Self-Employment Income Support Scheme (SEISS) – Second Payment

18th August 2020

The government have recently opened the facility for individuals to claim the grant which covers the three months’ worth of profits to the end of August 2020.

HMRC planned to contact taxpayers who they believed to be eligible for this scheme from 10 August 2020 onwards.

As with the last SEISS grant it will be awarded as a single payment, even though it covers a three month period.

How is the Payment Calculated

This second grant will allow eligible individuals to claim a taxable grant worth 70% of their average three monthly trading profits. This payment will however be capped at £6,570 for the three months (£2,190 per month).

The average is based on the average three monthly trading profits for the 2016/17 to 2018/19 tax years. If you did not trade in a particular year, HMRC will not take this into account. For example if you did not trade in 2016/17, HMRC will base the average on the 2017/18 and 2018/19 tax years.

Qualifying Criteria

In order to be eligible for the grant the following must all apply:

• You are a self-employed individual or a member of a partnership. This grant is not available if you trade through a limited company.
• In 2018/19 Your taxable profits were no more than £50,000 for the year, plus at least half of your income must come from self-employed activity. If you did not meet this criteria in 2018/19, HMRC will measure the average total for the 2016/17 – 2018/19 tax years to see if you qualify.
• You traded in the 2018/19 tax year and your tax return was submitted before 23 April 2020.
• You traded in the 2019/20 tax year.
• It is your intention to continue to trade in the 2020/21 tax year.
• You can demonstrate that your business has been adversely affected by Covid – 19. To claim the second grant it must be the case that your business has been adversely affected by Covid-19 from 14 July 2020 onwards, it cannot be based on what you anticipate may happen later.

What Does it Mean to be ‘Adversely Affected’

There are no specified monetary thresholds to demonstrate this and no requirements for income or profits to have fallen by a certain amount.

HMRC give the following examples of how a business is adversely affected which are:

You are unable to work because you

1. Are Shielding
2. Self – Isolating
3. On Sick Leave due to Covid-19
4. Have Caring Responsibilities

You scaled down/incurred additional costs due to

1. Your supply chain was interrupted
2. You had less clients than normal
3. Staff were unable to come into work
4. You have had one or more contracts cancelled
5. Your costs increase as you had to buy protective equipment so you could comply with social distancing rules
6. You wrote off a bad debt of a customer who ceased trading due to covid-19.

An allowable example, given by HMRC in this regard include a shop owner who could serve a lower amount of customers due to social distancing rules and the fact he had increased costs due to the purchase of protective equipment.

HMRC also give an example of a builder who was able to return to site as normal from June 2020. They were eligible for the first SEISS grant but not the second.

We would advise that if you are claiming you have been adversely effected, evidence is retained in this regard (e.g. showing how income is lower than it could have potentially been). This would include keeping:

• Accounts showing a fall in turnover or increase in expenditure.
• A record of dates your business had to temporarily close due to lockdown restrictions
• A record of dates staff were unable to work due to Covid-19 symptoms, shielding or caring responsibilities.

How to Apply

The application has to be done by the individual receiving the grant, it cannot be done by an agent on their behalf. To claim for the second grant please follow the link below:

https://www.gov.uk/guidance/claim-a-grant-through-the-self-employment-income-support-scheme

Please be aware that the deadline for claiming for this second grant is 19 October 2020.

It is worth noting that an individual who did not make a claim under the first grant can still apply for the second grant. This is because they may be able to demonstrate that they have only been adversely affected by the Covid-19 in this later stage.

Tax Treatment of Grant

It is worth noting, that like the first grant the second SEISS grant awarded is taxable income and is also subject to National Insurance at the self-employed rates. This income will be treated as taxable in the 2020/21 tax year.

Should you require any assistance in regards to any of the above, please do not hesitate to contact us and we will be happy to help.