The Self-Employment Income Support Scheme (SEISS), will support self-employed individuals, including members of partnerships, allowing eligible recipients to claim a taxable grant worth 80% of their trading profits, up to a maximum of £2,500 per month.
The scheme will be open to those with trading profits of less than £50,000 in the 2018/19 tax year, or those with average trading profits of less than £50,000 over the last three years.
The level of the grant will be calculated based on the average of trading profits for the last three tax years (2016/17, 2017/18 and 2018/19). If you commenced trading after the 2016/17 tax year, HM Revenue & Customs (HMRC) will calculate the average based on the tax returns filed for the later years when you were trading.
The scheme does allow you to continue to trade in this period and make a claim for the amount of loss, so unlike the Job Retention Scheme, limited work can continue. However, those who commenced self-employment after 5 April 2019 will be ineligible for the scheme.
The initial grant is available for a 3 month period and is payable in one lump-sum instalment.
Claims for the initial SEISS grant will close on 13 July 2020, so it’s important if you qualify to make a claim before this date.
On 29 May 2020, the Chancellor announced an extension to the SEISS with a second taxable grant available for eligible individuals worth 70% of their trading profits, up to a maximum of £6,570 in total for a further 3 month period. The grant will be paid out in a single instalment in August 2020.
Further details can be found here.
You will qualify for the grant if you:
- are self-employed, or a member of a partnership
- have submitted your Self-Assessment tax return for the 2018/19 tax year, on or before 23 April 2020
- have traded in the 2019/20 tax year
- are trading when you apply, or would have been except for COVID-19
- intend to continue to trade in the 2020/21 tax year
- your trade has been adversely affected by coronavirus
Your business could be adversely affected by coronavirus, for example if:
- you are unable to work (because you are shielding, self-isolating, on sick leave or have caring responsibilities due to coronavirus)
- you have had to scale down or temporally stop trading (because your supply chain has been interrupted, you have fewer/no customers or your staff are unable to come to work)
You should not claim the grant if you are above the state aid limits or operating a trade through a trust.
Your self-employed trading profits must also be less than £50,000 and more than half of your total income should consist of trading profit from self-employment, or as a member of a partnership.
This is determined by:
- having trading profits in the 2018/19 tax year of less than £50,000 and these profits constitute more than half of your total taxable income; or
- having average trading profits in the 2016/17, 2017/18, and 2018/19 tax years of less than £50,000 and these profits constitute more than half of your average taxable income in the respective period
How to make a claim
HMRC started contacting individuals who may be eligible for the new Self-Employment Income Support Scheme from 4 May 2020.
If you are eligible for the grant, HMRC will invite you to make an online application and advise you of the date you can apply for the grant. This date will be assigned randomly between 13 and 18 May 2020.
To confirm you are eligible to make a claim and what date you can make an online application from, please use HMRC’s eligibility checker . You will need your National Insurance number and Unique Taxpayer Reference (UTR) to hand, or if you have an accountant they can check on your behalf.
Applicants will then be able to make a claim though HMRC’s online eligibility checker from the application dated provided. You will need your Government Gateway (GOV.UK) credentials ready to make a claim, therefore, if you have not yet registered you can do so simply by using the eligibility checker in the meantime. By registering this way, there will be no requirement to wait for pins or codes through the post.
If you are unable to claim online, an alternative way to claim will be available.
The service will not be made available to agents, therefore, you will need to make the claim yourself. However, if you have an accountant they should be able to guide you through the process and check the grant amount on your behalf.
This is the perfect situation for scammers and phishers, so be cautious of any texts, calls or emails claiming to be from HMRC and only apply using Government Gateway online account. Examples of HMRC scams are highlighted in our recent article.
What information is required to make a claim?
You will need the following details to make an online claim:
- Your Government Gateway user ID and password
- Self-Assessment Unique Taxpayer Reference (UTR)
- National Insurance number
- Bank account details (account number and sort code) you want the grant payment to be made into
To make a claim, please use HMRC’s online eligibility checker, enter your UTR and NI number
before logging in using your Government Gateway credentials.
HMRC will ask for a few basic details, including that your business has been adversely affected by coronavirus, before you can submit your claim.
The application process will also show how HMRC have calculated the grant, therefore, we recommend you save a copy of the calculation for your records as we understand that once you have completed the process you will not be able to go back afterwards and view this.
What to do once a claim has been made?
Once you have submitted a claim, HMRC will confirm that your grant has been approved and provide you with a claim reference.
You must retain details of the claim reference, grant amount and evidence that your business has been adversely affected by coronavirus, in line with normal self-employment record keeping requirements.
HMRC will pay the grant into your bank account within 6 working days, with the first payments due 25 May 2020.
The grant is treated as taxable income, therefore, this will need to be reported on your Self-Assessment tax return.
The grant is also treated as income for Universal Credit and Tax Credit claims, therefore, claimants will need to report the grant accordingly.