26 Mar 2020

Self-Employment Income Support Scheme

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Chris Smith

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Updated September 2021

Following the closure of the extended Self-Employment Income Support Scheme on 30 September 2021, this page is for historic information purposes only.

Expanding the UK Government’s measures to protect people and businesses from the economic impact of coronavirus, on 26 March 2020 the Chancellor focused on self-employed individuals (including members of partnerships) whose incomes have suffered.

Called the Self-Employment Income Support Scheme (SEISS), this offers welcome relief to those in self-employment, who comprise 15.3% of the UK’s workforce. The new scheme will cover 95% of those who are self-employed.

Under the scheme, grants will be provided to self-employed individuals or partnerships, worth 80% of their profits up to a cap of £2,500 per month, initially for three months.

Qualifying for SEISS

The criteria for the scheme, all of which you must meet to be eligible, are:

  • Be self-employed or a member of partnership
  • Have lost trading/partnership trading profits due to coronavirus (COVID-19)
    • We assume that “trading” includes professions; but it is not yet clear what evidence will be required that profits have in fact been affected by coronavirus
  • File a tax return for 2018/19 as self-employed or a member of a trading partnership
    • For eligible individuals who have not submitted their returns for 2018/19, they will have 4 weeks’ notice from 26 March (i.e. until 23 April 2020) to file their returns and therefore become eligible – otherwise you will be excluded from the scheme
  • Have traded in 2019/20; be currently trading at the point of application (or would be except for coronavirus) and intend to continue to trade in the tax year 2020/21
  • Have trading profits of less than £50,000 (this appears to be a cliff-edge: £49,999 makes you eligible but £50,000 doesn’t) and derive more than half of your total income from self-employment. This can be with reference to either of the following conditions:
    • Your trading profits and total income in 2018/19
    • Your average trading profits and total income across up to the three years between 2016/17, 2017/18 and 2018/19.

If you’re self-employed and had a new child, you may still be able to make a claim if this affected the trading profits or total income you reported for the 2018/19 tax year or meant you did not submit a Self Assessment tax return for the 2018/19 tax year. The criteria are listed on the government’s SEISS page.

If you had a child and so did not trade, or had reduced trade during 2018/19, you may not have been eligible for SEISS, or if eligible only for a reduced payout.  HMRC have addressed this by saying that in this case the period of non-trading won’t count, so for example if someone was self-employed in 2017/18, then took the whole of 2018/19 off as maternity leave, but resumed trading in 2019/20 and continues to trade, then they will be eligible for SEISS based on 2016/17 and 2017/18 trading income.

Second grant

Applications for the first grant must have been made by 13 July 2020. However, following the Chancellor’s announcement on 29 May 2020, those eligible were able to claim a second taxable grant worth 70% of their average monthly trading profits capped at £6,570 in total. This will be made as a single payment.

Applications opened on 17 August 2020 and the grant was available from 30 November 2020.

It was necessary to confirm that your business had been adversely affected by coronavirus on or after 14 July 2020. You did not need to have claimed for the first grant to be eligible for the second grant.

SEISS Grant Extension: three more grants

The SEISS Grant Extension was announced as part of the 2020 Winter Economy Plan. Initially it was to be limited to self-employed individuals who were already eligible for SEISS (although they did not have to have claimed the previous grants) and was due to last for 6 months, from November 2020 to April 2021.

The SEISS Grant Extension was itself extended in the March 2021 Budget.

The extension comprises three more taxable grants (the third, fourth and fifth overall):

The third grant covered a three-month period from the start of November 2020 until the end of January 2021. This initial grant covered 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.

The fourth grant was also worth 80% of three months’ average trading profits, paid out in a single instalment and capped at £7,500 in total. The grant covered the period February to April 2021, and could be claimed from late April – HMRC contacted eligible individuals in mid-April, and all claims must have been made by 1 June 2021. Self-employed individuals must have filed a 2019-20 Self Assessment tax return to be eligible for the fourth grant. This means that over 600,000 people may have become newly eligible for SEISS, including many new to self-employment in 2019/20. All other eligibility criteria remained the same as the third grant.

The fifth grant covers May to September 2021. The value of the grant is determined by a turnover test, with the aim of making it targeted according to need:

  • If your turnover has fallen by 30% or more, you will continue to receive the full grant worth 80% of three months’ average trading profits, capped at £7,500
  • If your turnover has fallen by less than 30%, you will receive a 30% grant, capped at £2,850

This fifth and final grant can be claimed from late July 2021. Further details have been published by the government here.

Eligibility and access to SEISS

You can check your eligibility for SEISS here. You will need your National Insurance number and Unique Taxpayer Reference (UTR).

If eligible, you will be given a date from when you can apply. On or after that date, you will need to log in and provide your bank account details via your Government Gateway account. If you don’t have a Government Gateway account, you should register for one here as soon as possible.

HMRC calculate the claim themselves and pay the grant directly to your bank account – the application is to supply bank account details. Payments to be made six working days after applications submitted.

Via this government webpage, you can ask HMRC to verify you had a new child which affected your SEISS eligibility.

Self-employed people remain eligible for other government support including business continuity loans and more generous Universal Credit.

Eligibility for the November-April grants is restricted to businesses that are actively continuing to trade but are facing reduced demand due to coronavirus, or to businesses that have been trading but are temporarily unable ty do so due to coronavirus. The portal for the November-January grant opened on 30 November.

Conditions and limits: our initial comments on SEISS

We made the following comments at the launch of SEISS in March 2020, in anticipation of further guidance and developments. We have kept them here for reference.

The Self-Employment Income Support Scheme looks to be very rough-and-ready – perhaps inevitably so. In particular:

  • If you trade through a company, the scheme doesn’t apply to you at all
  • Although the scheme applies only if your profits have fallen because of COVID-19, the payment is calculated as a percentage of your historic profits; not as a percentage of the profit reduction you’ve suffered
  • What happens if, post-COVID-19, your business recovers and you end up suffering no drop in profit for the year as a whole remains unclear
  • The £50,000 cut-off seems to be a cliff-edge.  It thus appears that if your profits have dropped from say £45,000 to £40,000 as a result of COVID-19, you get the full £2,500 per month; but if they drop from £60,000 to virtually nothing, you’re not entitled to claim at all
  • If your income is say £45,000 from self-employment and £40,000 from rental income you can potentially claim; but if it’s the other way round you can’t (even if your rental income has dried up because your tenants are affected by COVID-19)
  • If HMRC don’t have details of at least one full year’s trading, you won’t be able to claim.  That disqualifies anyone who started business in the current tax year 2019/20, but may also rule you out if you started business after 6 April 2018
  • Any grant paid will form part of your taxable business profits

For further guidance and insights on responding to the current situation, we have a range of articles in our dedicated coronavirus hub.

We will continue to support our clients through the challenges ahead. wish you, your families and your colleagues the best of health. As our clients, you can rely on our continued support.