The Government grant to self-employed individuals whose businesses have been adversely affected by coronavirus – is made up of two grants.
The first grant is now closed (it closed 13 July), but the second and final grant will open for applications on 17 August.
Here’s what you need to know about the second grant:
- Applications will open 17 August. You won’t be able to apply before then.
- It will be worth up to 70% of your trading profits. It’s capped at £2,190 a month and is taxable at a total of £6,570. As it’s a grant, you don’t need to pay it back.
- You don’t need to have claimed the first grant to receive the second grant. And if you’ve claimed the first, you can still claim the second as long as you’re eligible.
- You need to have been adversely affected by coronavirus on or after 14 July to claim it. Unsure what ‘adversely affected’ means? We’ve detailed examples and help. The 14 July date is “bizarre”, adding confusion to many people who were affected throughout June, see more on this below.
- Grants are based on your profits over three tax years. This is based on an average of the tax returns for 2016/17, 2017/18 and 2018/19.
- You must have filed a tax return for 2018/19. This means you must have been self-employed prior to 6 April 2019. The last possible moment to file a 2018/19 tax return was Thursday 23 April (the deadline had been extended from 31 January 2020). If you only had a few months’ self-employment on your 2018/19 return, this will be counted as your total profit for the year – the Government won’t pro-rata it based on your monthly profits.
- You must earn more than 50% of your total income from self-employment. This must have been the case for either your 2018/19 tax return or, if not, the average of your 2016/17, 2017/18 and 2018/19 tax returns. Income from property, dividends, savings, pensions and taxable benefits all count as “non-trading income” and to qualify for the SEISS. The total of these combined must NOT exceed 50% of your total income. For more information on which benefits count as “taxable income”, see our full list here.
- Your average trading profit must be less than £50,000/year. This is essentially a ‘cliff-edge’ requirement – so those whose average annual trading profit is more than £50,000 (to be specific, £50,000.01 and above) won’t be able to get any support from this scheme.
For both these requirements, the Government says it will first check your 2018/19 tax return – if you met the requirements that year, you’ll be eligible.
However, if you earned more than £50,000 (or earned less than half of your income from self-employment) in 2018/19, the Government will then check your 2016/17 and 2017/18 tax returns, if you filed them for those years. If on average over the three years you earned less than £50,000 and made more than half your income from self-employment, you’ll still be eligible. - Unlike the employee scheme, here you CAN keep working. You do not need to prove coronavirus impact, though you will need to declare your business has been impacted over the period of March to May. HMRC is introducing checks to prevent fraud.
- You can also apply for and get universal credit (SEISS doesn’t make you ineligible). But once you start receiving self-employed income support too then this will be classed as income, meaning the amount of universal credit you receive will decrease. But you will NOT have to pay back previous months of universal credit because of your SEISS payment. If you can wait, in some cases it could be worth delaying your SEISS application to maximise your universal credit award. We have all the details in our Coronavirus benefits guide here.
Second SEISS grant’s “bizarre” rule
The eligibility criteria are the same for the second grant as for the first. But you will need to confirm your business has been adversely affected by coronavirus on or after 14 July 2020 to claim the second grant. Unsure what ‘adversely affected’ means? We’ve detailed examples and help.
This rule is somewhat bizarre. The Government’s own press release from 26 March 2020 stated: “The income support scheme… will cover the three months to May,”ie, March, April and May. Logic (and basic counting) therefore suggests the second three-month grant covers June, July and August.
So it’s very strange to read the new rule that says you have to declare your business was impacted after mid July, and we think it’s unfair on businesses that were heavily impacted in June but recovered by mid July.
Having spoken to HMRC, apparently the grantsdon’t relate to a specific three-month time period, they are just grants – though based on three months of trading profits.
But the rules ARE simple. The first grant is for those whose ‘business was impacted by Covid-19 before13 July’, and the second is for those ‘impacted by Covid-19 on or after 14 July’. If impacted before and after the dates, you are due both.
SOURCE: MSE