The UK government has recently announced that a second grant for sole-traders will be open for claims in August 2020. As businesses begin to familiarise themselves with the new COVID-19 normality, it is essential to stay on top of the ongoing adjustments to the government support schemes.
In this guide, we will cover the main changes to the Self-Employment Income Support Scheme (SEISS). Namely, the amount of available grant for you, from August and the eligibility requirements to submit a claim.
If you are a contractor or a small business operating through a limited company, you may want to review our Coronavirus Job Retention Scheme (‘Furlough Scheme’) guides, for employers and the CJRS guide for limited company directors (PCSs) with no employees.
The Self-Employment Income Support Scheme – what is changing in August?
With the first SEISS grant, you are entitled to claim 80% of your average monthly trading profits by 13 July 2020. This one-off payment intends to cover three months’ of lost profits, and it is currently limited to £7,500.
From August, the claimable amount will decrease, but you could still apply for up to 70% of your average monthly trading profits, capped at £6,570 in total.
This second grant aims to cover three months of lost profits, from or after 14 July 2020.
What are the SEISS eligibility criteria?
In order to apply, make sure you comply with the below requirements:
- You have been trading in the 2018/19 tax year, and submitted your self-assessment tax return for that year on or before 23 April 2020.
- Have been trading in the 2019/20 tax year.
- You intend to carry on trading in the 2020/21 tax year.
- Have lost trading profits due to Coronavirus.
How does HMRC decide whether you have lost profits due to Coronavirus?
- You, as a business owner unable to work because if:
- You are shielding.
- On sick leave due to Coronavirus.
- Have caring duties related to Coronavirus.
- You have had to reduce your business activity or cease trading completely:
- Since your supply chain has been disrupted.
- Due to a reduction of inactive clients.
- Your staff are unable to come to work.
Check your status online
HMRC also provides a quick eligibility status check, here.
The limitations of the Self-Employment Income Support Scheme
Keep in mind that the scheme does not support businesses with trading profits of more than £50,000 and if less than half of your total income (trading and non-trading) comes from self-employment.
How is the SEISS grant calculated?
For grant claims submitted on August 2020, HMRC will calculate the average trading profits calculated from tax years 2016/17 to 2018/19.
70% of the calculated average profit will be paid to you as a grant, up to a total of £6,750.
Can I apply for the second grant if I haven’t submitted a claim for the first one?
Yes. As long as you comply with the eligibility requirements.
Can I keep on trading and take more work once I have received a Self-Employment Income Support grant?
Yes. In contrast to the furlough scheme, receiving a SEISS grant does not prevent you from taking additional work or another type of employment.
Will I have to pay it back?
No. The government’s SEISS grant is not a loan, so you do not have to repay it. However, it will be subjected to income tax and national insurance deductions.
Is the grant tax-deductible?
Yes. HMRC will deduct income tax and NIC contributions from the total amount of your calculated grant.
If my business was effected by COVID-19, but for less time than the entire three months period covered by the scheme. Would that decrease the amount of self-employment grant I am eligible for?
No. The Self Employed Income Support grant is calculated using your previous three Self-Assessment tax returns, while your business activity for tax year 2020/21 will only apply for the Self-Assessment on 31 January 2022.
How to make a claim?
To start making a SEISS claim, go to: www.tax.service.gov.uk/self-employment-support/enter-unique-taxpayer-reference
Here are the details you will need to have when submitting a claim:
- Your Self Assessment Unique Taxpayer Reference (UTR).
- National Insurance number.
- Government Gateway user ID and password. If you don’t have a Gateway user ID, you can create one here.
- UK bank details, including:
- Bank account number.
- Sort code.
- Name on the account.
- Your address linked to your bank account
Keep in mind
You must complete the claim yourself. Your accountant or tax adviser cannot submit it on your behalf as this will trigger a fraud alert, and according to HMRC, will cause a significant delay in delivering your payment.