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The government’s support scheme for the self-employed – the Coronavirus Self-Employed Income Support Scheme (SEISS) offers taxable grants for many sole traders and partnerships.
Applications for the first grant of up to 80% of your average monthly trading profits capped at £7,500 closed on 13th July 2020. Applications for the second grant covering up to 70% of your average monthly trading profits, capped at £6,750 closed on 19th October 2020.
There is a third SEISS grant available covering the period November 2020 to January 2021. The government announced in November that due to the lockdown the third grant for the Self-Employed Income Support Scheme (SEISS) would be increased to 80% of profits instead of the 40% previously announced and the payment date would be brought forward.
The third grant covers the 3 month period from 1st November 2020 until 31st January 2021. The Government is providing a taxable grant calculated at 80% of 3 months average monthly trading profits, paid out in a single instalment and capped at £7,500 in total. This is an increase from the previously announced amount of 55%. And to ensure those who need support get it as soon as possible, payments will also be made more quickly with the claims window was brought forward from 14th December to 30th November.
There is a fourth and final grant planned to cover the period February 2021 to April 2021. The amount of the fourth grant has not yet been announced by the government.
HMRC have provided an online tool to check if you’re eligible. If you received the first two grants you are likely to be eligible for the following grants if your business continues to be affected. The government has an online portal for making a claim which opened on 30th November 2020. We’ve put together this guide to help you make a claim when it is available.
You must make a claim yourself – Tax Agents or advisers such as Crunch cannot make a claim on your behalf.
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The SEISS is designed to support self-employed individuals. For Crunch clients, this usually means you operated as a sole trader during your period of eligibility for the scheme. If you were employed by your business, or you’re a director employed by your limited company, you may be eligible for the Coronavirus Job Retention Scheme (CJRS) or from April 2021 for the Job Support Scheme (JSS). We have prepared a separate CRJS guide for employers to assist you.
HMRC will contact people it believes are eligible to use the SEISS. The grants are paid in a lump sum and do not cover any income from non-trading sources.
Please note, tax agents or advisors such as Crunch cannot make a claim on your behalf. We have prepared this guide to help you understand whether you may be eligible for a payment from the scheme and to help you through the application process based on guidance published by HMRC.
On 22nd October 2020, the Chancellor announced a further expansion of the Self-Employed Income Support Scheme (SEISS), this was amended further on the 2nd November and again on 5th November.
The Self-Employed Income Support Scheme (SEISS) has now been updated and the proportion of profits covered by the forthcoming self-employed grant for the period 1st November 2020 to 31st January 2021 increases to 80% of three months average monthly trading profits, paid out in a single instalment and capped at £7,500 in total. And to ensure those who need support get it as soon as possible, payments will also be made more quickly with the claims window being brought forward from 14th December to 30th November.
The SEISS operates as follows:
The first tranche of SEISS allowed you to claim a taxable grant worth 80% of your average monthly trading profits over the three tax years to 2018/19, paid in a single amount up to a maximum of £7,500.
If you were eligible and your business was adversely affected by COVID-19, you needed to make your claim for the first grant on or before 13th July 2020. The deadline for claiming the first grant has now passed.
The second tranche of SEISS was an extension of the first but only allowed you to claim a taxable grant worth 70% of your average monthly trading profits over the three tax years if your business had been adversely affected on or after 14th July 2020. So you could only claim a maximum of £6,570 between 17th August and 19th October 2020. The deadline for the second grant has now passed.
The SEISS scheme has been extended for those people whose trade continues to be, or is now, adversely affected by coronavirus. If you’re eligible for the third tranche of grant, and your business is being adversely affected, You can make a claim from 30th November 2020 using HMRC’s online system. The government have said the grant should be paid within a few days of your claim. The third grant is also taxable and worth 80% of three months average monthly trading profits, paid out in a single amount up to a maximum of £7,500. The grants are taxable income and also subject to National Insurance Contributions. (see below for eligibility and how to claim).
There will be a fourth grant for those people whose trade continues to be adversely affected by coronavirus after 1st February 2021. The government is yet to announce the percentage of the average monthly trading profits it will be paying. The grant will be paid in a lump sum just like all the previous payments.
The eligibility criteria for all the grants are the same. You do not need to have claimed the first or second grants to claim the third or fourth grants: for example, your business may have been adversely affected by Coronavirus more recently.
Self-employed people who were eligible for the first or second SEISS grant should be eligible for the third and fourth grants, so long as their business has been adversely affected by the coronavirus pandemic.
There is no minimum threshold over which a business’s income, costs or activity need to be changed by, but you must keep appropriate records as evidence of how your business has been adversely affected. For instance, you should keep records of how your income has reduced compared to the previous year, an increase in bad debts or a reduction in the number of clients your business can serve.
Self-employed parents whose income may have been affected if they took time out to have children will also now be able to claim if they meet the eligibility criteria. There’s more information for new parents, including an online form on GOV.UK.
You can only claim if your average trading profit over the three tax years to 2018/19 was less than £50,000. Also, the majority (over 50%) of your income over that period must come from self-employment and you need to meet all the following criteria:
For the third and fourth grants HMRC has said:
To be eligible for the grant extension self-employed individuals, including members of partnerships, must:
You can check online to find out if you’re eligible to make a claim for the grants. Your tax agent or adviser cannot make a claim on your behalf. You’ll need your:
If you want to claim under the third tranche of grant you must make your claim after 30th November 2020. To claim you’ll need your:
You’ll have to confirm to HMRC that your business has been adversely affected by coronavirus. HMRC has confirmed it will check claims and take appropriate action to withhold or recover payments found to be dishonest or inaccurate.
You must make the claim yourself. Your tax agent or adviser must not claim on your behalf as this will trigger a fraud alert, and you will have to contact HMRC. This will cause a significant delay in receiving your payment.
You’ll get a taxable grant based on your average trading profit over the three tax years:
HMRC will work out your average trading profit by adding together your total trading profits or losses for the three tax years, then divide the total by three.
The third grant will be calculated at 80% of your average monthly trading profits, paid out in a single instalment covering three months, and capped at £7,500 in total. The online service will tell you how the amount of grant is calculated.
HMRC has provided various examples showing how it will calculate your average trading profits including if you have not traded for all three years.
Once you’ve submitted your claim, you will be told immediately if your grant is approved. HMRC has said it will pay the grant into your bank account within six working days. You must keep a copy of all records in line with normal self-employment record keeping requirements, including:
The grant is taxable, so you will need to report it:
You can contact HMRC though its lines are understandably extremely busy at this time.
If you’re not eligible for support under SEISS, there may still be other support available to you such as Universal Credit or the Coronavirus Bounce Back Loan Scheme – you can use the government’s Business Support Finder to check.
We will keep this article and our COVID-19 Hub up to date with all the latest updates as they happen.