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Self-Employment Income Support Scheme: your common problems explained

Published on 22 May 2020

⚠️ As the government response to the coronavirus (COVID-19) is changing on a frequent basis, some of this information may have changed. Please also read our main guidance on the Self-employed Income Support Scheme (SEISS).

Now that the Self-Employment Income Support Scheme (SEISS) has been up and running for a week or so, we are publishing answers to the questions that have been most frequently asked about the scheme.

Image of the words self-employed and income
(c) Shutterstock / alexskopje

⚠️ Please note that when we refer to self-employed this includes a partner in a partnership and when we refer to self-employment income/profits this also includes partnership trading income/profits. 

HMRC’S online checker says I am not eligible for the SEISS grant but I think I am. What should I do?

There are several conditions that must be met to be eligible for the SEISS grant. The full list is set out on our website.

HMRC’s online checker only checks that you meet the profits conditions (less than £50,000 profits and self-employment profits of at least 50% of your total taxable income) by analysing the information on your Self Assessment tax returns for the 2016/17, 2017/18 and 2018/19 tax years. It does not check if you meet all the conditions.

If you are confident that you do meet the profits conditions but have got a ‘not eligible’ message from the checker, then we recommend that you first retry the online checker. We have found that in some cases where people retry, they are then confirmed as eligible and allowed to apply for the SEISS grant, even though initially they were informed they weren’t eligible.

If you retry the checker, and you continue to get a ‘not eligible’ message, you can ask HMRC for a review by filling out an online form which appears once you click the box requesting a review.

Don’t forget that you must meet ALL the conditions to be able to claim the grant, so as well as meeting the profits conditions (covered by HMRC’s eligibility test on GOV.UK) you must meet the other three conditions:

  • You must have been trading on a self-employed basis in 2019/20, and
  • your business must have been adversely affected by the coronavirus epidemic and
  • you must intend to continue trading in the 2020/21 tax year (to the extent that you are allowed by government rules).

I am eligible for a SEISS grant but I have an outstanding tax debt with HMRC. Will this be taken from my grant?

The SEISS grant will be paid out in full into your nominated UK bank account, approximately 6 days after the claim is made and will NOT be reduced by any tax currently owed to HMRC at the time of payment. However, if you do have an outstanding tax debt, you should contact HMRC to discuss what options are available to deal with your arrears as soon as possible.

HMRC are being very flexible with regard to setting up payment plans (‘time to pay’ arrangements) for those with outstanding amounts of tax in this current economic environment and are keen to agree affordable repayment plans. Our understanding is that they are currently agreeing the majority of repayment plans put to them by those who contact them.

My self-employed work has only reduced by a small amount or has picked up again. Do I still qualify for the grant?

The grant is an all or nothing payment, and is a fixed amount, broadly to cover a 3 month period (March to May) and we explain exactly how the amount is calculated on our website. There is no facility to claim a reduced amount of grant and once it has been claimed it will be paid into your nominated UK bank account. Provided you meet all the eligibility conditions, including that your profits have been adversely affected by the coronavirus outbreak, even though you may not have lost 80% of your profits, you are still entitled to the grant in full.

HMRC have said they will be checking claims in due course. Even if there is a compliance check in respect of your claim, you will only need to show that your self-employment profits were adversely affected, and the degree to which you were adversely affected compared to the amount of the grant received should not be relevant.

The grant is calculated in the same way for someone who has seen a relatively small reduction in their profits as someone who has had to stop work altogether during the pandemic.

Therefore there should not be a risk of clawback of the grant on these grounds provided you can satisfy HMRC that your profits were adversely affected by the coronavirus outbreak overall, bearing in mind you are allowed to continue your self-employment during the period to which the grant relates.

We recommend that you keep some written notes or evidence which shows how you were adversely affected such as details of when your business premises were closed or loss of regular customer contracts.

I have been self-employed for many years but in the 2018/19 tax year I received a lump sum from my pension. Does this mean I won’t get the SEISS grant?

The full list of conditions that must be met to qualify for a SEISS grant payment is set out on our website.

Two of the key requirements are that your self-employment profits must be £50,000 or less and that they must be equal to or more than any other taxable income in the period. These profits conditions are first applied to the 2018/19 tax year. If you have received a significant one-off amount of income in the 2018/19 tax year, such as a pension lump sum, you may find this makes your other taxable income more than your self-employment profits in that tax year so these conditions are not met. This is the case even if your self-employment is your main source of regular income.

However, this does not necessarily mean that you do not qualify for a grant. This is because if you do not meet the profits conditions for the 2018/19 tax year, then you can see whether you meet the conditions when considering your average amounts over the three-year period 2016/17 – 2018/19 as a whole.

Example: Samantha runs a café on a self-employed basis and her profits have been as follows:

  • 2018/19: £22,000
  • 2017/18: £26,000
  • 2016/17: £18,000

Her only other income has been a taxable lump sum pension payment of £24,000 in August 2018.

Due to the pension income in 2018/19, Samantha doesn’t meet the profits conditions for 2018/19 as, although her self-employment profits are less than £50,000, her profits of £22,000 are less than her other taxable income of £24,000.

Even though Samantha doesn’t meet the eligibility conditions for 2018/19 she can look at the position for the 2016/17 – 2018/19 tax years. Her average profits over the 3 years 2016/17 – 2018/19 are:

£22,000 + £26,000 + £18,000 = £66,000 / 3 = £22,000

and the average amount of other income is

£24,000 + £0 + £0 = £24,000 / 3 = £8,000

Therefore, Samantha meets the eligibility conditions when looking at the average over the 3 tax years 2016/17 – 2018/19 and so she can claim a SEISS grant provided all the other conditions are also met.

We explain how the amount of the grant payment is calculated on our website.

I only became self-employed in the 2018/19 tax year. Can I still get a SEISS grant payment?

Yes, you might still get a grant, but if your self-employment began during the 2018/19 tax year, your entitlement may depend on what you were doing before your self-employment started.

You still need to meet all the eligibility conditions to qualify for the grant , including those for the 2019/20 and 2020/21 tax years, and these are set out on our website.

Provided these conditions are met and your self-employment profits for 2018/19 are £50,000 or less, you should be eligible for the grant as long as your self-employment profit is equal to or more than your other taxable income in 2018/19. In our experience, it is often this second part of the test that catches out people who started their own business in 2018/19.

For example, if you have moved from employment into self-employment, and in 2018/19 your employment income is more than your self-employment profits then unfortunately you will not be eligible for a SEISS grant. This is illustrated here:

Sayeed was employed full time as a porter in the NHS. He decided to set up his own business as a gardener and so left the NHS at Christmas 2018. He had self-employment profits of £3,230 in the period 1 January 2019 – 5 April 2019, and his P45 dated 31 December 2018 from the NHS showed gross employment income of £9,565. Therefore, Sayeed’s self-employment profits are less than his PAYE employment income and so he will not qualify for the SEISS grant, regardless of whether or not the other eligibility conditions are met.

I was only self-employed for part of the tax year in which my self-employment first started. How does this affect how much grant I will receive?

The special rules that apply if you were not self-employed during all of the 3 tax years 2016/17, 2017/18 and 2018/109 (which form the basis of the calculation of the grant) are explained on our website.

As the example of Sean in our website text shows, profits for a part year are still divided by 12 when working out monthly profit, even if they actually relate to a shorter period. This may mean you get a smaller SEISS grant than you were expecting if you started self-employment part way through a tax year.

Contact: Victoria Todd (click here to Contact Us)
(First published: 22-05-20)

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Working out profits, losses and capital allowances

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How do I work out my taxable profits?

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How do I prepare my accounts?

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What business expenses are allowable?

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Can I claim for pre-trade expenses?

What is Making Tax Digital for VAT?

What capital allowances can I claim?

Pensions and self-employment

What if I make a loss?

How do I repay my student loan if I am self-employed?

When do I make Self Assessment payments and file my tax return?

Penalties and enquiries

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