Self-employment Income Support Scheme

A recording of our fourth webinar on the Self-Employment Income Support Scheme (SEISS) held on 27 November 2020 is here.

Recordings of our previous webinars about the SEISS are also available on our website:

7 May 2020 is here
7 July 2020 is here
8 October 2020 is here

Who is eligible and who isn’t?
Trading profits and losses
Compliance aspects
The claims process - third payment 1 November 2020 to 29 January 2021
The claims process – fourth payment 1 February 2021 to 30 April 2021

Latest updates:

20/01/2020
How much is a 'significant reduction' in my trading profits?
If I have two basis periods which fall within the period 1 November 2020 to 29 January 2021, do I need to have a significant reduction in trading profits in both periods?
Do the first and second grants count as trading profits to determine whether I’m eligible for the third one?

First grant

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). Applications for the first grant closed on 13 July 2020.

Second grant

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 was 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.

Third and fourth grants

On 24 September 2020, the Chancellor announced that the SEISS would be extended again, and a further announcement was made on 5 November 2020. The grant extension will provide for a third and fourth grant and is for self-employed individuals, including members of partnerships, who have previously been eligible for the first and second grants.

Third grant

Eligible self-employed individuals, including members of partnerships must intend to carry on trading, and either: be currently trading but are impacted by reduced demand due to coronavirus or have been trading but are temporarily unable to do so due to coronavirus.

The third grant covers a three-month period from 1 November 2020 until 29 January 2021. It is worth 80% of average monthly trading profits paid out in a single instalment covering three months’ worth of profits, and capped at £7,500 in total. Applications for the third grant closed on 29 January 2021.

Fourth grant

The fourth grant will cover a three-month period from the start of February until the end of April. The Chancellor will announce further details at the Budget on 3 March 2021.

HMRC has published the following guidance:

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 is here.

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

For how your trading conditions affect your eligibility for the scheme, and what is meant by reduced demand or temporary closure and some examples of how this could affect your eligibility – see 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.

Guidance on how to tell HMRC if you made a claim in error because you were not eligible for the 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 grant overpayments.

HMRC’s factsheet CC/FS11a provides information about when HMRC might charge penalties for a failure to notify an Income Tax charge relating to an overpayment of a coronavirus support payment, including under the SEISS.

Legislation

HMRC has published three 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 SEISS grants are 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.

Further information

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’ (and creative industries’) 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
Are the grants taxable?	Yes, the grants are taxable. They are subject to both Income Tax and Class 4 National Insurance Contributions.
When are the grants taxable (in which tax year)?	The grants are taxable in the tax year 2020/21. They should be reported in full on your 2020/21 self-assessment tax return in due course. Specific boxes will be provided on the form for them. No part of the grants should be reported on your tax return for the tax year 2019/20.
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 amended 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.
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 have filed your self-assessment tax return for 2018/19 by 30 September 2020. It did 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 – third payment 1 November 2020 to 29 January 2021 Applications for the third grant closed on 29 January 2021
What period is the third grant for?	The third grant is for the three months from 1 November 2020 to 29 January 2021. The grant will be paid in one lump sum instalment.
Who qualifies for the third grant?	To be eligible for the third grant, self-employed individuals, including members of partnerships, must: have been previously eligible for the SEISS. in the period between 1 November 2020 and 29 January 2021 must either: be currently trading but are impacted by reduced activity, capacity or demand due to coronavirus, or have been trading but are temporarily unable to do so due to coronavirus. declare that they intend to continue to trade and that they reasonably believe that they will suffer a significant reduction in their trading profits in the basis period in which the qualifying period falls because of reduced activity, capacity or demand due to coronavirus. See HMRC’s guidance – here.
How much is a 'significant reduction' in my trading profits?	HMRC’s guidance says that before you make a claim you must decide if the impact on your business will cause a significant reduction in your trading profits and that HMRC cannot make this decision for you because your individual and wider business circumstances will need to be considered when deciding whether the reduction is significant. You should wait until you have a reasonable belief that your trading profits are going to be significantly reduced, before you make your claim.
If I have two basis periods which fall within the period 1 November 2020 to 29 January 2021, do I need to have a significant reduction in trading profits in both periods?	If you have two basis periods which fall within the period 1 November 2020 to 29 January 2021, you must declare that you reasonably believe that any reduced demand, or inability to trade, from 1 November 2020, will result in a significant reduction in your trading profits for at least one of the basis periods. You do not need to have a significant reduction in both basis periods to be eligible for the third grant.
Do the first and second grants count as trading profits to determine whether I’m eligible for the third one?	No, you do not have to consider the first or second SEISS grant, or other coronavirus scheme support payments you have already received, when deciding whether you reasonably believe that you will suffer a significant reduction in trading profits for SEISS purposes. See HMRC’s guidance – here.
Can I claim the third grant 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 third grant.
When can I make my claim?	The third SEISS grant opened for applications on 30 November and closed on 29 January 2021.
Can I reset my Government Gateway ID / Password?	Yes. See https://www.gov.uk/log-in-register-hmrc-online-services/problems-signing-in for more information. You will need two forms of ID to hand.
How do I make my claim?	HMRC’s guidance is here.
The claims process – fourth payment 1 February 2021 to 30 April 2021 Details about the fourth grant will be announced at the Budget on 3 March 2021
What period is the fourth grant for?	The fourth grant is for the three months to 30 April 2021.
Who qualifies for the fourth grant?	HMRC will provide full details about who will qualify of the fourth grant in guidance on GOV.UK in due course.
Can I claim the fourth grant if I didn’t claim the first, second or third ones?	Yes, you don’t need to have claimed the first, second or third payments to claim the fourth grant.
When can I make my claim?	HMRC will provide full details about claiming and applications in guidance on GOV.UK in due course.
How do I make my claim?	HMRC will provide full details about claiming and applications in guidance on GOV.UK in due course.

First grant

Second grant

Third and fourth grants

Third grant

Fourth grant

HMRC has published the following guidance:

Legislation

Further information

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?

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’ (and creative industries’) 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

Are the grants taxable?

Yes, the grants are taxable. They are subject to both Income Tax and Class 4 National Insurance Contributions.

When are the grants taxable (in which tax year)?

The grants are taxable in the tax year 2020/21. They should be reported in full on your 2020/21 self-assessment tax return in due course. Specific boxes will be provided on the form for them.

No part of the grants should be reported on your tax return for the tax year 2019/20.

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 amended 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.

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 have filed your self-assessment tax return for 2018/19 by 30 September 2020. It did 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 – third payment 1 November 2020 to 29 January 2021

Applications for the third grant closed on 29 January 2021

What period is the third grant for?

The third grant is for the three months from 1 November 2020 to 29 January 2021. The grant will be paid in one lump sum instalment.

Who qualifies for the third grant?

To be eligible for the third grant, self-employed individuals, including members of partnerships, must:

have been previously eligible for the SEISS.