Update: The government have recently announced a Self-Employment Income Support Scheme fifth grant. To find out more information you can visit the GOV.UK website.
What is SEISS?
In response to the global pandemic, the government launched a ‘lifeline’ scheme to protect the income and livelihoods of the UK’s self-employed UK workforce.
Almost exactly mirroring the furlough scheme, this grant is designed to offer financial support to those whose businesses and/or jobs are impacted by COVID-19 and thankfully, does not need to be paid back (unless HMRC deem the grants were claimed fraudulently). Any payments through this scheme however are subject to the usual Income Tax and National Insurance Contributions.
Unlike the furlough scheme in which a workers’ employer handles the process, the SEISS requires individuals to claim for the grant themselves every three months.
Who qualifies for the Scheme?
HMRC states that self-employed workers can apply for the grant if they have suffered a significant reduction in trading profits due to reduced business activity, capacity, or demand; or the complete inability to trade due to Coronavirus.
Back in March 2020, HMRC stated that self-employed workers must have submitted Self-Assessment Tax Returns for at least the past three years, however since the scheme’s inception and duration, they have softened their stance to include a minimum of two years (including the 2019-20 tax year).
How is the grant calculated and paid?
The grant is calculated at 80% of the workers average trading profits for three months, paid in a single instalment, but with a maximum cap of £7,500. HMRC will use a maximum of 4 years trading profits historically, but if there are gaps within the self-employed worker’s record, they may only use the most recent figures after any significant gap.
HMRC provide the following working example:
- Starting with a trading profit of - £42,000
- Divide by twelve months - £3,500
- Multiply by three months - £10,500
- Calculate 80% - £8,400
- Grant amount will be capped and pay - £7,500
Another example:
- Starting with a trading profit of - £36,000
- Divide by twelve months - £3,000
- Multiply by three months - £9,000
- Calculate 80% - £7,200
- Grant amount will pay - £7,200
How to claim?
All HMRC SEISS grant claims are handled between themselves and the Self-Employed Worker directly using the below as a great starting point.
Read more on how to submit a claim for the SEISS
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