What is the Self-Employment Income Support Scheme?

Definition of Self-Employment Income Support Scheme

The Self-Employment Income Support Scheme is a temporary initiative that aims to provide financial support to self-employed people whose businesses are affected by the coronavirus (Covid-19) pandemic.

How the scheme works

The Self-Employment Income Support Scheme (SEISS) was announced in March 2020 by Chancellor Rishi Sunak. It was extended on 24th September 2020 and again on 5th November 2020. Only sole traders and partners are eligible for the scheme.

The SEISS initially enabled businesses that were affected by coronavirus between March and October 2020 to claim two taxable grants. The extension of the scheme offers two additional grant payments for self-employed people affected by coronavirus between November 2020 and April 2021. These grants will only be available to businesses that were eligible for the first and second grants and that meet certain additional qualification criteria.

The grant for businesses affected by coronavirus from 1st November 2020 to 29th January 2021 will cover up to 80% of the business’s average monthly profits, up to a total of £7,500. Businesses can apply for this grant regardless of whether they applied for the first or second grants, as long as they were eligible for the earlier grants and that they meet the additional qualifying criteria.

Details of the grant that will cover businesses affected by coronavirus during February, March and April 2021 haven’t been released yet.

A summary of the four grants offered under the Self-Employment Income Support Scheme can be found in the table below:

SEISS grant For businesses affected by Covid-19 during: Grant application window % of trading profits covered Maximum grant available
Grant 1 1st March - 13th July 2020 13th May - 13th July 2020 80% £7,500
Grant 2 14th July - 19th October 2020 17th August - 19th October 2020 70% £6,570
Grant 3 1st November 2020 - 29th January 2021 30th November 2020 - 29th January 2021 80% £7,500
Grant 4 February, March and April 2021 To be announced To be announced To be announced

Who is eligible for the grant that is currently available?

There are two types of sole trader or partner businesses that qualify for the 1st November 2020 to 29th January 2021 grant:

  • Businesses that are currently trading but are experiencing reduced demand because of coronavirus
  • Businesses that were trading but are temporarily unable to do so because of coronavirus

The sole trader or partner must also:

  • have been required to file a tax return for the 2018/19 tax year
  • have submitted their tax return for the 2018/19 tax year by 23rd April 2020
  • have traded in the 2019/20 tax year

In addition, more than half of an individual’s income must come from self-employment in order for them to be eligible for the scheme.

Each individual’s profit must also be either:

  • less than £50,000 in the tax year 2018/19
  • less than £50,000 on average over the tax years 2016/17, 2017/18 and 2018/19

As partners in a partnership typically share the business’s profits, they are treated as individuals for the above criteria. For example, if a partnership made £60,000 profit and shared that equally between two partners then the partners would still qualify, as each would have a share under £50,000.

Sole traders and individual partners whose profits exceed £50,000 during the above periods are not eligible for the scheme.

Businesses that made an overall loss over the last three tax years (2016/17, 2017/18 and 2018/19) don’t qualify for the Self-Employment Income Support Scheme. However, the business owner may be eligible to claim Universal Credit at £94.25 per week, the same rate as Statutory Sick Pay (SSP).

If an individual started trading between 2016-19, HMRC will only use the years for which they filed a Self Assessment tax return when determining eligibility for the scheme.

You can find more information on how HMRC calculates trading profits and non-trading income on the government's website.

How to apply

If you're eligible for the Self-Employment Income Support Scheme you should apply through the government's website. Businesses can apply for the grant covering the period of 1st November to 29th January 2021 from 30th November 2020. They must declare that they intend to continue trading and that they reasonably believe there will be a significant reduction in trading profits due to coronavirus.

If your application is successful you should receive the grant as a single payment in your bank account within six working days.

You can find out more about the support available for small businesses during the coronavirus pandemic on our small business coronavirus support hub.

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