The Self Employed Income Support Scheme will be paid for the second and final time from August, the Chancellor confirmed last week.
As yet, the details about when the online portal will open are unknown. But we do know that the taxable grant will be calculated at 70% of the taxpayer’s annual average profit. There will be a total of three months of payments, capped at £2,190 per month.
The conditions will be the same as the previous grant.
Second Self Employed Income Support Scheme conditions
Those applying must meet the following conditions, as previously:
- registered with HMRC as self-employed
- submitted tax returns for 2016/17 to 2018/19 (or years within that period when trading) which include self-employed trading income
- was trading in 2018/19 and 2019/20,is still trading in 2020/21 (or would be if it were not for the coronavirus shutdown)
- has lost trading profits due to coronavirus
- self-employed profits make at least half of their annual average income
- average self-employed profits for 2018/19 do not exceed £50,000 and were more than nil or
- average annual self-employed profits for 2016/17 to 2018/19 do not exceed £50,000 and were more than nil
HMRC has further emphasised with the second grant that the business must have been “adversely affected” by the coronavirus pandemic on or after 14 July as a condition for claiming the payment.
For example, a builder who was unable to work due to the site being closed on March to May would have been able to claim for the first grant. But if the site reopened in June, then the builder would not be considered adversely affected for the second tranche and would not be eligible for the grant.
As with the first grant, there isn’t a full definition, however, and it is open for interpretation. HMRC says that the business must have either temporarily stopped trading or been scaled back. It suggests three possible causes for this reduction in trade as:
- supply chains have been interrupted
- fewer or no customers or clients
- staff were unable to work
These categories broadly cover supplies, sales and staff but there could be other reasons for a reduction in profits, such as increased costs.
As many businesses have had to pay for extra cleaning, installing screens, adding signs and paying for protective equipment for staff, this could reduce profitability. Although HMRC doesn’t see these costs as an adverse effect, the business may not be viable once it has paid for these additions.
Continue to work
Unlike company directors who chose to furlough themselves, the self-employed can continue to work in their business while receiving the SEISS payment. The grant does not need to be repaid but it is subject to income tax and self-employed National Insurance.
Applying for the SEISS
As with the first grant, you cannot request your accountant applies on your behalf. The feedback from our clients is it was an extremely simple application process and payments were made without issues.
If you want to check your eligibility, you can use the government’s website. You will need your Unique Taxpayer Reference and National Insurance numbers. You will also need your Government Gateway ID. If you applied for the first grant, you will have used all these details.
If you need our help, please do not hesitate to contact us.