The Latest Update: Self Employed Income Support Scheme

The Self Employment Income Support Scheme (SEISS) was first introduced in late March to provide financial support to self-employed individuals (i.e. sole traders or members of a partnership) that have been affected by the economic impact of Covid-19.

The SEISS provides a taxable grant of worth 80% of average monthly trading profits for businesses that have been adversely affected by Covid-19. The grant is paid in a single instalment covering three months’ worth of profits (capped at £7,500 in total).

The Chancellor recently announced the SEISS would be extended with a second and final grant, and further details were published on Friday evening. This second grant can be claimed in August 2020 and will be worth 70% of average monthly trading profits. It will again be paid out in a single instalment covering a further three months’ profits (capped at £6,570 in total).

Am I eligible to claim?

The eligibility criteria for the second grant remain the same as for the first grant – see link to our earlier blog for details: https://www.garbutt-elliott.co.uk/blog/a-lifeline-for-the-self-employed/

The key criteria to claim the SEISS are:

• you traded in the 2018/19 tax year and submitted your Self-Assessment tax return on or before 23 April 2020 for that year
• you traded in the tax year 2019/20
• you intend to continue to trade in the tax year 2020/21
• you carry on a trade which has been adversely affected by coronavirus

Claimants must again confirm their business has been adversely affected by Covid-19 when applying for the second grant, and the Government confirm that an individual does not need to have claimed the first grant to receive the second (as they may have only been adversely affected by COVID-19 in this later phase).

Newly published guidance emphasises the “adversely affected” requirement, giving some basic examples of when this would and would not be accepted for both the first and second grants.

It remains the case that business that commenced trading during the 2019/20 tax year are still unable to benefit from the SEISS and have little Government support to fall back on other than the Bounce Back Loan facility or claiming Universal Credit.

The rationale behind the Government’s approach to SEISS has clearly been to keep the scheme administration manageable (taking already captured Self-Assessment profits to automate calculation of the claim) and to avoid risk of abuse (if they permitted claims for profits that haven’t yet been filed with HMRC). But it remains a serious concern that so many new businesses remain unsupported by the scheme, and this still hasn’t been addressed by the Chancellor.

When can I claim?

The closing date for claiming the first grant is 13th July 2020, so anybody eligible for that should make their claim as soon as possible.

Applications for the second grant will open in August, with claimants having to confirm their business is adversely affected on or after 14th July 2020.

How much will I get?

As with the first SEISS grant, you will receive a taxable grant based on your average trading profit over the three tax years:

• 2016 to 2017
• 2017 to 2018
• 2018 to 2019

As HMRC hold your profits details for those years, they will work out your average trading profit for you. All you need to do is register your claim and the HMRC online service will confirm how much you are due. The grants will be paid directly into your bank account, in one instalment (per grant).

The first grant is worth 80% of average monthly trading profits (capped at £7,500 in total) and the second grant is worth 70% of average monthly trading profits (capped at £6,570 in total) – giving a maximum total of £14,070 across the two claims.

One final important point to note is that the SEISS grant is taxable income. So when you come to prepare your 2020/21 business accounts, you must include your SEISS grant(s) in your trading income.

For more information on the above scheme, please contact Richard Whitelock at rwhitelock@garbutt-elliott.co.uk