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Our latest webinar about the Self-Employment Income Support Scheme (SEISS) took place on Monday 19 April 2021. The webinar provided an update on the scheme ahead of the claims process for the fourth grant opening at the end of April and focussed on what has changed from the previous three grants, who qualifies for the fourth grant (and who doesn’t), the claims process and compliance aspects, plus there was a brief look ahead to the fifth grant - for more details see here.

Recordings of our previous webinars about the SEISS are also available on our website:

  • 7 May 2020 is here
  • 7 July 2020 is here
  • 8 October 2020 is here
  • 27 November 2020 is here

Who is eligible and who isn’t?
Trading profits and losses
Compliance aspects
The fourth grant February 2021 to April 2021
The fifth grant - May 2021 to September 2021

Latest updates:
14/04/2021
Who is eligible and who isn’t
Are the self-employed who started trading during 2019/20 eligible for the SEISS?
Compliance Aspects
I amended my tax return after 3 March 2021 – will this affect my claim?
The fourth grant - February 2021 to April 2021
Who qualifies for the fourth grant?
When can I make my claim?
How do I make my claim?

First grant

On 26 March 2020, the Chancellor announced that the Government would provide support to self-employed workers in the form of a cash grant of 80% of their profits, up to £2,500 per month for three months. This is known as the Coronavirus (COVID-19) Self-employment Income Support Scheme (SEISS). Applications for the first grant closed on 13 July 2020.

Second grant

On 29 May 2020, the Chancellor announced that the SEISS would be extended with those eligible able to claim a second grant from 17 August 2020. The grant was worth 70% of average monthly trading profits, paid out in a single instalment covering three months’ worth of profits, and capped at £6,570 in total. Applications for the second grant closed on 19 October 2020.

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Third grant

The third grant covered a three-month period from 1 November 2020 until 29 January 2021. It was worth 80% of average monthly trading profits paid out in a single instalment covering three months’ worth of profits, and capped at £7,500 in total. Applications for the third grant closed on 29 January 2021.

Fourth grant

The fourth grant will cover the three-month period from February to April 2021. Details were announced by the Chancellor at the Budget on 3 March 2021.

The grant will be set at 80% of three months’ average trading profits, paid out in a single instalment, capped at £7,500.

Unlike the first three grants, the fourth (and fifth) grant will take into account 2019/20 tax returns and will be open to those who became self-employed in tax year 2019/20. Eligibility will be based on 2019/20, or the four year period spanning 2016/17 to 2019/20. You must have submitted your 2019/20 to HMRC by 2 March 2021 to be eligible.

The value of the grant is based on an average of trading profits for up to four tax years between ending 2019/20.

The online claims service for the fourth grant will be available from late April 2021 until 23:59 on 1 June 2021.

Fifth and final grant

The fifth and final grant will cover the impact of coronavirus from May to September 2021. It will introduce an additional turnover test and the amount of the grant will be determined by how much turnover has been reduced in the year April 2020 to April 2021.

The grant will be worth 80% of three months’ average trading profits, capped at £7,500, for those with a higher reduction in turnover (30% or more). For those with a lower reduction in turnover, of less than 30%, then the grant will be worth 30% of three months average trading profits.

The online claims service for the fifth grant will open in late July 2021. Further details will be provided on the fifth grant in due course.

HMRC has published the following guidance:

Guidance on how to use the scheme, including who can claim and the amount of grant payable, is here.

Guidance on how to claim a grant is here.

Guidance on how to work out your trading profits and non-trading income for the scheme is here.

For how your trading conditions affect your eligibility for the scheme, and what is meant by reduced demand or temporary closure and some examples of how this could affect your eligibility – see here.

Guidance on different circumstances, such as for late returns, partners in a partnership, those who have loans covered by the loan charge, those on parental leave, military reservists, non-residents, those claiming averaging relief and those near or above the state aid limits, is here.

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Guidance on how to tell HMRC if you made a claim in error because you were not eligible for the grant, have been overpaid or would like to make a voluntary repayment is here.

HMRC’s factsheet CC/FS47 gives more information about assessments and penalties in relation to grant overpayments.

HMRC’s factsheet CC/FS11a provides information about when HMRC might charge penalties for a failure to notify an Income Tax charge relating to an overpayment of a coronavirus support payment, including under the SEISS.

Legislation

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HMRC has published four Treasury Directions under Sections 71 & 76 of the Coronavirus Act 2020 which set out the legal framework for the SEISS here.

Legislation to introduce rules on how SEISS grants are taxed is in Schedule 16 Finance Act 2020 – see here. The Act received Royal Assent on 22 July 2020. The legislation also gives HMRC powers to recover payments to which recipients were not entitled to, and to charge a penalty in cases of deliberate non-compliance. The legislation had been published on 29 May 2020 for a short consultation - see here. The CIOT’s comments on the draft legislation can be found here.

Further information

An explainer about the scheme can be found on the CIOT’s Low Incomes Tax Reform Group’s website and also on the ATT website.

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Query

Status / response

Who is eligible and who isn’t
What is the position for property lettings businesses, including furnished holiday lettings? Do they qualify for the SEISS?
No, the SEISS scheme only applies to individuals who complete the self-employment or partnership trading pages of the self-assessment tax return. These pages exclude income from property, which includes furnished holiday lettings.
Will people working in the construction industry qualify for the SEISS?
Yes, if they are self-employed and meet the eligibility criteria. They must have completed the self-employment pages of the self-assessment tax return.
Does one look at the trading profits and total income at partner level or at partnership level when working out whether a partner in a partnership is eligible to claim a SEISS grant?
HMRC’s guidance says that a member of a partnership can make a claim for the SEISS grant and that eligibility is based on the partner’s share of the partnership’s trading profits. See example here.
Are all trading partnerships included even those with a corporate partner?
Yes, but only to the extent that they have partners who are individuals. The partners that are incorporated are not covered by the SEISS.
I’m resident and domiciled outside the UK. Can I claim under the SEISS?
Yes, you may be eligible, although you need to compare your trading profits with your worldwide income - see HMRC’s guidance here.
Can trusts claim the SEISS?
No, you cannot claim the grant if operating a trade through a trust – see here.
Can you claim the SEISS grant and continue to work?
Yes, you can receive the grant and continue to work in your self-employed business, start a new trade and also take on other employment including voluntary work or duties as an armed forces reservist.
If an individual has remained self-employed throughout the relevant tax years but has changed what they do, for example, running a café, then closing it down and becoming a window cleaner, does this matter?
No, so long as you were self-employed in 2018/19 (for the first three grants) and 2019/20 (for the fourth and fifth grants) and the other eligibility criteria are met.
Are the self-employed who started trading during 2019/20 eligible for the SEISS?
If you started trading during 2019/20 you were not eligible for the first three grants but you may be eligible for the fourth and fifth grants.
I didn’t submit my 2019/20 tax return by midnight on 2 March 2021. Can I still claim the fourth and fifth grants?
No, if you didn’t submit your 2019/20 tax return by midnight on 2 March 2021 you will not be able to claim the fourth or fifth grants.
Can dentists claim under the SEISS for their private (non-NHS) work?
HMRC have confirmed that overall as long as they meet the criteria for the SEISS, dentists can claim on the basis that they have income from non-NHS work. For further information see here.
Trading profits and losses
How does it work when a taxpayer has made a loss in one of the tax years on which the grant will be based?
In-year trading losses are taken into account as well as profits in calculating a person’s eligibility for the grant and the amount of the grant they will receive. However, non-trading losses are not included in the calculation of non-trading income. See here.
What if an individual is self-employed with more than one trade at the same time? Do you combine them?
Yes, if a person has more than one trade in the same tax year, HMRC will add together all the profits and losses for all the trades to work out the trading profit. See here.
Are ‘trading profits’ pre or post farmers’ and creative industries averaging relief?
HMRC will use the profit before farmers’ (and creative industries’) averaging relief to work out whether a person is eligible to claim the grant and how much grant they will receive. See here.
If I started being self-employed during the 2018/19 tax year (or 2019/20 for the fourth and fifth grants), will my trading income and profits be extrapolated to be expressed as an annual rate when looking at whether I am eligible to receive the grant?
No, if you started being self-employed during 2018/19, for example on 6 October 2018, HMRC will look at your actual trading income and profits for the 6 months of trading. They will not be extrapolated to be expressed as an annual amount. See here.
The same principle applies for the fourth and fifth grants if you started trading during the tax year 2019/20.
Compliance Aspects
Are the grants taxable?
Yes, the grants are taxable. They are subject to both Income Tax and Class 4 National Insurance Contributions.
When are the grants taxable (in which tax year)?
The grants are taxable in the tax year they are received.
This means that the first three grants are taxable in the tax year 2020/21. They should be reported in full on your 2020/21 self-assessment tax return in due course. Specific boxes are provided on the form for them.
No part of the grants should have been reported on your tax return for the tax year 2019/20.
The fourth and fifth grants are taxable in the tax year 2021/22 and should be reported on your 2021/22 self-assessment return in due course.
What if I disagree with how HMRC have worked out the amount of my payment?
If you have an agent discuss it with them. If you still disagree with the amount, you can ask HMRC to review it – to contact HMRC by telephone or webchat see here.
Can agents request a review of the amount of the payment on behalf of their clients?
Yes, agents can request a review of their client’s award amount by contacting HMRC by telephone or webchat – see here.
What should I do if I claimed the grant but I wasn’t actually eligible for it, or if I’ve received more from HMRC than I was entitled to?
You must tell HMRC if, when you made the claim you:
  • were not eligible for the grant
  • received more than HMRC said you were entitled to
When you must tell HMRC depends on the date you received your grant. If you received the grant:
  • before 22 July 2020 you must tell HMRC on or before 20 October 2020
  • on or after 22 July 2020 you must tell HMRC within 90 days of receiving the grant
If you do not you may have to pay a penalty. Further information about assessments and penalties is in HMRC’s Factsheet CC/FS47.
HMRC have provided an online form to notify and repay some or all of the grant.
When you’ve completed the form, you’ll be given bank details to pay back the grant. You should print or save this page so you can make the payment.
If you’re unable to use the online facility you should contact HMRC for help.
HMRC are contacting people who they think were not eligible to claim the SEISS because they told HMRC on their tax return that they stopped trading in either the tax year 2018/19 or 2019/20. If you receive an email or letter from HMRC asking you to review your grant application, you should follow the instructions in the email or letter and respond to HMRC by the deadline provided – for further information see here.
I have decided that I would like to voluntarily repay some or all of the grants I received even though I was eligible to receive it when I made my claim.
You can voluntarily pay back some or all of the grants you received. If you choose to do this, you can do so at any time – see here – using HMRC’s online form.
When you’ve completed the form, you will be given bank details to pay back the grant. You should print or save this page so you can make the payment.
If you’re unable to use the online facility you should contact HMRC for help.
I amended my tax return after 3 March 2021 – will this affect my claim?
Yes, it may do if the amendment means you are entitled to a lower grant than you claimed. This rule only applies to the fourth and fifth grants. Earlier grant claims will not be affected. See HMRC’s guidance here.
The fourth grant - February 2021 to April 2021
Details about the fourth grant were announced at the Budget on 3 March 2021
What period is the fourth grant for?
The fourth grant covers the period from February to 30 April 2021.
How much is the fourth grant?
The fourth grant will be set at 80% of three months average trading profits, paid out in a single instalment, and capped at £7,500.
Who qualifies for the fourth grant?
The fourth grant will take into account 2019/20 tax returns submitted to HMRC by midnight on 2 March 2021, meaning that the fourth grant will be open to people who became self-employed in tax year 2019/20, as well as those who will become eligible on the basis of their 2019/20 returns (when considering with previous returns covering the four tax years from 2016/17 to 2019/20).
If you did not submit your 2019/20 tax return by midnight on 2 March 2021 you will not qualify for the fourth grant.
The value of the grant is based on an average of trading profits for up to four tax years between ending 2019/20.
With the exception of the introduction of the 2019/20 returns, and the four-year average, the rest of the eligibility criteria remain unchanged.
This means that to be eligible for the fourth grant, self-employed individuals must during the claim period:
  • be currently trading but are impacted by reduced activity, capacity or demand due to coronavirus, or
  • have been trading but are temporarily unable to do so due to coronavirus.
And they must declare that they
  • intend to continue to trade, and
  • that they reasonably believe that they will suffer a significant reduction in their trading profits in the basis period in which the qualifying period falls because of reduced activity, capacity or demand due to coronavirus.
See HMRC’s guidance – here.
How much is a 'significant reduction' in my trading profits?
HMRC’s guidance says that before you make a claim you must decide if the impact on your business will cause a significant reduction in your trading profits and that HMRC cannot make this decision for you because your individual and wider business circumstances will need to be considered when deciding whether the reduction is significant.
You should wait until you have a reasonable belief that your trading profits are going to be significantly reduced, before you make your claim.
If I have two basis periods which fall within the period February to April 2021, do I need to have a significant reduction in trading profits in both periods?
If you have two basis periods which fall within the period February to April 2021, you must declare that you reasonably believe that any reduced demand, or inability to trade will result in a significant reduction in your trading profits for at least one of the basis periods. You do not need to have a significant reduction in both basis periods to be eligible for the fourth grant.
Do the first, second and third grants count as trading profits to determine whether I’m eligible for the fourth one?
No, you do not have to consider previous SEISS grants, or other coronavirus scheme support payments you have already received, when deciding whether you reasonably believe that you will suffer a significant reduction in trading profits for SEISS purposes. See HMRC’s guidance – here.
Can I claim the fourth grant if I didn’t claim the first, second or third ones?
Yes, you don’t need to have claimed the first, second or third payments to claim the fourth grant.
When can I make my claim?
HMRC will send you a personal claim date from mid-April and the claims period will run from late April until 23:59 on 1 June 2021.
How do I make my claim?
HMRC’s guidance is here.
Can I reset my Government Gateway ID / Password?
Yes. See here for more information. You will need two forms of ID to hand.
The fifth grant - May 2021 to September 2021
The fifth grant will introduce an additional turnover test and the amount of the grant paid will be determined by how much turnover has been reduced in the year April 2020 to April 2021. It will be available to claim from late July. Further details will be announced by HMRC in due course.
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