⚠️ We are working hard to ensure this guidance is up to date. However, you should bear in mind that things may change as the government respond to the ongoing situation.

Coronavirus: Self-Employment Income Support Scheme (SEISS)

Updated on 14 July 2021

Coronavirus continues to have far-reaching financial impacts on individuals and businesses across the world. The government is providing support for the self-employed in the UK under the Self-Employment Income Support Scheme (SEISS). This page covers the first three SEISS grants. There is separate guidance on the fourth and fifth grants, and where to include the first three SEISS grants on your 2020/21 tax return.

Illustration of a woman working from home

What is the Self-Employment Income Support Scheme (SEISS) and can I use it?

This scheme was set up by the government to provide support during the coronavirus pandemic for those who are self-employed, either as a sole trader or a partner in a partnership. You have been trading if you have been running a business selling goods or services and you complete self-employed or partnership pages as part of your Self Assessment tax return. Under the scheme, you can still work in your business or do other work such as new employment or volunteering.

The scheme was originally announced on 26 March 2020 and provided an initial grant for self-employed individuals whose businesses were adversely affected on or before 13 July 2020.

A second grant was then made available for self-employed individuals whose businesses were adversely affected on or after 14 July 2020.

On 1 July 2020, the scheme was extended to provide payments to certain self-employed individuals (or partners in partnerships) who did not originally qualify based on their trading profits or total income in 2018/19 because they had parental responsibilities or were a military reservist.

On 24 September 2020 a further extension to the SEISS scheme was announced under which a third and fourth grant would be provided. The third grant notionally covered the three-month period from 1 November 2020 to 29 January 2021.

On 3 March 2021, it was announced that the fourth grant would take account of 2019/20 trading profits on tax returns submitted by midnight at the end of 2 March 2021. A fifth grant was also announced. We provide more detail on the fourth and fifth grants here.

It is no longer possible to make a claim for the first, second or third grants. Claims for the fourth grant will be possible from late April.

The qualifying criteria for each grant is different. We provide more information below.

The first three SEISS grants were calculated using the same notional profit figure for three months based on submitted tax returns. However, each grant then multiplies that notional profit figure by a certain percentage (depending on which grant is being claimed) and the amounts paid are capped.

The fourth grant will notionally cover the three-month period from 1 February 2021 to 30 April 2021. Unlike the first three grants, the notional profit figure for the fourth and fifth grants will take account of 2019/20 trading profits.

The fifth grant will notionally cover the five-month period from May 2021 to September 2021 but will be based on three months of average trading profits.

Further information on the fourth and fifth grants can be found here. The rest of this page discusses the rules for the first three grants only.

⚠️ Be careful of fraudsters pretending to be HMRC or the government and requesting your bank account details. You will be asked to access the SEISS and provide your contact and bank details only through GOV.UK.

Who was eligible for the first three SEISS grants?

⚠️ Note: SEISS is not available for people who work through their own companies and so receive wages through the PAYE system and/or dividends, see our guidance for employees.

Please note that it is no longer possible to make a claim for the first, second or third grant.

In order to have been eligible for the first three grants under SEISS, all of the following must have applied (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 includes partnership trading income/profits):

a) you submitted a Self Assessment tax return for the 2018/19 tax year, which included self-employment profits, by 23 April 2020 (see What if I have not submitted my 2018/19 tax return yet? and exceptions for certain groups of individuals).

b) you were self-employed in the 2019/20 tax year and traded for at least part of that year

c) you intended to continue trading in the 2020/21 tax year for at least part of the year (or would have done so but for coronavirus)

d) you carried on a trade which had been adversely affected by the coronavirus. For the first grant, you needed to have been adversely affected at some point on or before 13 July 2020. For the second grant, you needed to have been adversely affected at some point on or after 14 July 2020 up to the closure of claims for second grants on 19 October 2020. There were additional conditions for the third grant.

e) you met the profits test (explained below).

Our understanding is that conditions (c) and (d) were tested at the point of making a claim. Therefore, it was possible to be eligible for different grants depending on when your business had been adversely affected, or if your intention changed regarding continuing to trade.

The profits test

To decide if you met this test, HMRC would have first looked at your 2018/19 tax return – unless your circumstances fell into a group of exceptions (see also our guidance on extended rules for people with parental responsibility).

You will have met the test if, for 2018/19:

  • your self-employment profits were £50,000 or less, but more than nil; and
  • your self-employment profits were equal to, or more than, your non-trading income. So if, for example, you are self-employed and an employee and your tax return shows you earn more from your employment, you will not be eligible for SEISS. We explain what is available for employees on our page: Coronavirus: Employees: work changes.

If you did not meet the profits test based on your 2018/19 tax return, then HMRC allowed you to average profits over the 2016/17, 2017/18 and 2018/19 tax years assuming you traded in each of these years. If the average self-employment profits for these three tax years were £50,000 or less and these profits were more than 50% of your average taxable income over the period, then the profits test would have been treated as met. There is an example of how this worked in our article: Self-Employment Income Support Scheme: your common problems explained.

If you did not carry on a trade in 2016/17, then the average profits for 2017/18 and 2018/19 were used.

If you did not carry on a trade in 2017/18 but you did in 2016/17, then the 2016/17 profits were ignored. In this case you would have just looked at 2018/19 to see if the profits test was met.

See below for further information on what happened if you did not carry on a trade for 2016/17 and/or 2017/18.

If conditions (a) to (d) above were met but you are not sure whether you met the profits requirements for either 2018/19 or the three years 2016/17 to 2018/19, HMRC would have checked your eligibility when you made a claim.

Our article Self-Employment Income Support Scheme: your common problems explained outlines how the eligibility criteria worked if you started your self-employment during the 2017/18 or 2018/19 tax year.

If you have a work visa, you are eligible to claim SEISS. A grant under SEISS does not count as ‘access to public funds’ for immigration purposes.

If after you have claimed the SEISS grants you realise you have been overpaid or should not have claimed the grant(s) at all because you do not meet all the eligibility conditions, see below.

We also provide guidance below if you want to voluntarily pay back some of the grant, even if you were entitled to it.

What does adversely affected mean?

⚠️ Please note it is no longer possible to make a claim for the first, second or third grant.

You needed to consider whether your business had been adversely (negatively) affected before you applied for a SEISS grant. You had to confirm that your business had been adversely affected as part of the claim process.

Your business could have been adversely affected for a number of reasons. These include if you had not been able to work for periods of time due to self-isolating, shielding or as a consequence of caring responsibilities caused by coronavirus, or if your business had to temporarily close or scale down due to lockdown, making your workplace ‘COVID secure’, staff shortages, or a lack of customers.

It may be the case that your business was adversely affected earlier on in the coronavirus outbreak but then your trading patterns resumed as normal, so although you claimed the first or second grant you might not be able to claim any further grants if you are no longer adversely affected.

Note that for the third grant, there were additional criteria to be met, which also apply for the fourth grant. Adversely affected businesses must specifically:

For this test, it is not sufficient to have been adversely affected only by having increased costs, such as expenditure on personal protective equipment (PPE).

If you have two or more trades, it is only necessary for one of your trades to be adversely affected. Your grant payment is be calculated using your profits from all trades added together, even if only one of them has been adversely affected.

You need to keep business records to show how your business has been affected and that you were eligible to make a claim.

Will I still be eligible if I have taken a break from my self-employment due to maternity or adoption leave since 6 April 2019?

If you are taking a break from your self-employment because of pregnancy, a new baby or adoption, or have had a break for this purpose since 6 April 2019 (or, for the fourth grant onwards, since 6 April 2020), HMRC will treat you as still trading throughout the period and so you will remain eligible for one or all SEISS grants if all the eligibility criteria above are otherwise met.

If taking such a break affected your trading profits or total income for 2018/19 (or, for the fourth grant onwards, for 2019/20) such that you were not entitled to a SEISS grant at all under the original rules, you may be able to claim under the extended rules explained in our Parental extension guidance.

I am not sure what my self-employed profits are: where can I find this?

Note: reference below to box numbers on the Self Assessment tax return is to the self-employment (short) pages.

Your self-employed profits are the trading profits shown on your tax return (usually in box 28). It is the difference between the turnover – that is, trading income (usually the box 9 figure on the tax return) and the expenses you are allowed to deduct for tax purposes, which includes capital allowances such as the Annual Investment Allowance.

You can find out more about working out taxable profits on our website. Any trading losses from a different tax year which are used to reduce taxable profits in either 2016/17, 2017/18 or 2018/19 are ignored for this purpose.

If your allowable expenses are more than your income, you will have a trading loss for the tax year rather than a taxable profit. The way this is dealt with for the purpose of SEISS is explained below in the section What if I have made a trading loss in one of the three tax years 2016/17 to 2018/19?.

If you have more than one self-employment, you must add together the trading profits and losses for all self-employments to work out your overall trading profits. See the Example in HMRC’s guidance which shows how this works.

What is my non-trading income?

Your non-trading income is the total of all your:

  • income from earnings
  • overseas income
  • property income (that is, rental profits)
  • dividends
  • savings income
  • pension income (including the taxable part of any lump sums)
  • miscellaneous income (including taxable social security income)

Please note that tax credits and universal credit are not taxable social security income. See our section on state benefits if you are not sure whether your social security income is taxable.

⚠️ These figures will be on your tax return and will also show on the online tax calculation for the particular tax year or on the SA302 tax calculation if you received a paper calculation from HMRC.

There is additional information on GOV.UK if you: prepare your accounts using the herd basis or using averaging elections; you are not resident in the UK or chose to use the remittance basis; or you have loans covered by the loan charge and did not agree a settlement with HMRC before 20 December 2019.

How much was the first SEISS grant?

⚠️ A note about the tax treatment of SEISS grants: The first three grants are subject to both income tax and Class 4 National Insurance contributions in the 2020/21 tax year. You might find our press release warning of the tax consequences of interest, as you will need to factor in these charges on the grant if estimating your Self Assessment bill for 2020/21 and budget accordingly.

The first grant was based on 80% of your average monthly profits from self-employment for the 2016/17, 2017/18 and 2018/19 tax years. The grant is subject to both income tax and Class 4 National Insurance contributions in the 2020/21 tax year.

There was a monthly maximum limit of £2,500 and this first grant covered three months.

⚠️ The claim process for the first SEISS grant closed on 13 July 2020. It is no longer possible to make a claim for the first SEISS payment.


Example: Sean

Sean had self-employment trading profits for the 2016/17, 2017/18, 2018/19 tax years, he had no other income, and he was unable to work because of the coronavirus but was planning to get back to work as soon as he could. He met all of the SEISS eligibility conditions for the first grant and his trading profits for each tax year were:

2016/17 tax year £20,000
2017/18 tax year £23,000
2018/19 tax year £29,000

HMRC contacted Sean to invite him to make a claim which he did through GOV.UK (see below) and they calculated his first SEISS grant as £4,800 which was paid directly into his bank account.

The grant was calculated as £20,000 + £23,000 + £29,000, which totals £72,000 and averages at £24,000 per tax year (that is, £72,000 divided across the three tax years).

Sean received from the government 80% of his average monthly profits of £2,000 (£24,000 divided by 12) for three months so £2,000 x 80% x 3, which is £4,800.

If Sean’s average monthly profits had been higher than the example above, such as £3,500 per month the amount of the SEISS grant would have been capped at £2,500 per month. So, the maximum Sean could have received for the first SEISS grant would have been £7,500 (£2,500 x 3 months).


How much was the second SEISS grant?

⚠️ A note about the tax treatment of SEISS grants: The first three grants are subject to both income tax and Class 4 National Insurance contributions in the 2020/21 tax year. You might find our press release warning of the tax consequences of interest, as you will need to factor in these charges on the grant if estimating your Self Assessment bill for 2020/21 and budget accordingly.

The second SEISS grant was available to eligible self-employed claimants. The application process closed on 19 October 2020. You may not have met all the eligibility criteria for the second grant even if you claimed the first, for example your trading position may have returned to the same level as before the coronavirus outbreak such that you were no longer ‘adversely affected’.

It was possible to claim the second SEISS grant even if you did not claim the first grant. This may have been because your business was not adversely affected initially but it was adversely affected later.

The second grant was based on 70% of your average monthly profits from self-employment for the 2016/17, 2017/18 and 2018/19 tax years. Average monthly profits were calculated in the same way as for the first SEISS grant. There was a monthly maximum limit of £2,190.

See our separate guidance for differences in the calculation for those entitled to claim under the extended ‘parental responsibility’ rules, and see GOV.UK for the extension for military reservists.


Continuing the example of Sean (above)

Sean had self-employment trading profits for the 2016/17, 2017/18 and 2018/19 tax years, he had no other income, he was unable to work because of the coronavirus but was planning to get back to work as soon as he could. He met all of the SEISS eligibility conditions and his trading profits for each tax year were:

2016/17 tax year £20,000
2017/18 tax year £23,000
2018/19 tax year £29,000

Sean was still unable to continue his self-employment work during the summer so was eligible to make a claim for a second SEISS grant in August.

This payment would have been calculated as follows:

The grant was calculated as £20,000 + £23,000 + £29,000, which totals £72,000 and averages at £24,000 per tax year (that is, £72,000 divided across the three tax years).

Sean should have received from the government 70% of his average monthly profits of £2,000 (£24,000 divided by 12) for three months so £2,000 x 70% x 3, which is £4,200.

If Sean’s average monthly profits were higher than the example above, such as £3,500 per month, the amount of the second SEISS grant would have been capped at £2,190 per month. In this situation, the maximum Sean could have received for the three months would be £6,570 (£2,190 x 3 months).


Who was eligible for the third SEISS grant?

⚠️ The claim window for the third SEISS grant closed on 29 January 2021. It is no longer possible to make a claim for the third SEISS grant.

In order to have been eligible for the third grant:

  • you must have met all the general eligibility criteria for SEISS discussed above; and
  • your business must have suffered reduced activity, capacity or demand (see below) in the period 1 November 2020 to 29 January 2021, compared to what could reasonably have been expected but for the adverse effect on the business of coronavirus; and
  • as a result of the reduced activity, capacity or demand suffered by the business, you must have reasonably believed that you would have suffered a significant reduction in trading profits for a ‘relevant basis period’ (see below) compared to what you could reasonably have expected were it not for the reduced activity, capacity or demand.

Reduced activity, capacity or demand

This means, for example, that:

  • you carried out less work due to supply chain disruptions (reduced activity); or
  • you are temporarily unable to trade – for example, because your business has had to close, you’ve tested positive for coronavirus and you are unable to work, or you cannot work because of parental caring responsibilities (reduced capacity); or you had fewer customers or clients than you would normally expect (reduced demand).

However, you could not make a claim for the third grant (nor can you for the fourth grant) if your reduced activity, capacity or demand was solely as a result of having to quarantine after travelling to the United Kingdom from overseas.

Note that having increased costs – for example, the purchase of personal protective equipment (PPE) – does not, by itself, mean that you had reduced activity, capacity or demand. There must have been some impact on the amount of work you had, or on your ability to carry out that work, in order to qualify.

You can find further examples on GOV.UK.

‘Significant reduction’ and ‘relevant basis periods’

There was no requirement for trading profits to be reduced by a certain fixed amount or percentage, but the reduction must be ‘significant’. HMRC say you need to consider your individual and wider business circumstances when making this assessment.

The reduction must also have been as a result of the reduced activity, capacity or demand suffered by the business.

Any income received from COVID-19 support schemes such as the first and second SEISS grants and the small business grants should not have been included when considering whether your trading profits have been significantly reduced.

A ‘relevant basis period’ is a basis period for your business which overlapped with the period 1 November 2020 to 29 January 2021. A basis period is usually 12 months.

If your basis period ended in the period 1 November 2020 to 29 January 2021 (for example, your basis period ended on 31 December 2020), then you will have two relevant basis periods.

You needed to consider whether or not you had a significant reduction in trading profits over the whole of at least one basis period, not just the period from 1 November 2020 to 29 January 2021.

How much was the third SEISS grant?

⚠️ The claim window for the third SEISS grant closed on 29 January 2021. It is no longer possible to make a claim for the third SEISS grant.

The Chancellor announced on 5 November 2020 that the third SEISS grant would be based on 80% of your average monthly profits from self-employment for the 2016/17, 2017/18 and 2018/19 tax years.

Average monthly profits were calculated in the same way as for the first and second SEISS grants. The maximum claim, covering three months’ worth of profits, was £7,500.

Following the example of Sean (who claimed the first and second SEISS grants):

Sean had self-employment trading profits for the 2016/17, 2017/18 and 2018/19 tax years, he had no other income. He was unable to work between March 2020 and August 2020 because of the coronavirus but started to work from September 2020. He met all of the SEISS eligibility conditions and his trading profits for each tax year were:

  • 2016/17 tax year £20,000
  • 2017/18 tax year £23,000
  • 2018/19 tax year £29,000

Sean continued to trade between September and December, however his sales income (turnover) was lower than usual because of coronavirus. Sean claims for the third grant.

This payment would have been calculated as follows:

The grant was calculated as £20,000 + £23,000 + £29,000, which totals £72,000 and averages at £24,000 per tax year (that is, £72,000 divided across the three tax years).

Sean could receive from the government 80% of his average monthly profits of £2,000 (£24,000 divided by 12) for three months so £2,000 x 80% x 3, which is £4,800.

If Sean’s average monthly profits were higher than the example above, such as £3,500 per month, the amount of the third SEISS grant would have been capped at £7,500. In this situation, the maximum Sean could have received for the three months would be £7,500 rather than £8,400 (£3,500 x 80% x 3).

See our separate guidance for differences in the calculation for those entitled to claim under the extended parental responsibility rules, and see GOV.UK for the extension for military reservists.

What if I made a trading loss in one of the three tax years 2016/17 to 2018/19?

If you made a loss in one tax year, this is deducted from the profits for the other two years when working out an average profit for the three-year period. There is an Example of this in HMRC’s guidance which shows how this works.

If such a loss arose in 2018/19 because of the effect of parental responsibility on your trade and this meant you were not entitled to a grant at all under the original SEISS scheme rules, you might have been able to claim under the extended rules based upon your profits for 2016/17 and 2017/18, or 2017/18 alone if you did not trade in 2016/17. Our separate guidance explains further.

What if I am receiving tax credits?

Our understanding is that HMRC’s intention is for the first three SEISS grants to be taken into account as trading income for 2020/21 for your tax credits claim.

As the first three SEISS grants are taxable in the 2020/21 tax year, our understanding is that they will form part of your taxable profits for 2020/21. For tax credit purposes, most self-employed claimants use their taxable profit figure from their tax return when declaring income for tax credit purposes and this will include the SEISS grant, so no further adjustments should be necessary. This is because the SEISS grant will already be included in your taxable profit figure on your tax return.

What if I am receiving universal credit?

Our understanding is that the SEISS grants are treated as self-employed earnings in the universal credit (UC) assessment period that they are received. Self-employed UC claimants must send their earnings information to DWP after the end of each assessment period.

You usually need to report payments into and out of the business in the assessment period – that includes the total amount of income your business received. Our understanding is a separate box has now been included on the online form to record the SEISS grants as self-employed income. You will also report any expenses paid out in that assessment period along with any payments of tax, National Insurance contributions and any money you paid into your pension. Although the SEISS grants are taxable, you can only deduct any tax actually paid in that assessment period for UC purposes.

The SEISS grants will be treated as self-employed income in the assessment period that they are received and will not impact any UC received in earlier assessment periods, even if your business had been adversely affected by the coronavirus outbreak during those assessment periods. In other words, the grants will not affect past UC entitlement.

However, it is possible that receipt of the whole amount of a SEISS grant in one UC assessment period will trigger something called ‘surplus earnings’ and as a result, it may affect your UC in subsequent assessment periods. You can read more about the surplus earnings rules via the information on our RevenueBenefits website for advisers.

What if I was not self-employed or did not submit a tax return for all the tax years on which the first three SEISS grants are based?

If you were not self-employed for all of the three tax years 2016/17, 2017/18 and 2018/19, or you did not submit a tax return for all three of these years, then the first three grants are based on the submitted tax returns they have received as follows:

Circumstances

Tax years used to calculate the grant payment

Traded in 2016/17, 2017/18 and 2018/19 and tax returns for these years were submitted by 23 April 2020

2016/17, 2017/18 and 2018/19

Did not trade in 2016/17, but traded in 2017/18 and 2018/19 and tax returns for these years were submitted by 23 April 2020

2017/18 and 2018/19

Did not trade in 2017/18, but traded in 2018/19 and submitted a tax return for this year by 23 April 2020

2018/19


If you traded in 2016/17 and/or 2017/18 but your tax return(s) for either or both years were not filed by 23 April 2020, then the grants are calculated on the assumption that you did not trade in the year(s) for which the tax returns are outstanding.

Note that exceptions can apply in the following circumstances:

So, in the case of Sean (see the example above), if he had only been self-employed from 2018/19 then HMRC would only have looked at his 2018/19 tax return.

His first SEISS grant would have been calculated as follows:

  • £29,000 divided by 12 = £2,416.67
  • £2,416.67 x 80% x 3 = £5,800.

Sean’s second SEISS grant would have been calculated as:

  • £29,000 divided by 12 = £2,416.67
  • £2,416.67 x 70% x 3 = £5,075.

If Sean had only started working on a self-employed basis part way through the 2018/19 tax year, the calculation of his grant would have been the same. So, if his self-employment began in July 2018, his profits of £29,000 would still have been divided by 12 to work out his average monthly profits even though he only traded for 9 months in that year.

What if I have not submitted my 2018/19 tax return yet?

Your 2018/19 tax return should have been submitted by 31 January 2020.

If the 2018/19 return was submitted after 23 April 2020 HMRC said you would not be eligible for the first three SEISS grants unless you fell into certain limited exceptions. This is understood to have been a strict deadline and there are no rules that would force HMRC to accept a return after that date for SEISS eligibility purposes.

What if I amend my 2018/19 tax return to correct a mistake?

If you amend a 2018/19 tax return after 6pm on 26 March 2020 the changes made would not have been taken into account when eligibility for the first three SEISS grants was considered. However, eligibility for the first three SEISS grants would have been based on amended details if the amendments were made before 26 March 2020.

For the fourth grant, amending your tax return on or after 3 March 2021 may mean that you have to pay some or all of the grant back. See our separate page for more information.

How do enquiries affect the SEISS calculation?

If an amendment is made to your tax return after 26 March 2020 following an enquiry, this will be disregarded and the eligibility for the first three SEISS grants would continue to be based on the original return before the enquiry amendments. If there has been an enquiry and it has been closed with a contract settlement, HMRC will use the original figures on the tax return when calculating the first three SEISS payments.

What if my self-employment began after 5 April 2019?

If you were not self-employed in the 2018/19 tax year and so did not submit a 2018/19 tax return showing any self-employed income then you are not eligible for the first three grants under the scheme.

However, if you started self-employment in the 2019/20 tax year then you might qualify for the fourth grant.

If you live in Scotland, Wales or Northern Ireland, you can find out whether there is any additional provision for you in our section: Coronavirus: help for businesses in Northern Ireland, Scotland and Wales.

How do I make a claim for the SEISS grant?

⚠️ Please note that it is no longer possible to make a claim for the first, second or third grant.

For the fourth and fifth grants, please see our separate page.

What happens after I make my claim?

As part of the claim process, you will confirm that you meet all of the eligibility criteria and HMRC will explain how the grant has been calculated and what you will receive. It is important to either print or take a screenshot of the calculation of your SEISS grant and the grant claim reference.

If you think that the grant calculation is incorrect then you can request a review by calling HMRC – you will need your grant claim details and the explanation of why you do not agree with the calculation. Keep records of the amounts received and plan for tax and National Insurance contributions on the grants.

As mentioned in our press release: Self-employed grant claimants warned of tax hit, SEISS grants are chargeable to income tax and Class 4 National Insurance contributions (NIC). This means you must keep a record of how much you receive so that you can include the grants in your Self Assessment tax returns. We understand that the first three SEISS grants will usually be taxed in 2020/21, so you will need to budget for tax and NIC on them accordingly.

Keep further records

Keep records detailing how your business was adversely affected by the coronavirus outbreak in respect of a claim for any SEISS grant. For the third and fourth grants, you should also keep records to demonstrate how your business has been affected by reduced activity, capacity or demand, as well as evidence to back-up your belief that you will have a significant reduction in trading profits. GOV.UK provides examples of the different types of evidence you need to keep if you claimed the third or fourth grants.

The records could show a reduction in your monthly business income during the coronavirus outbreak or include details of when your business premises were closed, when you were unable to work because of shielding or caring responsibilities (for example if you were home-schooling) or any business support loans you have applied for.

You might want to think about how you keep these records – particularly if your business is affected by the illness of either yourself or a family member, or caring responsibilities for children or others caused by coronavirus. It may be easiest to note the dates of these events in a diary kept for business purposes, so that these are separate from your personal records. This will mean that the information is easily available to produce should HMRC ask for it in future.

There are restrictions on information that HMRC can ask you to produce in the event of an enquiry if such information is of a personal nature, for example relating to ill-health. However, in the context of proving entitlement to SEISS, it might be reasonable for HMRC to ask you to produce records showing the impact of such ill-health on your business – such as having to stop work for a certain period.

What happens if I realise that I was not entitled to claim or that I have been overpaid?

If you have claimed a SEISS grant but you were not entitled to receive it, you have an obligation to notify HMRC of that fact. This might be the case if you claimed the grant but you later realised that you did not meet all of the eligibility conditions.

You have a similar obligation to notify HMRC if you have been overpaid either grant but you were nevertheless entitled to receive a smaller amount.

For the first three grants, we understand that this should be rare as HMRC will make the calculations automatically based on information submitted on your Self Assessment tax returns. However, we understand that in a number of cases HMRC have overpaid grants due to their own error and as a result they will not be seeking recovery of the overpaid amounts. If you are unsure, you should contact HMRC.

For the fourth grant, you might be overpaid if you amend a tax return on or after 3 March 2021 and the amendment reduces the amount of the grant you would have been entitled to. See our separate page for more information.

For all grants, we suggest that individuals check the amount received so that:

  • if they have been underpaid, they query this with HMRC; or
  • if they have been overpaid, they can notify HMRC in accordance with their legal obligation to do so (though HMRC may not seek recovery of the overpaid amount if it is as a result of their own error).

We understand that HMRC have contacted a number of individuals who have claimed a SEISS grant but have previously notified HMRC that they have stopped trading. If you have received such an email from HMRC, you should review whether you were eligible for the grant(s) you claimed – for example, you may have restarted trading before making a claim (even if it is a different trade). If you had not completed the specific form by 20 November 2020, you may have been blocked from claiming further SEISS grants.

Time limits for notifying HMRC

The date by which you must notify HMRC is the later of:

  • 20 October 2020, and
  • 90 days from the date you received the grant payment which was overpaid or to which you were not entitled.

The 20 October 2020 deadline will apply if you received a grant on or before 21 July 2020.

For details of how to make the notification to HMRC, see GOV.UK.

You will need to pay back any amount that you had received to which you were not entitled. You can do this by direct payment to HMRC. HMRC can also make a direct assessment in order to collect the 100% tax charge.

For the first three grants, if you have not repaid the amount by the time you come to complete your Self Assessment tax return for 2020/21, you would be liable to a tax charge as part of your 2020/21 Self Assessment liability equal to 100% of the amount of the first and second grant(s) to which you were not entitled. This will be due on 31 January 2022.

Overpayments of the fourth and fifth grants will need be repaid as part of your Self Assessment tax return for 2021/22 in a similar way, if they haven’t already been repaid to HMRC or otherwise directly assessed.

We understand it will be possible to ask for a Time to Pay arrangement in respect of any amounts needing to be repaid.

Penalties for failing to notify HMRC

If you do not notify HMRC within 90 days, you may be charged a penalty unless the failure was not deliberate, and you had a reasonable excuse. However, provided you did not know at the point of receipt of the grant that you were not entitled, or that you had been overpaid, such a penalty should be nil provided you pay any tax due by 31 January 2022 (for the first three grants) or by 31 January 2023 (for the fourth and fifth grants).

On the other hand, if at the point you received the SEISS payment you knew you were not entitled to it, or you knew that you had been overpaid, then the penalty for failing to notify HMRC within the 90-day period could be up to 100% of the amount to which you were not entitled and had not paid back before the end of the 90-day period.

This will be in addition to the 100% tax charge on the amount to which you were not entitled, so you could in effect need to pay back double the amount you had received. Furthermore, you will not be able to argue you had a reasonable excuse for the failure to notify.

I am entitled to the SEISS grant I have received but I feel it is too much. What can I do?

We understand that some individuals feel like the SEISS grant has over-compensated them for the adverse effect their trade has suffered. This is not unusual, given that there is no minimum economic impact you must have suffered in order to qualify as ‘adversely affected’.

HMRC have responded to this by saying they will allow voluntary repayments of some or all of the grant individuals have received. Information on how to do this is on GOV.UK.

We understand from HMRC that if you do pay some of it back voluntarily, you will only be liable to income tax and Class 4 National Insurance on the ‘net’ amount that you keep. You should therefore keep a careful record of the amount you receive, and any amounts repaid and ensure that only the amount you have kept is included on your 2020/21 (for the first three grants) or 2021/22 (for the fourth and fifth grants) Self Assessment tax returns.

LITRG makes no comment on whether you should or should not make a voluntary repayment to HMRC in these circumstances.

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