Coronavirus: Self-Employment Income Support Scheme

Research Briefing

Published Wednesday, 02 December, 2020

• Research Briefing
• Business
• Diseases
• Economic policy
• Tax
• Covid-19

• Antony Seely
• David Hirst

To support the self-employed through the coronavirus outbreak the Government has introduced the Self-Employment Income Support Scheme (SEISS).

Documents to download

• Coronavirus: Self-Employment Income Support Scheme (730 KB, PDF)

  Download full reportDownload ‘Coronavirus: Self-Employment Income Support Scheme’ report (730 KB, PDF)

To support the self-employed through the coronavirus outbreak the Government introduced the Self-Employment Income Support Scheme (SEISS).

The Scheme has paid taxable grants worth 80% of someone’s average monthly trading profit, for a three-month period, worth up to £7,500 in total. On 30 April, the Government published the Treasury Direction to HM Revenue & Customs, the statutory guidelines for HMRC to administer the SEISS. The Scheme was opened for applications on 13 May, and closed on 13 July.

On 29 May the Government announced a second round of the SEISS, with those eligible able to claim a second grant, worth 70% of their average monthly trading profit, for a further three months, capped at £6,570 in total. On 2 July a second Treasury Direction was published to this effect. Applications for the second grant were opened on 17 August, and were closed on 19 October.

On 24 September the Government announced an extension to the SEISS to be introduced in November, to cover the six months up to the end of April 2021. The SEISS Grant Extension would be made in two taxable grants – first to cover November to January, second to cover February to April.  

Initially it was proposed that the first of these grants would cover 20% of average monthly trading profits, capped at £1,875, but this figure has been revised three times.  On 22 October the Chancellor announced the first grant would cover 40% of average monthly trading profits, capped at £3,750. On 2 November the Chancellor announced that the payment for the first month (November) of the first grant would be set at 80% – increasing the total level of this grant to 55% of trading profits, capped at £5,160. Subsequently on 5 November the Chancellor announced that all three months of the first grant would be calculated on the basis of 80% of average trading profits, up to a maximum of £7,500.[1]

On 24 November the Government published a further Treasury Direction underpinning the scheme. Applications for the third SEISS grant opened on 29 November and are to close on 29 January 2021.

HMRC has published detailed guidance of the SEISS Grant Extension, an extract from which is reproduced below:

Who can claim

• To be eligible for the third grant you must be a self-employed individual or a member of a partnership. You cannot claim the grant if you trade through a limited company or a trust.
• If you claim Maternity Allowance this will not affect your eligibility for the grant.
• You must have traded in both tax years:
  • 2018 to 2019 and submitted your Self Assessment tax return on or before 23 April 2020 for that year
  • 2019 to 2020
• You must either:
  • be currently trading but are impacted by reduced demanddue to coronavirus
  • have been trading but are temporarily unable to do sodue to coronavirus
• You must also declare that:
  • you intend to continue to trade
  • you reasonably believe there will be a significant reduction in your trading profits

Reasonable belief

• In order to claim, you must reasonably believe that you will suffer a significant reduction in trading profits due to reduced business activity, capacity or demand or inability to trade due to coronavirus during the period 1 November to 29 January 2021. You must keep evidence that shows how your business has been impacted by coronavirus resulting in less business activity than otherwise expected.

Significant reduction

• Before you make a claim, you must decide if the impact on your business will cause a significant reduction in your trading profits for the tax year you report them in. 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.
• There are some examples that can help you decide.

How HMRC works out your eligibility based on your tax returns

• To work out your eligibility we will first look at your 2018 to 2019 Self Assessment tax return. Your trading profits must be no more than £50,000 and at least equal to your non-trading income.
• If you’re not eligible based on the 2018 to 2019 Self Assessment tax return, we will then look at the tax years 2016 to 2017, 2017 to 2018, and 2018 to 2019.
• How different circumstances affect the scheme
• There are some circumstances that can affect your eligibility such as if:
  • your return is late, amended or under enquiry
  • you’re a member of a partnership
  • you had a new child
  • you have loans covered by the loan charge
  • you claim averaging relief
  • you’re a military reservist
  • you’re non-resident or chose the remittance basis
  • state aid

Find out more information on how your circumstances affect your eligibility.[2]

Notes :

[1]     HM Treasury press notice, Government extends Furlough to March and increases self-employed support, 5 November 2020

[2]     HM Revenue & Customs, Check if you can claim a grant through the Self-Employment Income Support Scheme, 29 November 2020