Richard Wild, Head of Tax Technical at the Chartered Institute of Taxation, assesses the annoucement of an extension to Self-Employment Income Support Scheme
It was widely expected that the Chancellor would provide more support for the newly self-employed, and so his announcement that he would extend the Self-Employment Income Support Scheme (SEISS) to those who became self-employed in 2019-20 was not a huge surprise. Of course, the newly self-employed were just one category of the working population who’d previously missed out on support either through SEISS or the Coronavirus Job Retention Scheme, and there was nothing in the Budget that would otherwise plug those gaps.
Including the newly self-employed is brought about by the inclusion of 2019-20 tax return data into the eligibility criteria for the fourth and fifth SEISS grants. However, this won’t just affect the newly self-employed, but also the existing self-employed, too.
Indeed, the 600,000 more people who can now claim the fourth and fifth grants, a figure announced by the Chancellor in his Budget speech, is the aggregate of those who will qualify because they became self-employed in 2019-20, PLUS those who were already self-employed and whose 2019-20 tax return data will now make them eligible.
What the Chancellor did not announce, perhaps understandably, was that their 2019-20 tax return data would make a large cohort of the existing self-employed ineligible for the fourth and fifth grants. This is because incorporating 2019-20 data could mean that the individual fails one of the key tests. For example, trading profits might have fallen below non-trading income, or have exceeded the £50,000 cap. Further, failure to file their 2019-20 tax return before midnight on 2 March 2021 also precludes a claim being made.
Those who have successfully claimed the previous three SEISS grants will assume that they are entitled to the fourth and fifth grants, and will get an unwelcome shock if the ‘computer says no’ when they try to make their next claim.
Blog by Richard Wild, Head of Tax Technical at the Chartered Institute of Taxation. This article first appeared in Practical Law Tax.