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The Self-Employed Income Support Scheme (SEISS) is being extended to provide financial support to businesses over the winter.
The extension will provide two lump sum grants between November 2020 and April 2021.
The first grant will cover 3 months’ worth of profits from November to January and will be worth 20% of average monthly profits - capped at £1,875 in total.
To be eligible for the scheme, self-employed individuals, including members of partnerships, must meet the following criteria:
- Currently be eligible for the existing 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.
The criteria to be “actively trading” and to be “impacted by reduced demand” are new. Further guidance will be issued by HMRC in due course to explain these in more detail.
Additionally, the actively trading criteria means firms closed during the pandemic may not be able to claim if they have not restarted during the qualifying period.
What does the grant cover?
The extension will provide two grants and will last for six months, from November 2020 to April 2021. 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 and will cover 20% of average monthly trading profits. It will be paid in a single instalment covering 3 months’ worth of profits, and be capped at £1,875 in total.
The Government is providing broadly the same level of support for the self-employed as is being provided for employees through the new Job Support scheme.
The second grant will cover a three-month period from the start of February until the end of April. The Government will review the level of the second grant and set this in due course.
The grants are subject to Income Tax and National Insurance Contributions.
HMRC will provide full details about claiming and applications in guidance on gov.uk in due course.
The grants will be based on the same tax years as the two previous grants, so information on 2019/20 self-assessment tax returns will not be considered.
Example of grants paid and payable
Gary has self-employed trading profits for the last three tax years, and has no other income. His business has been affected by the coronavirus:
- 2016/17 tax year £18,000
- 2017/18 tax year £24,000
- 2018/19 tax year £27,000
HMRC has invited Gary to make claims online, and has computed his taxable grants as follows:
1st Grant (80%) payable May 2020 £4,600.
The grant was computed as £18,000 + £24,000 + £27,000 = £69,000, which averages at £23,000 per tax year.
Gary can receive from the government 80% of his average profits of £23,000 for three months, so £23,000 x 80% x 3/12, which is £4,600..
2nd Grant (70%) payable August 2020 £4,025.
Average £23,000 x 70% x 3/12 = £4,025
3rd grant (20%) payable February 2021 £1,150.
Average £23,000 x 20% x 3/12 = £1,150
4th grant - percentage to be determined - payable May 2021.
Other government measures already in place to support businesses and workers during the coronavirus emergency can be found in our Business after COVID-19: Transition Knowledge Hub.
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