Self-Employed Income Support Scheme SEISS – January 2021 Update

On 26 March 2020, the Government announced a support package for those who are self-employed or a member of a partnership and have lost income due to the COVID-19 crisis. 

This is aimed at self-employed businesses that DO NOT trade through a limited company, that have generated profits and where those profits are your main or only source of income.

With the closure of the claims window for the 3rd grant and the details of the 4th grant potentially not being announced until the budget on the 3rd March, we have set out a summary of the Grants to date

SEISS grants currently cover the following periods

NameClaim periodClaim deadlineGrant size
Fourth grantFeb 2021-April 2021 TBATBA
Third grantNov 2020-Jan 202129 Jan 2021Up to £7,500
Second grant14 July – Oct 202019 Oct 2020Up to £6,570
First grantMarch – July 202013 July 2020Up to £7,500

The Self-Employed Income Support Scheme (the ‘scheme’) is open to those who have annual profits of less than £50,000 and receive at least half their income from self-employment.  Where the conditions outlined below are met, eligible individuals can apply for a grant payment under a total four rounds of the scheme. All payments are subject to income tax and Class 4NICs.

The first round of grants, for which claims closed on 13 July 2020, was worth:

  • up to 80% of average monthly trading profits,
  • for a period of three months,
  • capped at an overall maximum of £7,500.

The second round of grants, for which claims opened on 17 August 2020 and closed on 19 October, is worth:

  • up to 70% of average monthly trading profits,
  • for a period of three months,
  • capped at an overall maximum of £6,570.

On 24 September 2020 it was announced that the scheme would be extended further for self-employed individuals who were currently eligible for the SEISS and are actively continuing to trade, but facing reduced demand due to COVID-19.

This extension will be in the form of a further third and fourth round of grants. The third round of grants, for which applications opened on 30 November 2020 and will close on 29 January 2021, covers the period from the start of November 2020 until 29 January 2021 and is worth:

  • up to 80% of average monthly trading profits, 
  • for a period of three months,
  • capped at an overall maximum of £7,500.

The fourth round will cover a three-month period from the start of February until the end of April. The Government have indicated that they will review the level of the fourth round and set this in due course.

HMRC calculate how much eligible individuals will receive. Individuals therefore do not need to calculate the amount they are due, but they do need to make a claim to receive funds under the scheme. 

Below we have set out an outline of how HMRC determine eligibility, the amount receivable for both grants, and how the claims process works. 

Who is eligible for the Self-Employed Income Support Scheme (SEISS)?

For the first round of grants, HMRC provided a standalone online eligibility checker which allowed individuals, or their agents, to check if they were eligible for the scheme in advance of making a claim. This eligibility checker was withdrawn for the second round of grants onwards, where eligibility was confirmed as part of the application process.

You could claim under the first and second rounds of the scheme if you were a self-employed individual or member of a partnership and you:

  • carry on a trade which has been adversely affected by COVID-19 (for example because you’re unable to work, or you have had to scale down/stop trading);
  • traded in the tax years 2018-19 and 2019-20;
  • submitted your self-assessment return for the tax year 2018-19 on or before 23 April 2020;
  • intend to continue trading in 2020-21; and
  • meet the profits condition.

These eligibility criteria were the same for both the first and second grant. The one notable variation was in the timing of when a trade has to be adversely affected:

  • To claim the first grant, the trade must have been adversely affected by COVID-19 in the period up to and including 13 July 2020.
  • To claim the second grant, the trade must have been adversely affected on or after 14 July 2020.

The Treasury Direction dated 24 November sets out that, in order to be eligible for the third grant, all of the same conditions have to be met as for the first and second grants. However, there are two extra conditions which must also be met in order to be eligible for the third grant:

  • The trade must have suffered from reduced activity, capacity or demand in the period from 1 November 2020 to 29 January 2021 as a result of COVID-19; and
  • The claimant must reasonably believe they will suffer a significant reduction in trading profits for the basis period including those months as a result.
  • A claim cannot be made for the third grant if the reduced activity, capacity or demand is caused solely because a person is required to self-isolate, or care for someone required to self-isolate as a result of travelling to the UK.

Who isn’t eligible for the Self-Employed Income Support Scheme (SEISS)?

You will not be eligible for the first, second or third grants if any of the following apply:

  • You started your trade after 5 April 2019 (i.e. you did not trade in the tax 2018-19).
  • You did not submit your 2018-19 tax return by 23 April 2020.
  • Your trading income forms less than half of your total income (for example, your main income comes from employment, which you top up with a smaller amount from self-employment).
  • You traded in 2016-17 and 2018-19 but not 2017-18; and you do not meet the first test of the profit condition (i.e. in 2018-19 your trading profits were more than £50,000, or less than your non-trading income in that year).
  • You are a director of a limited company.
  • You operate a Furnished Holiday Letting business.
  • You are operating a trade through a trust.

Other points to note:

  • In calculating eligibility and the amount which can be claimed, HMRC will not take into account any self-assessment returns submitted after 23 April 2020.
  • Claims based on late returns submitted between 26 March and 23 April 2020 will be subject to additional anti-fraud checks.
  • If you amend a submitted return after 26 March 2020 any changes will not be taken into account when working out your eligibility or amount of the grant.
  • HMRC will only look at your original return if a tax return is under enquiry, or the subject of a contract settlement.
  • If you are taking a break from your trade due to having a baby or adoption, or have done so since 6 April 2019, you will still be eligible.  Claiming maternity allowance will not affect eligibility.

How much might I get?

The first grant was calculated as 80% of average trading profits for a three-month period, subject to an overall cap of £7,500.  The second grant is calculated as 70% of average trading profits for a three-month period, and capped at £6,570. The third grant will be calculated as 80% of average trading profits for a three-month period, and capped at £7,500. The Government have not yet confirmed how the fourth grant will be calculated.

There is no link between the amount of grant received and the level of income lost by the trade due to COVID-19.

You must keep a record of the amount claimed, your claim reference number and evidence that your business has been adversely affected by coronavirus.

Please note that claims will be dealt with through GOV.UK only – any texts, calls or emails purporting to be from HMRC asking you to click a link or provide personal information are likely to be a scam so please exercise caution.