The Coronavirus (COVID-19) Self-employment Income Support Scheme (SEISS) allows self employed workers who have had their business adversely affected by coronavirus to claim a taxable grant.
Update 5 November
The extension to the SEISS will last for 6 months, from November 2020 to April 2021. Grants will be paid in 2 lump sum instalments each covering a 3 month period.
The third grant will be paid out in a single instalment and cover the period from 1 November 2020 until 31 January 2021. The Government will provide a taxable grant of 80% of 3 months average monthly trading profits, capped at £7,500, which is an increase from the 55% previously announced.
The Government are providing the same level of support for the self-employed as is being provided for employees through the Coronavirus Job Retention Scheme which has also been extended until March 2021.
There will be a fourth grant covering February 2021 to April 2021 and the Government will set out further details, including the level, of the fourth grant in due course.
The grants are taxable income and also subject to National Insurance contributions.
Update 2 November
The government has announced changes to the SEISS extension.
- Support under the third instalment of the UK-wide Self-Employment Income Support Scheme has been increased to people receiving 80% of average trading profits for November
- Grants will also be paid faster than previously planned – with the claims window opening on 30 November rather than 14 December
As SEISS grants are calculated over three months, the uplift for November to 80%, along with the 40% level of trading profits for December and January, increases the total level of the third grant to 55% of trading profits. The maximum grant will increase to £5,160.
SEISS extension from November 2020
The government has announced that the SEISS will be extended for six months for eligible self-employed workers who are actively continuing to trade but are facing reduced demand due to coronavirus. This will be broadly the same level of support as is being provided for employees through the Job Support Scheme.
The extension will run from November 2020 to April 2021 and the grant will be paid in two lump sum instalments each covering a three-month period.
The first grant will cover the period from November until the end of January. The second grant will cover a three-month period from February until the end of April. HMRC will confirm the level of the second grant in due course.
The grants are subject to Income Tax and National Insurance Contributions.
The second SEISS grant
The scheme has been extended so if you were eligible for the first grant and can confirm to HMRC that your business has been adversely affected on or after 14 July 2020, you’ll be able to make a claim for a second Self-Employment Income Support Scheme (SEISS) grant from 17 August 2020. This will be a taxable grant worth 70% of their average monthly trading profits for three months, paid out in a single instalment and capped at £6,570 in total.
The eligibility for the second grant are identical to those for the first round of the SEISS. This means that if you have already made a claim for the SEISS and your business continues to be adversely affected by the coronavirus and you continue to trade in 2020/21, you should also be eligible to claim for a second SEISS grant. More information is on HMRC’s website.
Receiving a SEISS grant you were not entitled to
HMRC have released information about assessments and penalties relating to amounts of Self-Employment Income Support Scheme grants that people were not entitled to. This includes:
- Receiving a grant you were not eligible to claim
- The amount of grant you received which was more than the amount HMRC said you were entitled to when you made your claim
Notifying HMRC of an overpayment
You should notify HMRC if you have been paid a grant which you were not entitled to. This must be within the notification period which ends on the latest of either 20 October 2020 or 90 days after you receive the grant. Where you fail to notify HMRC of receiving a SEISS grant which you knew you were not entitled to when you received it, HMRC will treat your failure as if it were deliberate and concealed.
Repaying an overpayment
HMRC may recover the full amount of the overpaid grant by making a tax assessment for the amount that you were not entitled to. They will write to you to confirm this and any amount will be due for payment 30 days after the assessment. Interest will be charged on late payments. If you do not agree with the decision or the amount due, you may appeal within 30 days of the date of the
notification being issued to you.
If you are worried about making the payment you should call HMRC’s Payment Support Service on 0300 200 3835 Monday to Friday, 8am to 4pm.
If you have repaid the grant or HMRC have made an assessment by the date you submit your tax return, you do not need to include it in your 2020 to 2021 Self Assessment tax return.
If you have not repaid the grant and HMRC have not made an assessment by the date you submit your 2020 to 2021 Self Assessment tax return, you must separately include details of the grant that you were not entitled to in your return and you will repay the grant then.
Failure to notify HMRC of an overpayment
If you do not notify HMRC within the notification period about an amount of grant you claimed and were not entitled to, you may be charged a penalty. If you knew you were ineligible for the grant when you received it, any penalty will be based on the amount you were not entitled to receive and did not repay by the last day of the notification period.
If you did not know you were ineligible for the grant when you received it, you will only charge you a penalty if you have not repaid the grant by 31 January 2022.
More information about overpayments to partners and partnerships can be found in HMRC’s guide.
Check if you’re eligible to claim
You can check if you are eligible using the government’s online tool.
You’ll need your:
- Self Assessment Unique Taxpayer Reference (UTR) number – you can find out how to get your UTR number
- National Insurance number – you can find out how to get your National Insurance number
Other criteria for the scheme include:
- Where the self employed worker has 3 years accounts, the profits will be the average monthly profits of the last 3 years
- Where the self employed worker doesn’t have 3 years accounts, it will be the average of the shorter period
- It will be open to self employed workers with profits of less than £50,000 in 2018/19 tax year, or an average of £50,000 over the tax years 2018/19, 2017/18 and 2016/17
- The grant will be available from June 2020 and paid directly into the self employed workers bank account
- More than half of their income must come from self employment
HMRC will work out whether you are eligible for the scheme based on your total income and trading profits.
Trading profits are based on the figures on your tax return for your total trading income (turnover) minus any allowable business expenses and capital expenditure. HMRC will not deduct any losses carried forward or your personal allowance from your trading profits.
Allowable expenses include:
- Office costs such as stationary or phone bills
- Travel costs such as fuel, parking or train fares
- Uniforms or other clothing expenses
- Staff costs or subcontractors
- Training courses
- Marketing costs such as websites or advertising
- Business premises costs
- Financial costs such as bank charges and insurance
It also includes:
- Any business expenses deducted through the trading allowance
- Capital allowances, used to buy assets used in your business
- Qualifying care relief
- Flat rate expenses
To see more details of how HMRC access eligibility and examples of different scenarios, please visit their website.
Requesting a review of your entitlement
If you have used HMRC’s eligibility checker to check if you are eligible to receive a grant and it says you are either not eligible to receive a grant or you disagree with the amount of the grant that HMRC has calculated for you, then you can ask for a review of your eligibility status.
Unlike making the claim, which must be done by yourself, asking HMRC for a review of your eligibility status can be done by either the claimant or their agent. If you are an Ellacotts client, we can help you with this.
Support for anyone who is due to make Self Assessment payment on account due on 31 July 2020
If you due to make a payment on account under Income Tax Self-Assessment, payments due on the 31 July 2020 will be deferred until the 31 January 2021.
This is an automatic offer with no applications required.
As part of the UK200Group we have access to up-to-the-minute information and can help you get access to the support you need. We’ll be keeping you informed in general terms, but please don’t hesitate to get in touch if you have any questions or concerns.
If you’d like to speak with one of our tax advisers about the key points above please call us by email or on 01295 250401.
Read more about the other Coronavirus support packages the government has announced: