All you need to know about the Self-Employment Income Support Scheme

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Self-Employment Income Support Scheme

The Self Employment Income Support Scheme or SEISS is a government relief scheme for the self employed. Owing to the coronavirus pandemic and its severe implications on businesses, Chancellor Rishi Sunak on 26 March 2020 announced the SEISS as a relief measure in the form of grants for eligible self employed people in the United Kingdom. As of 24 May 2020, 2.3 million claims had been made for the grants, worth a total of £6.8 billion.

With millions of self employed individuals across the UK, guidelines for eligibility and the application process for the SEISS are much needed. The criteria for the eligibility and information regarding the grants are stated below.

Who is eligible for the Self Employment Income Support Scheme? 

Self employed individuals, including members of partnerships, are eligible if they have:

·     Submitted their Income Tax Self Assessment tax return for the tax year 2018-19

·     Continued to trade in 2019-20

·     Intend to keep trading in 2020-21

·     Carried on a trade which has been adversely affected by COVID-19

·     Average self employed trading profits of no more than £50,000 and at least equal to their non-trading income

How can one confirm if they are eligible for the SEISS?

Before you test your eligibility for the SEISS, you will need your:

·     Unique Taxpayer Reference

·     National Insurance Number

Once you have these details, you can simply visit the HMRC website and within minutes confirm your eligibility

When can I apply and what is the available grant?

After allowing access to the first grant on 13 May 2020, Chancellor Rishi Sunak extended the SEISS to a second and final grant in an announcement on 29 May 2020. The eligibility criteria for both the grants are the same.

First Grant

Applications will close on 13 July 2020. Those eligible individuals can claim a taxable grant worth 80% of their average monthly trading profits, paid out in a single installment covering three months’ worth of profit, and capped at £7,500 in total.

Second and Final Grant

Individuals will need to confirm that their business has been adversely affected by coronavirus when applying for the second and final grant. An individual does not need to have claimed the first grant in order to be eligible for the second and final SEISS grant.

Applications for the Second Grant will open in August 2020. HMRC will make further information available on 12 June 2020. Eligible individuals can claim a taxable grant worth 70% of their average monthly trading profits, paid out in a single installment covering three months’ worth of profit, and capped at £6,570 in total.

Does the SEISS grant have to be paid back to the HMRC?

The SEISS is a taxable grant that has to be declared in your Self Assessment Tax return. Specifically, you will need to declare the same as an income and pay taxes in 2020/21 tax year.

What about people who work through a limited company from which they take salary and dividends as they are the director as well as the sole employee of that company?

As a sole director and sole employee of a limited company, you aren’t eligible for the Self Employment Income Support Scheme. There are however other options available for such individuals such as the Coronavirus Business Interruption Loans, the Coronavirus Job Retention Scheme, or Universal Credit.

Can a sole director of a limited company “furlough” himself or herself under the Coronavirus Job Retention Scheme?

The short answer is yes, you can. As long as you meet the eligibility criteria that HMRC has set out you will be allowed to furlough yourself and apply for the CRJS. However, it is important to note that if you do so, you may be unable to continue to work as you would have furloughed yourself. Please speak to an accountant for further details. 

What are the other options available to those who aren’t eligible?

A detailed note of the options available for the self employed apart from the SEISS is mentioned in our blog.

As the COVID-19 pandemic stretches on and more businesses and self employed individuals continue to be affected, more such announcements are expected from the government. We will keep you updated with the latest details on such schemes and benefits through our blogs. Don’t miss updates on our upcoming product by signing up here.

Make sure you are following us on our social media platforms, Facebook, Twitter and LinkedIn to stay up to date with all the latest developments around the schemes announced by the government for the self-employed.

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If you are considering finding and combining your pensions into one place then Raindrop could be a good solution for you. If you choose to combine your pensions with Raindrop, as with all investments your capital is at risk. The value of your pension can go up as well as down.

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