Coronavirus: Self-employed income support

On 26 March Chancellor Rishi Sunak announced the Self-Employed Income Support Scheme (SEISS) to help the self-employed and freelancers.

Self-employed individuals will be able to apply for the first SEISS grant of up to 80% of average monthly trading profits for a 3-month period. This will be calculated by looking at average trading profits over the last 3 tax years (2016/17 to 2018/19) or shorter period where applicable. Like the Coronavirus Job Retention Scheme (CJRS), this is subject to a maximum claim of £2,500 per month. The maximum total grant is therefore £7,500, paid in one lump sum.

The plan will be backdated to March and cover up to 95% of the self-employed, according to the Chancellor. Payments are set to be made to up to 3.8 million people.

On 29 May the Government announced a second SEISS grant will be available from August.

How to qualify

In order to qualify the individual must have satisfied all of the following:

• Income tax return for 2018/19 must have been submitted by 23 April 2020
• Must be self-employed or a member of a partnership
• Must have traded in the 2019/20 tax year
• Must be intending to trade in the 2020/21 tax year
• Must be trading at the time the grant application is made, or would be trading if it weren’t for COVID-19
• Trading profits from self-employment must be at least 50% of total income
• Trading profits from self-employment must be less than £50,000 in the 2018/19 tax year OR less than £50,000 on average over the 3 tax years 2016/17 – 2018/19
• Must have lost trading profits due to COVID-19

Applications

The deadline to apply for the first grant is 13 July 2020. The second SEISS grant (70% of average monthly trading profits, capped at £6,570) will be open for applications from August 2020.

Find out about the practicalities of making a SEISS claim

Additional points

The grants will be taxable in the 2020/21 tax year and must be declared on the tax return for that period.

This scheme does not apply to company owners or directors who pay themselves dividends and a salary. However it has been confirmed that company directors can be furloughed just like other employees.

The Chancellor also highlighted the disparity in tax treatments between the employed and self-employed so we can expect some changes to the tax regime when this is all over.

For further information, please get in touch with a member of our Business Services team on 01903 234094.