In the ‘Winter Economy Plan’ announced by Chancellor Rishi Sunak on 24th September 2020, were more policies to support the self employed until the spring.
The reason that this was announced is off the back of recent restrictions to combat the beginning of a second phase of COVID19, and the real risk to peoples livelihoods over the winter.
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.
We soon followed this with our blog in August about the second payment.
The Chancellor recognises the continued impact that COVID-19 has had on the self employed and has taken action to provide support. The SEISS Grant Extension provides critical support to the self-employed.
If you didn’t see our blogs, you can see them here;
These subsequent grants follow the same application process and eligibility criteria as the first two, with the claim amounts reducing (just as they were with furlough support), essentially weaning businesses off support without dropping them off the cliff edge.
Are you eligible for the next phase of SEISS?
As with the other grants, the same eligibility applies, but you don’t need to have claimed the first two grants to be able to claim the next phase of support.
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.
To be eligible for the extended scheme, self employed individuals, including members of partnerships, must meet also the following criteria:
- Currently be eligible for the SEISS (although they do not have to have claimed the previous grants)
- Declare that they are currently actively trading and intend to continue to trade
- Declare that they are impacted by reduced demand due to COVID-19 in the qualifying period. The qualifying period for the first grant is between 1 November and the date of claim.
If you’ve checked with HMRC, and you are eligible, you’ll be able to access the claim process once it opens for the third payment (expected late December / early January 2021), and the fourth (expected late March / early April 2021).
What does the grant cover?
The extension will provide two grants and will last for six months, from November 2020 to April 2021, and grants will be paid in two lump sum instalments each covering a three month period.
The first grant will cover a three-month period from the start of November until the end of January 2021, and covers 20% of average monthly trading profits up to £1,875 in total.
This payment will be made one lump sum once the claim process is available.
It is not known yet as to how much the fourth grant will amount to, and the government will review the level over the next few months before the next claim period opens up.
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).
Once claimed, you’ll receive your grant within 6 working days, and it will be paid in a lump sum covering the three months, not in monthly instalments.
If you’re unable to claim online, you can contact the HMRC by phone on 0800 0241222 for further guidance.
For details on how to apply, visit our blog here, which will walk you through the process.