UK Self-Employed Income Support Scheme: An Update

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As part of its continued response to the COVID-19 crisis, the UK government has again revised the Self-Employed Income Support Scheme (SEISS).

The SEISS comprises four taxable grants, available for periods of three months each, the first two grant periods of which have now closed. In September 2020, the UK government announced the extension of the SEISS with an additional two grants in respect of the total period November 2020 to April 2021. (For details, see McGuireWoods’ 25 September alert.)

On 5 November 2020, the UK government announced that the third SEISS grant, covering the period 1 November 2020 to 31 January 2021, will now be a single payment of 80 percent of average trading profits, up to a maximum of £7,500 for that period.

This is a significant increase from the 55 percent of average trading profits, which would have included 80 percent of average profits in November only, then up to 40 percent of average profits in December and January, up to a maximum of £5,160.

The second grant under SEISS in respect of the three months’ profit covering the period between 1 August and 31 October was 70 percent of average trading profits, up to a cap of £6.570.

The level of support mirrors that of the Coronavirus Job Retention Scheme (CJRS), which has now been extended to March 2021 and which (currently) provides a grant level of 80 percent of a worker’s normal pay. (For further information on CJRS, see McGuireWoods’ 6 November alert.) The third grant will open for applications on 30 November.

The fourth grant covers the period 1 February 2021 to 30 April 2021, but the level of grant associated with that period has not yet been announced.

Trading profits

The average trading profit will be calculated by reference to the average of the previous three years (or any other period if the business has been operating for less than three years). The grants are subject to tax and National Insurance contributions and self-assessed tax owed by self-employed workers can now be deferred to January 2022.

Eligibility

Self-employed individuals or members of partnerships who were previously eligible for the first and second SEISS grants and have declared that they intend to continue to trade are eligible (although it is not necessary to have claimed under the first two grants provided by SEISS). However, individuals must now declare not just that their business has been adversely impacted, as before, but that they have been impacted by “reduced demand” because of COVID-19. This is a higher threshold than before, and accordingly, adverse effects from COVID-19, such as having to shield or self-isolate, etc., will not trigger eligibility under the revised SEISS.

Additionally, as before, those who claim under SEISS must have trading profits of £50,000 or less, derive at least 50 percent of their income from self-employment and have filed a tax return for the 2018/19 tax year. (The last day for filing was 23 April 2020, having been extended from 31 January 2020.)

The 50 percent self-employment threshold means an individual can both be furloughed under the CJRS in respect of their employment and claim under the SEISS. SEISS grants can also be claimed in addition to a Local Restrictions Support Grant, if the business must temporarily close because of COVID-19-related restrictions but intends to continue trading.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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