronavirus may be entitled to other parts of the Government’s support package. This includes the Bounce Back Loan Scheme, business support grants, Universal Credit, income tax deferrals, mortgage holidays and rental support. Business support schemes, such as the Coronavirus Business Interruption Loan Scheme, are also open for applications until September 2020.
For more help with the Self Employment Income Support scheme, check the government website or phone HMRC on 08000241222, Monday to Friday, 8am to 4pm.