COVID-19: Daily Update – Self-employment Income Support Scheme (SEISS)

COVID-19: Daily Update – Self-employment Income Support Scheme (SEISS)

The government have announced a new scheme to support the income of self-employed workers on largely the same terms as the Coronavirus Job Retention Scheme supports PAYE employees. On 26 March Rishi Sunak announced SEISS and explained that the delay has been due to the complexities of designing a deliverable support scheme for individuals not subject to PAYE which also includes appropriate restrictions to limit fraud.

In parity with the Coronavirus Job Retention Scheme the SEISS will pay a taxable grant worth 80% of the self-employed workers average monthly income calculated over the last three years up to £2,500 per month. Previous constructions of this support scheme, including the version temporarily proposed as an amendment to the Coronavirus Act 2020, sought to guarantee a total income of this value each month, however, the SEISS being introduced is worded to suggest eligible self-employed individuals may continue working and receive the grant on top of any income they continue to receive through their services. SEISS will be available for three months from 26 March with payments being made as backdated lump sums from the beginning of June. Due to this wait for payment self-employed individuals may consider utilising other new government schemes to support their cashflow in the meantime including deferring their Self Assessment income tax and VAT payments, seeking a business rates grant, recently increased Universal Credit support, or the Business Interruption Loan Scheme.

In an effort to prevent fraudulent use of SEISS the government have been clearer on eligibility restrictions. As of yet the following criteria have been set out:

  • The individual is self-employed or a member of a partnership.
  • They have submitted their Income Tax Self Assessment return for the tax year 2018-19.
  • They traded in the tax year 2019-20, continue to trade, and intend to trade in 2020-21.
  • They have lost profits due to COVID-19.
  • They make the majority of income from self-employment, as of their 2018-19 tax return or as an average over their 2016-17, 2017-18, and 2018-19 returns.
  • They have trading profits of up to £50,000, as of their 2018-19 tax return or as an average over their 2016-17, 2017-18, and 2018-19 returns.

HMRC will use data from Income Tax Self-Assessment tax returns to determine who is eligible and calculate their entitlement. An extension for 2018-19 returns has been granted until 23 April 2020 to ensure those missing the January deadline are not unfairly penalised. Where individuals have not submitted tax returns for tax years prior to 2018-19 only those returns actually submitted will be used to establish eligibility and entitlement. Once these details are confirmed HMRC will make direct contact so there is no need to submit any applications at this time.

For further information on the Self-employment Income Support Scheme, please contact our employment team.

Claire Knowles – Partner

Mark Alaszewski – Associate

Rebecca Mahon – Solicitor

Adam McGlynn – Trainee Solicitor

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