Back in May we talked about the first round of support for self employed business owners, known as the ‘Self Employed Income Support Scheme Grant’ (SEISS), and talked you through how to submit a claim for the grants available from the UK Government.
This support was key for businesses that had been affected by COVID19, but it didn’t go far enough, and only offered a short respite to business owners who saw their earnings disappear overnight.
On the 29th May 2020, the chancellor announced that the Self Employed Income Support Scheme (SEISS) would be extended, and that a second grant would be available to claim for those businesses that were still unable to open or had seen their earnings ‘adversely affected’ by COVID19.
This second grant follows the same application process, and eligibility criteria as the first.
Are you eligible for SEISS?
Before we go any further, this guide assumes that you are eligible for the self-employed income support scheme.
If you’re still unsure which of the government’s support schemes applies to you, please check out our COVID-19 Business Support Hub for more details.
In summary, you can apply for the SEISS if:
you have average profits of £50k or less.
you make more than 50% of your total income from self-employment.
you are already registered as self-employed and submitted a tax return for 2018-19 by 23rd April 2020.
you are trading when you apply, or otherwise would be except for COVID-19, and will continue trading into 2020-21.
If you’ve checked with HMRC, and you are eligible, you’ll be able to access the claim process from the 17th August.
What does ‘adversely affected’ mean?
Businesses must have been ‘adversely affected’ by COVID19. In our eyes, there aren’t many businesses that haven’t!
If you’ve seen a drop in your earnings, and/or a drop in the number of people you can safely get through the doors of your business, then you’ve been impacted!
The HMRC consider an adversely affected business as ‘a business that has temporarily stopped trading, the trading has been scaled back (a drop in customer numbers / sales), or the business has incurred additional costs due to COVID19, i.e. you’ve had to purchased PPE, safety equipment etc.
The HMRC haven’t issued exact guidance, just suggestions as follows;
The supply chain of the business has been affected
Fewer or no customers / clients
Staff were unable to work – either due to lockdown, isolation/shielding or the premises was not big enough to allow for safe social distancing for all employees.
One or more business contracts have been cancelled
The business has had to buy protective equipment in order to trade following social distancing rules.
The business has had additional costs associated with COVID19, including the purchase of screens, signage, PPE and additional cleaning requirements.
If the owners cannot work due to shielding, self-isolating, on sick leave due to COVID19, or have caring responsibilities due to COVID19.
In all cases, business owners should keep records to support their claim, including why their business has been affected, and for which periods.
As with the first grant, the HMRC will pay the equivalent of 3 months trading profits, based on the trading profits of the tax returns filed for 2016-17, 2017-18, and 2018-19. However the government will only pay 70% of average earnings up to £6,570 (£2,190 per month).
The reason for this is that they expect the majority of businesses that claimed first time round to be back to some form of work.
Who isn’t eligible?
You are not eligible for the SEISS grants if any of the following applies:
Your trading profits are more than £50,000 – for both tax year 2018/19 and when averaged across the tax years you traded in during the last three full tax years starting in 2016/17.
You aren’t self-employed or in a partnership at the moment, or don’t intend to be in the future. It’s not enough to merely be enrolled for Self-Assessment and to have undertaken self-employment work or have a role in a partnership at some point in the past year. You must be trading now and intend to do so in the 2020/21 tax year too.
You failed to submit a Self Assessment tax return for the 2018/19 tax year before 23 April 2020 – the deadline has long since passed, and if you submit now you will get a late filing penalty, and it still won’t count towards your claim.
You haven’t lost trading profits due to the coronavirus outbreak – during your application, the HMRC will require you to declare that you have been adversely affected, and may attempt to recover amounts paid to taxpayers who falsely declared as such.
Less than 50% of your income came from your self-employment or partnership for both tax year 2018/19 and when averaged across the tax years you traded in during the last three full tax years starting in 2016/17.
It’s important to remember that these grants are not repayable as they are not a loan, but they are taxable, so you will be taxed on how much you receive on your 2020-21 tax return (due 31st January 2022).
The second grant portal is due to open on the 17th August via the HMRC Portal.
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