The Self-Employment Income Support Scheme (SEISS) is a temporary scheme set up by the government to support self-employed individuals during COVID19.
What is the Self-employment Income Support Scheme (SEISS)?
The SEISS could be described as the self-employed version of the Coronavirus Job Retention Scheme (CJRS). It was created to support those who are self-employed during the pandemic. While you’ll still owe Income Tax and National Insurance on any money you receive via the SEISS, it’s a grant (rather than a loan), which means you won’t need to pay it back.
How much do you get under the SEISS?
The amount available under the SEISS has varied for each payment instalment. There have, so far, been three grants available - with two more announced for 2021.
The first SEISS grant covered 80% of average monthly trading profits for three months, up to a maximum of £7,500 (applications closed 13 July 2020)
The second grant covered 70% of monthly trading profits for three months, up to a maximum of £6,570 (applications closed 19 October 2020)
Following Winter restrictions and lockdowns, a third grant covered 80% again - rather than a previously announced reduction (applications closed 29 January 2021)
Details of the fourth grant were announced in the 2021 Budget – it covers 80% of profits for February to April 2021, with applications opening in April
A fifth and final grant covers June to August – it covers 80% of average profits if your turnover has fallen by more than 30% (those who haven’t been as affected can get a 30% grant)
SEISS extended for a fifth and final grant
The government extended SEISS at the end of 2020 to cover the self-employed until April 2021. Then, during the 2021 Budget announcement, the Chancellor unveiled details of a fifth and final grant.
Applications for the fourth grant don’t open until April. So it’ll be some time before the self-employed will be able to access the fifth grant, which is due to cover the months June to August.
The good news is that for the fourth and fifth grants, SEISS eligibility is wider – it should cover people newer to self-employment, as it now takes 2019/2020 tax returns into account.
As long as you filed your 2019/2020 tax return by 2 March, you should be able to apply
How do I work out my trading profits for SEISS?
HMRC has so far worked out your average trading profit by taking your total trading profits or losses for tax years 2016/17 + 2017/18 + 2018/19 and dividing by three.
For the fourth and fifth grants, HMRC will take your 2019/2020 records into account.
If you’re a sole trader, HMRC will work out your trading profit after allowable business expenses. They’ll do this by adding any losses brought forward from previous tax years to the amount shown on your tax return as ‘total taxable profits from this business’.
If you’re a member of a partnership, HMRC will work out your share of the partnership’s profit after adjustments. They’ll do this by adding any losses brought forward from previous years to the amount shown as ‘your share of the total taxable profits from the partnership’s business’.
What is SEISS eligibility?
The scheme has been set up to provide financial support to self-employed people and people in partnerships who’ve been affected by the coronavirus pandemic.
For the fourth grant, you need to be either currently trading but suffering reduced demand because of coronavirus, or temporarily unable to trade because of COVID19.
Other SEISS eligibility means that you need to:
have traded in tax years 2019/20 and 2020/21 (and submitted your 19/20 return by 2 March)
declare that you intend to continue to trade and that you ‘reasonably believe’ there’ll be a significant reduction in your trading profits
take in trading profits of no more than £50,000 and at least equal to your non-trading income
If you’re not eligible based on your 2019/20 return, HMRC will then look at the tax years 2016/17, 2017/18, 2018/19, and 2019/20.
What does a ‘reasonable belief’ that you’ll face reduced profits mean?
You need to have a ‘reasonable belief’ that you’ll suffer reduced profits because of coronavirus – and you have to keep records to support the claim.
How do I apply for the SEISS?
Because HMRC is setting up the system to take 2019/20 tax returns into account, you won’t be able to apply for the fourth grant until late April 2021. HMRC will contact you in mid-April if you’re eligible, to give you your personal claim date.
When you do apply, it’ll be useful to have the following information to hand:
Self Assessment UTR
National Insurance number
Government Gateway user ID and password
bank account number and sort code (which must accept BACS payments)
When will SEISS payments be paid?
You’ll find out whether you’ll get the grant as soon as you’ve made your SEISS claim. If they approve your claim, the money should come through within six working days.
Make sure you keep a copy of all records associated with your claim, the same as you would for all your other self-employed records. You should keep a record of:
the amount you claimed
your claim reference number
evidence that your business has been adversely affected by COVID19
This is so you can report your grant:
on your Self Assessment tax return
as self-employed income if you claim Universal Credit
as self-employed income if you claim tax credits
Can I keep working if I get SEISS?
Unlike furloughed employees under the CJRS, the SEISS allows self-employed people to continue working. You’re also free to start a new trade, employment, volunteering, or be an armed forces reservist.
If you need support in managing your personal finances during this time, please get in touch with us.