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Self-employment Income Support Scheme

Self-employment Income Support Scheme

What is it?

The Government have introduced this scheme to allow self-employed individuals to claim a taxable grant worth 80% of their trading profits up to a maximum of £2,500 per month until September 2021.

Who is it for?

You qualify for this scheme if you are a self-employed individual or a member of a partnership that:

  • has submitted your Income Tax Self Assessment tax return for the tax year 2018-19
  • traded in the tax year 2019-20
  • are trading when you apply, or would be except for COVID-19
  • intend to continue to trade in the tax year 2020-21
  • has lost trading/partnership trading profits due to COVID-19

Your self-employed trading profits must also be:

  • less than £50,000, and
  • more than half of your total income come from self-employment.

If either of these conditions do not apply then HMRC will allow you to average profits over the 2016/17, 2017/18 and 2018/19 tax years so that these conditions will be treated as met. 

Your total income is the total of all your: 

  • income from earnings 
  • trading profits 
  • property income (e.g. rental profits) 
  • dividends 
  • savings income 
  • pension income 
  • miscellaneous income (including social security income) 

These figures will be on your tax return and will also show in the online tax calculation for the particular tax year or on the SA302 tax calculation if you received a paper calculation from HMRC. 

If you started trading between 2016-19, HMRC will only use those years for which you filed a Self-Assessment tax return.

This scheme is not for those who pay themselves a salary and dividends through their own company. If you do pay yourself through your own company you will not be covered by this scheme but you may be covered for your salary by the Furlough Scheme if you are operating PAYE schemes.

How does it work? 

The Self-Employment Income Support Scheme Grant Extension provides critical support to the self-employed. The grants are taxable income and also subject to National Insurance contributions.

The online service to claim the fifth grant will be available from late July 2021. Find out more about the fifth grant here

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%

The Fifth Grant

If you’re eligible based on your tax returns, HMRC will contact you in mid-July to give you a date that you can make your claim from. It will be given to you either by email, text message, letter or within the online service. 

You’ll need to confirm that you meet other eligibility criteria when you make your claim.

You must make your claim on or before 30 September 2021.

Get ready to claim

The fifth grant is different from previous grants. In most cases, when making your claim you’ll need to tell HMRC about your business turnover so they can work out your grant amount.

Turnover includes the takings, fees, sales or money earned or received by your business.

To make your claim, you’ll need to have 2 different turnover figures. You’ll need to work out your turnover for:

  • a 12-month period starting between 1 April 2020 and 6 April 2020
  • either 2019 to 2020 or 2018 to 2019

HMRC will compare these figures to work out how much you’ll get.

When you do not need turnover figures to claim?

HMRC will not ask you for any turnover figures if you started trading in 2019 to 2020 and did not trade in the following tax years:

  • 2018 to 2019
  • 2017 to 2018
  • 2016 to 2017

How much you’ll get

If you need to tell HMRC about your turnover

There are 2 levels of grant. HMRC will work out your grant amount based on how much your turnover is down by after we’ve compared your 2 turnover figures.

If your turnover is down by

You’ll get

Maximum grant amount

30% or more

80% of 3 months’ average trading profits

£7,500

less than 30%

30% of 3 months’ average trading profits

£2,850

How the grant is treated

The grant is subject to Income Tax and self-employed National Insurance Contributions. It must be reported on your 2021 to 2022 Self Assessment tax return.

The grant also counts towards your annual allowance for pension contributions. SEISS grants are not counted as ‘access to public funds’ and you can claim the grant on all categories of work visa.

What should I do next?

Claim the fifth grant if you think that your business profit will be impacted by coronavirus (COVID-19) between 1 May 2021 and 30 September 2021.

If you’re eligible based on your tax returns, HMRC will contact you in mid-July to give you a date that you can make your claim from. It will be given to you either by email, text message, letter or within the online service.

You should contact HMRC if you receive any suspicious texts, calls or emails claiming to be from HMRC as this may be a scam.

Critchleys Clients: If you have specific questions, please contact your Critchleys Accountant directly.

For more information, visit: https://www.gov.uk/guidance/claim-a-grant-through-the-coronavirus-covid-19-self-employment-income-support-scheme

 


Published 27 March 2020
Last Updated 16 July 2021

16 July 2021
The online service to claim the fifth grant will be available from late July 2021. Find out more about the fifth grant here

2 June 2021
Claims for the fourth grant have now closed. The last date for making a claim was 1 June 2021.

23 April 2021
The online service for the fourth grant is now available.

To be eligible for the fourth grant you must be a self-employed individual or a member of a partnership. You cannot claim the grant if you trade through a limited company or a trust.

You must have traded in both tax years:

  • 2019 to 2020 and submitted your tax return on or before 2 March 2021
  • 2020 to 2021

You must either:

You must also declare that you:

  • intend to continue to trade
  • reasonably believe there will be a significant reduction in your trading profits

Reasonable belief
In order to claim the fourth grant, you must reasonably believe that you’ll suffer a significant reduction in trading profits, due to reduced business activity, capacity, demand or inability to trade due to coronavirus between 1 February 2021 and 30 April 2021. You must keep evidence that shows how your business has been impacted by coronavirus resulting in less business activity than otherwise expected.

HMRC expects you to make an honest assessment about whether you reasonably believe your business will have a significant reduction in profits.

Significant reduction
Before you make a claim, you must decide if the impact on your business between 1 February 2021 and 30 April 2021 will cause a significant reduction in your trading profits for the tax year you report them in.

HMRC cannot make this decision for you because your individual and wider business circumstances will need to be considered when deciding whether the reduction is significant.

You should wait until you have a reasonable belief that your trading profits are going to be significantly reduced before you make your claim.

You do not have to consider any other coronavirus scheme support payments that you have received when deciding if you’ve had a significant reduction in your trading profits.

14 April 2021
The online service to claim the fourth grant will be available from late April 2021.

If you’re eligible based on your tax returns, HMRC will contact you in mid-April to give you a date that you can make your claim from. It will be given to you either by email, letter or within the online service.

You’ll need to confirm you meet other eligibility criteria when you make your claim.

You must make your claim on or before 1 June 2021.

3 March 2021
Fourth Grant

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 to 2020 tax returns and will be open to those who became self-employed in tax year 2019 to 2020. The rest of the eligibility criteria remain unchanged.

Your eligibility for the scheme will now be based on your submitted 2019 to 2020 tax return. This may also affect the amount of the fourth grant which could be higher or lower than previous grants you may have received.

If you’re not eligible based on your 2019 to 2020 Self Assessment tax return, HMRC will also look at the tax years 2016 to 2017, 2017 to 2018, 2018 to 2019 as well as 2019 to 2020.

How to claim

The online claims service for the fourth grant will be available from late April 2021 until 31 May 2021.

If you are eligible, HMRC will contact you in mid-April to give you your personal claim date. This will be the date that you can make your claim from.

There will be more guidance about the fourth grant in due course.

Fifth and Final Grant

There will be a fifth and final grant covering May to September.

You will be able to claim from late July if you are eligible for the fifth grant.

The amount of the fifth grant will be determined by how much your turnover has been reduced in the year April 2020 to April 2021.

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.

29 January 2021
Claims for the third grant have now closed. The last date for making a claim for the third grant was 29 January 2021. Details about the fourth grant will be announced on 3 March 2021.

3 December 2020
The online service for the third grant is now available.

26 November 2020
The online service for the third grant will be available from 30 November 2020.

You must make your claim on or before 29 January 2021.

You should contact HMRC if you receive any suspicious texts, calls or emails claiming to be from HMRC as this may be a scam.

5 November 2020
The first grant will cover a three-month period from 1 November 2020 until 31 January 2021. The Government will provide a taxable grant covering 80% of average monthly trading profits, paid out in a single instalment covering 3 months’ worth of profits, and capped at £7,500 in total.

3 November 2020
The first grant will cover a three-month period from 1 November 2020 until 31 January 2021. The Government will provide a taxable grant covering 80% of average monthly trading profits, paid out in a single instalment covering 3 months’ worth of profits, and capped at £5,160 in total.

22 October 2020
The grant is being extended from 1 November 2020

The Self-Employment Income Support Scheme Grant Extension provides critical support to the self-employed in the form of two grants, each available for three month periods covering November 2020 to January 2021 and February 2021 to April 2021.

The first grant will cover a three-month period from 1 November 2020 until 31 January 2021. The Government will provide a taxable grant covering 40% of average monthly trading profits, paid out in a single instalment covering 3 months’ worth of profits, and capped at £3,750 in total.

The second grant will cover a three-month period from 1 February 2021 until 30 April 2021. The Government will review the level of the second grant and set this in due course.

The grants are taxable income and also subject to National Insurance contributions.

HMRC will provide full details about claiming and applications in guidance on GOV.UK in due course.

20 October 2020
You can no longer make a claim for the second grant.

24 September 2020
This scheme has been extended to 31 January 2021. 

The initial lump sum will cover three months’ worth of profits for the period from November to the end of January next year. This is worth 20% of average monthly profits, up to a total of £1,875.

17 August 2020
The Self-Employment Income Support Scheme claim service is now open.

16 July 2020
The scheme is now closed to new claims for the first grant.

The scheme has been extended. If you were eligible for the first grant and can confirm to HMRC that your business has been adversely affected on or after 14 July 2020, you’ll be able to make a claim for a second and final grant from 17 August 2020.

If you want to claim the second and final grant you must make your claim on or before 19 October 2020.

15 June 2020
Find out about the extension to the scheme

This scheme is being extended, and you’ll be able to claim a second and final grant in August 2020.

We will work out your eligibility the same way as the first grant. If you make a claim for the second grant you will have to confirm your business has been adversely affected on or after 14 July 2020.

This grant will be a taxable grant worth 70% of your average monthly trading profits, paid out in a single instalment covering a further 3 months’ worth of profits, and capped at £6,570 in total.

You can claim for the second and final grant even if you did not make a claim for the first grant.

The online service for the second and final grant is not available yet. Do not contact HMRC as the will update this guidance when this service is available.

1 June 2020
The scheme has now been extended. A second and final grant will be available when the scheme opens again in August 2020. If you’re eligible and want to claim the first grant you must make your claim on or before 13 July 2020.

13 May 2020
What should I do next?

The online service is now available. Make your claim from the date HMRC gave you. If you’re unable to claim online you should contact HMRC for help. If your claim is approved you’ll receive your payment within 6 working days.

5 May 2020
What should I do next?

The online service will be available from 13 May 2020. If you’re eligible, HMRC will tell you the date you can make your claim from. If your claim is approved you’ll receive your payment within 6 working days.

If you’re unable to claim online an alternative way to claim will be available. This will be updated shortly.

Check if you’re eligible to claim
You can use the online tool to find out if you’re eligible to make a claim. Your tax agent or adviser can also use the online tool on your behalf.

You’ll need your:

23 April 2020
Who is it for?

Your self-employed trading profits must also be:

  • less than £50,000, and
  • more than half of your total income come from self-employment.

If either of these condition do not apply then HMRC will allow you to average profits over the 2016/17, 2017/18 and 2018/19 tax years so that these conditions will be treated as met. 

Your total income is the total of all your: 

  • income from earnings 
  • trading profits 
  • property income (e.g. rental profits) 
  • dividends 
  • savings income 
  • pension income 
  • miscellaneous income (including social security income) 

These figures will be on your tax return and will also show in the online tax calculation for the particular tax year or on the SA302 tax calculation if you received a paper calculation from HMRC. 

15 April 2020
How does it work?
If you amend a submitted return after 26 March 2020 any changes will not be taken into account when working out your eligibility or amount of the grant.

HMRC will pay the grant directly into your bank account, in one instalment.

The grant will be subject to Income Tax and National Insurance contributions but does not need to be repaid.

If you have not submitted Self Assessment tax returns for all 3 years
HMRC will work out your average trading profit based on continuous periods of self-employment, which will be either:

  • the tax years 2017 to 2018 and 2018 to 2019
  • the tax year 2018 to 2019 only, even if you were self-employed in the tax year 2016 to 2017

If you have loans covered by the loan charge
If you’re self-employed and have received payment for work or services in the form of a loan or other form of credit covered by the loan charge, you may be able to claim the grant, however your eligibility and average trading profits will be based on either:

  • the average of the tax years 2016 to 2017 and 2017 to 2018
  • the tax year 2017 to 2018 if you were not self-employed in the tax year 2016 to 2017

If you’re a farmer claiming farmers’ averaging relief
HMRC will use the amount of profit before the impact of the averaging claims to work out:

  • if you can claim the grant
  • how much grant you will receive

Find out how HMRC works out your total income and trading profits for the Self-employment Income Support Scheme

What should I do next?
HMRC are aiming to contact those eligible by mid May 2020 and make payments by early June 2020.

You can make a claim for Universal Credit while you wait for the grant, but any grant received will be treated as part of your self-employment income and may affect the amount of Universal Credit you get. Any Universal Credit claims for earlier periods will not be affected. If you receive the grant you can continue to work or take on other employment including voluntary work.

27 March 2020
First published. 

Find out more about Ian Timms

Ian Timms

Ian Timms

Ian is a Partner and the Head of Business Tax at Critchleys LLP.

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