Self-employment Income Support Scheme (SEISS)
The Self-Employment Income Support Scheme (SEISS) was introduced to support self-employed individuals (including sole traders and members of partnerships) who have lost income due to coronavirus (COVID-19).
Following the initial SEISS grants, on the 5th November 2020 the Chancellor announced an extension to the Self-Employed Income Support Scheme in the form of two additional grants, each over a three month period from November 2020 to January 2021 and February 2021 to April 2021.
For the first of these grants , to cover the period from November 2020 to January 2021, the total amount available will be calculated at 80% of average monthly trading profits over three months, paid out in a single instalment, up to a maximum of £7,500 per grant.
Who can claim this?
Sole traders and self-employed workers in partnerships can make a claim for this extended support if they are eligible, even if they did not make a claim for the initial grants.
This scheme is available to self-employed workers who:
- Have annual taxable profits of less than £50,000
- Make the most of their income from self-employment
- Have filed a 2018/19 tax return and submitted this prior to 23rd April 2020
- Have traded in the 2019/20 tax year
- Plan to continue trade in the tax year 2020/21
- Have seen their trade adversely affected by coronavirus
How do you know if trade has been affected?
Your business could have been adversely affected by coronavirus due to a variety of reasons, these include:
- Taking sick leave as a result of coronavirus
- Interruption of your supply chain
- Decrease in the number of customers/clients
- Lower staff levels
- Cancellation of contracts
- The requirement to purchase PPE to adhere to social distancing advice
If your business has had to close to due to local or national restrictions, you may be eligible to claim a government grant of £3,000 per month to cover rent on your business premises. You can find more information about this here.
How is it calculated?
To calculate your average monthly trading profits, HMRC will look at your last three tax returns. If you have not traded for three years, then HMRC will take the average of the tax returns you have submitted.
How do you claim this?
The online service to make a claim will be available from the 30th November 2020, with full details on how to claim to be confirmed in due course. As with the earlier SEISS grants, you will need to make this claim yourself using your government gateway account, your accountant will not be able to do this for you.
Treat the SEISS grant as you would income
It is important to remember that this grant is taxable in the same way that your trading profits will be at the end of the year. This means that when you come to submit your self-assessment tax return at the end of the year, you will need to pay tax and National Insurance on the total amount of the grant that you have received.
If you do receive the taxable grant, we would suggest keeping 30% to one side, so you have the funds available when the tax man comes knocking.