Self-employment Income Support Scheme

A link to a recording of our first webinar about the SEISS held on 7 May 2020 can be found here, a link to a recording of our second webinar about the scheme held on 7 July 2020 can be found here and a link to our third webinar held on 8 October 2020 can be found here

 

Who is eligible and who isn’t?
Trading profits and losses
Compliance aspects
The claims process - the first and second payments
The claims process - grant extension November 2020 to April 2021


Latest updates:
23/10/2020
Further accouncement from the Chancellor

 

On 26 March 2020, the Chancellor announced that the Government would provide support to self-employed workers in the form of a cash grant of 80% of their profits, up to £2,500 per month for three months. This is known as the Coronavirus (COVID-19) Self-employment Income Support Scheme (SEISS). The scheme went live on 13 May 2020.

On 29 May 2020, the Chancellor announced that the SEISS would be extended with those eligible able to claim a second grant from 17 August 2020. The grant is worth 70% of average monthly trading profits, paid out in a single instalment covering three months’ worth of profits, and capped at £6,570 in total. Applications for the second grant closed on 19 October 2020. Applications for the first grant closed on 13 July 2020.

On 24 September 2020, the Chancellor announced that the SEISS would be extended again, and a further announcement was made on 22 October 2020. The grant extension is for self-employed individuals, including members of partnerships, who have previously been eligible for the first and second SEISS grants. They must intend to carry on trading, and either: be actively trading but are impacted by reduced demand due to coronavirus or have previously been trading but are temporarily unable to do so due to coronavirus. The extension will provide two further grants and will last for six months from 1 November 2020 until the end of April 2021. The first grant will cover a three-month period from the start of November until the end of January. It will be worth 40% of average monthly trading profits, paid out in a single instalment covering three months’ worth of profits, and capped at £3,750 in total. The second grant will cover a three-month period from the start of February until the end of April. HMRC will review the level of the second grant and set this in due course. HMRC will provide details about claiming and applications in guidance on GOV.UK in due course.

HMRC’s guidance relating to the first and second grants was withdrawn on 20 October 2020.  Guidance about the scheme extension announced by the Chancellor on 24 September 2020 will be published soon.  Links to the withdrawn guidance are provided below.

Guidance on how to use the scheme, including who can claim and the amount of grant payable, is here.

Guidance on how to claim a grant through the Self-Employment Income Support Scheme is here.

Guidance on how to work out your total income and taxable profits for the SEISS is here.

Guidance on different circumstances, such as for late returns, partners in a partnership, those who have loans covered by the loan charge, those on parental leave, military reservists, non-residents, those claiming averaging relief and those near or above the state aid limits, is here. For what 'Adversely affected by coronavirus’ means and some examples – see here.

On 17 June 2020, the Government announced an extension of the scheme for certain people with parental responsibilities who would not otherwise qualify for support under the scheme - see here and there is further guidance here.

Guidance on how to tell HMRC if you made a claim in error because you were not eligible for the SEISS grant, have been overpaid or would like to make a voluntary repayment is here. HMRC’s factsheet CC/FS47 gives more information about assessments and penalties in relation to SEISS grant overpayments.

HMRC has published two Treasury Directions under Sections 71 & 76 of the Coronavirus Act 2020 which set out the legal framework for the SEISS here.

Legislation to introduce rules on how grants received under the SEISS will be taxed is in Schedule 16 Finance Act 2020 – see here. The Act received Royal Assent on 22 July 2020. The legislation also gives HMRC powers to recover payments to which recipients were not entitled to, and to charge a penalty in cases of deliberate non-compliance. The legislation had been published on 29 May 2020 for a short consultation - see here. The CIOT’s comments on the draft legislation can be found here.

An explainer about the scheme can be found on the CIOT’s Low Incomes Tax Reform Group’s website and also on the ATT website.

Query

Status / response

Who is eligible and who isn’t
What is the position for property lettings businesses, including furnished holiday lettings? Do they qualify for the SEISS?
No, the SEISS scheme only applies to individuals who complete the self-employment or partnership trading pages of the self-assessment tax return. These pages exclude income from property, which includes furnished holiday lettings.
Will people working in the construction industry qualify for the SEISS?
Yes, if they are self-employed and meet the eligibility criteria.
Does one look at the trading profits and total income at partner level or at partnership level when working out whether a partner in a partnership is eligible to claim a SEISS grant?
HMRC’s guidance says that a member of a partnership can make a claim for the SEISS grant and that eligibility is based on the partner’s share of the partnership’s trading profits. See example here.
Are all trading partnerships included even those with a corporate partner?
Yes, but only to the extent that they have partners who are individuals. The partners that are incorporated are not covered by the SEISS.
I’m resident and domiciled outside the UK. Can I claim under the SEISS?
Yes, you may be eligible, although you need to compare your trading profits with your worldwide income - see HMRC’s guidance here.
Can trusts claim the SEISS?
No, you cannot claim the grant if operating a trade through a trust – see here.
Can you claim the SEISS grant and continue to work?
Yes, you can receive the grant and continue to work in your self-employed business, start a new trade and also take on other employment including voluntary work or duties as an armed forces reservist.
If an individual has remained self-employed throughout the 2016/17, 2017/18 and 2018/19 tax years but has changed what they do, for example, running a café, then closing it down and becoming a window cleaner, does this matter?
No, so long as you were self-employed in 2018/19 and the other eligibility criteria are met.
Are the self-employed who started trading during 2019/20 eligible for the SEISS?
No, if you were not self-employed in the 2018/19 tax year and so did not submit a 2018/19 tax return showing any self-employed income then you are not eligible for the SEISS. You may qualify for other government support.
I didn’t submit my 2018/19 tax return by 23 April 2020. Can I still claim?
No, if you didn’t submit your 2018/19 tax return on or before 23 April 2020 you will not be able to claim.
What’s the position with State Aid?
The scheme is a state aid granted under the European Commission’s Temporary Framework (section 3.10 'Aid in the form of wage subsidies'), designed to respond to coronavirus (COVID-19). This means that there is no requirement that those eligible need to confirm they are below the €800,000 aid cap.
Can dentists claim under the SEISS for their private (non-NHS) work?
HMRC have confirmed that overall as long as they meet the criteria for the SEISS, dentists can claim on the basis that they have income from non-NHS work. For further information see here.
Trading profits and losses
How does it work when a taxpayer has made a loss in one of the tax years on which the grant will be based?
In-year trading losses are taken into account as well as profits in calculating a person’s eligibility for the grant and the amount of the grant they will receive. However, non-trading losses are not included in the calculation of non-trading income. See here.
What if an individual is self-employed with more than one trade at the same time? Do you combine them?
Yes, if a person has more than one trade in the same tax year, HMRC will add together all the profits and losses for all the trades to work out the trading profit. See here.
Are ‘trading profits’ pre or post farmers’ and creative industries averaging relief?
HMRC will use the profit before farmers’ averaging relief to work out whether a person is eligible to claim the grant and how much grant they will receive. See here.
If I started being self-employed during the 2018/19 tax year, will my trading income and profits be extrapolated to be expressed as an annual rate when looking at whether I am eligible to receive the grant?
No, if you started being self-employed during 2018/19, for example on 6 October 2018, HMRC will look at your actual trading income and profits for the 6 months of trading. They will not be extrapolated to be expressed as an annual amount. See here.
Compliance Aspects
Is the grant taxable?
Yes, the grant received will be subject to Income Tax and Class 4 National Insurance Contributions.
When is the grant taxable (in which tax year)?
The SEISS grant is taxable in the year of receipt (i.e. 2020/21), meaning that there will be no apportionment back to the tax year 2019/20. It should therefore be reported in full on your 2020/21 self-assessment tax return.
How was the requirement to show that a business has been adversely affected as a result of the COVID-19 crisis to be determined for the purposes of the first and second grants?
To be eligible to claim the first and second grants, you needed to confirm to HMRC that your business had been adversely affected by coronavirus. For further details see HMRC’s guidance - here.
HMRC will use a ‘risk based approach’ to check a person’s compliance with the scheme rules and will take action in cases of suspected fraud.
Was it possible to amend a 2018/19 tax return before 23 April 2020, for example if one had been using the cash basis, the trading allowance or had claimed capital allowances, and had reported lower profits as a result?
No, if a person amends their 2018/19 tax return after 6pm on 26 March 2020 (the date the Chancellor announced the scheme), any changes will not be taken into account when working out their eligibility for the SEISS or the amount of the grant.
I submitted my 2018/19 tax return to HMRC between 26 March and 23 April. I’m sure I’m eligible, but HMRC’s eligibility checker is saying I’m not. What should I do?
HMRC are updating their systems for those people who have very recently filed their 2018/19 tax returns, and this is why the system won’t necessarily show a positive answer yet. Don’t ask for a review at this stage. Instead you should keep checking back as HMRC are working at pace to update their systems.
I submitted my 2018/19 tax return between 26 March and 23 April. Will I still get a £100 penalty for failing to submit my return by 31 January 2020?
Yes, late filing penalties will apply as normal for all 2018/19 returns filed after the 31 January 2020 deadline (but special provisions apply for those people affected by the loan charge – see below).
What’s the position if a person has received loans impacted by the loan charge?
If you had loans impacted by the loan charge, you are going to declare a loan charge or settle your disguised remuneration scheme involvement with HMRC by 30 September 2020, and you are going to claim a grant through the SEISS, your grant will be based on either:
  • the average of the tax years 2016/17 and 2017/18
  • the tax year 2017/18 if you were not self-employed in the tax year 2016/17
You should file your self-assessment tax return for 2018/19 by 30 September 2020. It does not have to be submitted by 23 April 2020. See HMRC’s guidance on the disguised remuneration loan charge on GOV.UK (updated on 7 April 2020).
What if I disagree with how HMRC have worked out the amount of my payment?
If you have an agent discuss it with them. If you still disagree with the amount, you can ask HMRC to review it – to contact HMRC by telephone or webchat see here.
Can agents request a review of the amount of the payment on behalf of their clients?
Yes, agents can request a review of their client’s award amount by contacting HMRC by telephone or webchat – see here.
What should I do if I claimed the grant but I wasn’t actually eligible for it, or if I’ve received more from HMRC than I was entitled to?
You must tell HMRC if, when you made the claim you:
  • were not eligible for the grant
  • received more than HMRC said you were entitled to
When you must tell HMRC depends on the date you received your grant. If you received the grant:
  • before 22 July 2020 you must tell HMRC on or before 20 October 2020
  • on or after 22 July 2020 you must tell HMRC within 90 days of receiving the grant
If you do not you may have to pay a penalty. Further information about assessments and penalties is in HMRC’s Factsheet CC/FS47.
HMRC have provided an online form to notify and repay some or all of the grant,
When you’ve completed the form, you’ll be given bank details to pay back the grant. You should print or save this page so you can make the payment.
If you’re unable to use the online facility you should contact HMRC for help.
I have decided that I would like to voluntarily repay some or all of the grant I received even though I was eligible to receive it when I made my claim.
You can voluntarily pay back some or all of the grant you received. If you choose to do this, you can do so at any time – see here – using HMRC’s online form.
When you’ve completed the form, you’ll be given bank details to pay back the grant. You should print or save this page so you can make the payment.
If you’re unable to use the online facility you should contact HMRC for help.
The claims process - the first and second payments

The claims service for the first grant closed on 13 July 2020. If you became eligible for the first grant due to the extensions for having a new child or military reservists, the claims service closed on 19 October 2020.
The claims service for the second grant closed on 19 October 2020.
The claims process –  grant extension November 2020 to April 2021
What period is the grant extension for?
The extension will provide two grants and will last for six months, from November 2020 to April 2021. Grants will be paid in two lump sum instalments each covering a three-month period.
Who qualifies for the grant extension?
To be eligible for the grant extension self-employed individuals, including members of partnerships, must:
  • have been previously eligible for the SEISS.
  • declare that they intend to continue to trade and either:
  • are currently actively trading but are impacted by reduced demand due to coronavirus
  • were previously trading but are temporarily unable to do so due to coronavirus.
Can I claim the grant extension payments if I didn’t claim the first or second ones?
Yes, you don’t need to have claimed the first or second payments to claim the grant extension.
How do I make my claim?
HMRC will provide full details about claiming and applications in guidance on GOV.UK in due course.