Coronavirus: Self-Employment Income Support Scheme

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 2020 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 2020 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 2020.

On 24 September 2020 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 closed on 29 January 2021.

On 3 March 2021 the Chancellor presented the 2021 Budget, and as part of this announced the SEISS would be extended until the end of September 2021.

A fourth grant would be set at 80% of 3 months’ average trading profits, paid out in a single instalment, capped at £7,500. Unlike earlier SEISS grants, the grant would take into account 2019 to 2020 tax returns and be open to those who became self-employed in tax year 2019 to 2020. The grant would cover the period February to April, and could be claimed from late April.

A fifth and final grant would cover May to September, and could be claimed from late July. The size of the grant would be determined, in part, by the amount a claimant’s turnover has reduced in the year April 2020 to April 2021. The grant would be worth:

• 80% of 3 months’ average trading profits, capped at £7,500, for those with a turnover reduction of 30% or more
• 30% of 3 months’ average trading profits, capped at £2,850, for those with a turnover reduction of less than 30%.[2]

On 6 April the Government published a Treasury Direction for the fourth grant, and the online claims service for this grant was launched on 21 April. Individuals who are eligible need to make a claim on or before 1 June 2021. HMRC’s updated guidance summarises the eligibility criteria for the fourth grant:

Who can claim

To be eligible for the fourth 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.

You must have traded in both tax years:

• 2019 to 2020 and submitted your tax return on or before 2 March 2021
• 2020 to 2021

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
• reasonably believe there will be a significant reduction in your trading profits

Reasonable belief

In order to claim the fourth grant, you must reasonably believe that you’ll suffer a significant reduction in trading profits, due to reduced business activity, capacity, demand or inability to trade due to coronavirus between 1 February 2021 and 30 April 2021.

You must keep evidence that shows how your business has been impacted by coronavirus resulting in less business activity than otherwise expected. HMRC expects you to make an honest assessment about whether you reasonably believe your business will have a significant reduction in profits.

Significant reduction

Before you make a claim, you must decide if the impact on your business between 1 February 2021 and 30 April 2021 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. You do not have to consider any other coronavirus scheme support payments that you have received when deciding if you’ve had a significant reduction in your trading profits.[3]

There are some circumstances that can affect someone’s eligibility: if their tax return is late, under enquiry or amended; if they are a member of a partnership; if having a new child affected your 2019 to 2020 tax return; if they have loans covered by the 2019 loan charge and have not agreed a settlement with HMRC; if they claim averaging relief; if they are military reservist; and, if they are non-resident or chose the remittance basis. Full details are in a second guidance note.[4]

As with other aspects of the Covid-19 pandemic and the Government’s response to it, this is a fast-moving area and the paper should be read as correct at the time of publication. Similarly, as with other Commons Briefing papers, this information is provided to Members of Parliament in support of their parliamentary duties and is not intended to address the specific circumstances of any particular individual. A suitably qualified professional should be consulted if specific advice or information is required.

Notes : 

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

[2]     Budget 2021, HC 1226, March 2021 para 2.15-6

[3]     HMRC, Check if you can claim a grant through the SEISS, updated 21 April 2021

[4]     HMRC, How your circumstances affect eligibility for the SEISS, updated 9 April 2021