COVID-19: Coronavirus Self-employment Income Support Scheme

HMRC began contacting those eligible for the government's Self-Employment Income Support Scheme (SEISS) this week.

Amaiz's Expert Accountancy team are on hand to help our customers with understanding the intricacies of this scheme. Here are the answers to their most commonly asked questions.

1. How do I apply for the COVID-19 self-employment scheme?

HMRC will contact you inviting you to apply for the grant online. This process began on Monday 4 May 2020. You will only be able to apply for the grant from 13 May 2020, and further details on the grant application are available here.

2. When will I receive the payment?

Previously, any eligible self-employed were expected to receive payments by early June 2020, but the government has brought this forward. If your grant application is successful, payment will be made into your bank account by 25 May, or within six working days of completing a claim.

3. Do I have to pay the money back?

HMRC has confirmed that you will NOT need to pay back this grant.

4. Will I be eligible for the grant if my trading profits have been averaging £60,000 for the last few years?

Currently, the grant is only available if your average trading profits for the last three tax years are below £50,000. Also, your income from self-employment must be more than 50% of your total income.

5. What is the eligibility criteria for this grant?

Your self-employment income was more than 50% of your income during the 2018/19 tax year. Or it was over 50% of your average for the tax years 2016-2017, 2017- 2018, and 2018-2019.
Your business must have traded in the 2019-20 tax year and would have continued trading in the 2020-21 tax year if not interrupted by COVID-19.
Your business has lost trading profits due to CVID-19.
Your tax return for 2018/19 was submitted by 23 April 2020.

You can also check if you are eligible for the grant by using HMRC's eligibility tool. Since it launched, there have been some complaints about the accuracy of its results. Don't be discouraged if the tool says you are not eligible for the grant: If you believe you fit the criteria for the grant you should still apply.

6. How is the grant calculated and how much will I receive?

The grant is calculated at 80% of your average trading profit for the following tax years: 2016-17, 2017-18 and 2018-19.

Tax year	Trading profits for year	Employment income
2016-17	£30,000	£15,000
2017-18	£25,000	£15,000
2018-19	£35,000	£10,000

For example, the above trading profits would mean a total grant of £6,000, which would be paid directly into your bank account in one instalment by early June.

That £6,000 grant is calculated as follows:

Average profits for 3 years = £30,000
80% of the average annual profit = £24,000
£24,000 divided by 12 = £2,000 (monthly grant)
£2,000 per month multiplied by 3 months = £6,000

Click here to see other worked examples of the grant.

Currently, the grant comprises 80% of your average annual profits over three months. As this is a fast-changing situation, we will let you know if there are any extensions or amendments!

7. My business started trading after 6 April 2019. Will I be eligible for the grant?

Unfortunately, if your business started trading after 6 April 2019, you will not be eligible for the grant. You should consider applying for other COVID-19 support, such as the Coronavirus Business Interruption Loan Scheme, Bounceback loan or Universal credit

8. Can I continue working even if I receive the grant?

If your business is still operating, you can continue to do work. This is different from employees furloughed under the coronavirus job retention scheme, where the employees have to stop working to be eligible for payment.

9. Can I claim for universal credit and the grant at the same time?

You can claim for both universal credit and SEISS, but your universal credit payments may be reduced once you receive your grant.

10. Will I have to pay income tax and National insurance on the grant?

The grant will be taxable, so any money you receive will be subject to Income tax and National insurance. If you do claim the grant, your taxable income for 2020/21 will be higher.