Updated 5th November 2020
Self-employed workers will get direct cash grants though the UK-wide Self-Employed Income Support Scheme.
To date the Government has actioned two SEISS payments. They have now announced the details of the 3rdand 4th SEISS grant that can be applied for should your self-employed business still be affected by COVID-19.
The rules for the 3rd and 4th grant were originally set at 20% of your average monthly trading profit, however on 22 October 2020 it was announced that this would increase to 60%. However, the 3rdand 4thgrant will now be worth 80% of your average monthly trading profit up to a maximum of £7,500 (which is the same level offered to affected businesses with the 1stand 2nd grants.
Applications for the second grant closed on 19 October 2020.
HMRC has now announced that the online portal for the 3rd grant will open during the week beginning 30 November 2020.
You do not have to have claimed the first or second grant to claim the third or fourth grant.
The grant is taxable and subject to national insurance through your trading profits in 2020/21 tax return.
The scheme will be open to those with a trading profit of less than £50,000 in 2018-19 or an average trading profit of less than £50,000 from 2016-17, 2017-18 and 2018-19. To qualify, more than half of their income in these periods must come from self-employment.
This scheme will not cover any individuals who commenced self-employment after 5th April 2019.
HMRC have now advised that Henry Reeves & Co CANNOT make the claim for you. You must make the claim yourself. We are, of course, here if you need any help or support.
To make the claim you will require your own HMRC online account, detailed below.
Updated October 2020
Self-employed workers will get direct cash grants though the UK-wide Self-Employed Income Support Scheme.
To date the Government has actioned two SEISS payments. They have now announced the details of the 3rdand 4th SEISS grant that can be applied for should your self-employed business still be affected by COVID-19.
The rules for the 3rd and 4th grant remain the same as the previous, however the 3rd grant will now be worth 40%, increased from the original offer of 20%, of your average monthly trading profit up to a maximum of £3,750 (compared to 80% with a maximum of £7,500 for the 1st grant and 70% with a maximum of £6,570 for the 2nd grant). The Government will announce the level of support for the 4th grant in a few months’ time.
Applications for the second grant closed on 19th October 2020.
HMRC have not yet provided details of when the 3rd grant can be claimed for but have said this will be announced by mid-November 2020.
You do not have to have claimed the first or second grant to claim the third or fourth grant.
The grant is taxable and subject to national insurance through your trading profits in 2020/21 tax return.
The scheme will be open to those with a trading profit of less than £50,000 in 2018-19 or an average trading profit of less than £50,000 from 2016-17, 2017-18 and 2018-19. To qualify, more than half of their income in these periods must come from self-employment.
This scheme will not cover any individuals who commenced self-employment after 5th April 2019.
HMRC have now advised that Henry Reeves & Co CANNOT make the claim for you. You must make the claim yourself. We are, of course, here if you need any help or support.
To make the claim you will require your own HMRC online account, detailed below.
Am I eligible?
HMRC have provided a webpage for you to find out if you are eligible to claim on this Scheme. To do this you will require your 10-digit tax reference (found on HMRC Statements and Letters) and your National Insurance Number.
If you are eligible, you will be shown the date you can make your claim. If you do not yet have a HMRC online account, there will be a series of webpages you click through to set this account up. HMRC will also ask you to verify your identity by asking for details from either your Passport or your Driving Licence. HMRC have advised that the cash will be paid directly into your bank account within 6 working days.
HMRC Self Employment Scheme Eligibility Checker
If you are not eligible, please see the section at the end of this article titled "not eligible for self-employed income support scheme."
To be eligible for the scheme you must meet all the criteria below:
However, the government says individuals should not contact HMRC now; it says HMRC will identify eligible taxpayers and contact them directly. HMRC will use existing information to check potential eligibility and invite applications once the scheme is operational.
According to the government, the new scheme covers 95% of people who receive the majority of their income from self-employment. The grant will then be paid in a single lump sum covering all three months.
Should you require funding sooner, there are other options such as business loans and mortgage / rent holidays / Bounce Back Loan Scheme. Further details of these and of other business support schemes are listed in our COVID-19 General Support page, click here to view.
Those who pay themselves a salary and dividends through their own company are not classified as self-employed and are, therefore, not covered by this scheme. However, they will be covered for their salary by the Coronavirus Job Retention Scheme if they are operating PAYE schemes and meet the relevant criteria.
In an ominous warning to self-employed workers the Chancellor highlighted the likely possibility that he will reform self employed taxation and national insurance to align with the rates paid by PAYE workers once this crisis has ended. The Chancellor stated that if self-employed workers want the same Government protection as PAYE workers then they should pay the same amount of tax and national insurance.
How will HMRC calculate my average profit?
A basic example of how this will work is as follows. For more detailed calculations please see the HMRC examples on the link below.
A sole trader has the following profits and losses for the 3 years and more than 50% of their income stems from self-employment.
First, add £45,000 and £60,000 then deduct £20,000 loss. This gives us a total of £85,000 and dividing this by 3 this gives us an average of £28,333. 80% of this would be £22,666.
The grant will be the LOWER of 80% of the average trading profit (here £1,889 which is £22,666/12) or £2,500 per month. Here the grant would be £1,889 per month as it is lower than £2,500 per month.
If trade only commenced in the 17/18 or 18/19 years, the average profits would be divided by the number of years of trading rather than by 3 years.
To be eligible for the SEISS grant, the self-employed profits must be no more than £50,000 but more than 50% of total taxable income for either:
Examples of more detailed scenarios are shown below:
Full HMRC Calculations Guidance
Not eligible for Self Employed Income Support Scheme
If you are not eligible for SEISS, please read other Government measures available in the COVID-19 Business Support section of our website.
Other help includes:
