SEISS: How to apply for the self-employment grant
- 11 Jan 2021
Update: The information in this article relates to the third SEISS grant, available for the three month period covering 1 November 2020 to 29 January 2021. For more information on the eligibility criteria for the scheme and details about how much it is worth, please visit our FAQ page.
If you’re self-employed and have been affected by the coronavirus, you may be eligible to claim a grant through the Self-Employment Income Support Scheme (SEISS). The scheme first opened in May and was worth 80% of past average monthly trading profits for those eligible. A second grant, worth 70% was open in August and closed for applications on 19 October. A third SEISS grant, worth 80%, is now open to claim on or before 29 January - find out more below.
Self-Employment Income Support Scheme extension
The Chancellor has announced the scheme will be extended a further two times, lasting for six months from November 2020 to April 2021. Although these new grants were expected to be worth 20% of past average monthly trading profits, the government announced on 22 October that this would be increased to 40%, paid out in a single instalment covering 3 months’ worth of profits, and capped at £3,750 in total. However following the recent reintroduction of national lockdown measures, and to keep the level of support broadly comparable with the extension of the furlough scheme, it has now been confirmed the third grant will again be worth 80% of past trading profits, up to a cap of £7,500.
Third SEISS grant claim process
The online service for the next grant is now live and you must make your claim on or before 29 January 2021. The link to claim is available here and we have put together a step-by-step guide on how to apply below.
1. Check for your eligibility for the SEISS grant
The SEISS grant extension is open to self-employed workers who were previously eligible for the first and second grants. As a reminder, there are various conditions of eligibility to qualify:
- You must have traded in the tax year 2018 to 2019 and submitted your Self Assessment tax return on or before 23 April 2020 for that year - those newly self-employed without an 18/19 tax return are not eligilbe
- You must have traded in the tax year 2019 to 2020
- You must intend to continue to trade in the tax year 2020 to 2021
- Your trading profits must be no more than £50,000 and at least equal to your non-trading profits (according to your 2018 to 2019 Self Assessment tax return)
- Limited company directors are not eligible
There are a few other caveats on eligibility to be aware of, if you are a reservist or recently had a child for example, and these are outlined here.
However, there has been an important change in the declaration criteria for the third SEISS grant.
2. Look out for the new declaration criteria in SEISS
In SEISS 1 and 2 your business only needed to be “adversely affected” - this broadly meant any adverse impact due to Covid-19 would allow you to qualify qualified for the scheme (e.g. increased cost of buying things such as PPE/equipment; reduced work, cancelled or delayed projects; or if business interrupted by illness, self-isolation or caring/shielding). You also had to say you intended to continue trading.
For SEISS 3, there are two changes. First your business needs to either be impacted by “reduced demand” or be “unable to trade” from coronavirus in the qualifying period for SEISS 3 (Nov 1 - 29 Jan). Second, you “must decide if the impact on your business will cause a significant reduction in your trading profits for the tax year you report them in”. In other words, not only do you have to evidence reduced demand or inability to trade for the period Nov - Jan but you also need to have a ‘reasonable belief’ that this meant your profits will be lower than they otherwise would have been for the whole tax year you report in.
Unfortunately, HMRC has provided no clear definition of what constitutes a “significant reduction” in trading profit. HMRC says it cannot make this decision for a business because individual and wider business circumstances will need to be considered (it has published some examples online here) and you will need to make an “honest assessment”.
It is important to note here that – unlike SEISS 1 and 2 – SEISS 3 is a forward looking test based on considering a reduction in trading profits for your ‘basis period’ (the tax year you report in, will be March or April). Therefore, to make a claim you must consider whether any reduction in demand in the period 1 Nov – 29 Jan has significantly reduced your trading profits as a whole for the tax year ending in March/April (this will depend on your own reporting period). For this reason, HMRC says “You should wait until you have a reasonable belief that your trading profits are going to be significantly reduced, before you make your claim.” So if you are unsure about whether you might be eligible once the grant application opened in November, you may want to wait until later in January (29 Jan is your last chance) before making an application.
But what counts as ‘reduced demand’ or being ‘unable to trade’?
For the former, HMRC says this applies if your business has been impacted by “reduced demand, activity or capacity due to coronavirus” - e.g. fewer customers, contracts cancelled, less work. However, they are clear that “you must not claim if the only impact on your business is increased costs” such as purchasing face masks or cleaning supplies. Increased costs on their own – without loss of work - do not constitute a valid claim.
‘Unable to trade’ applies to you if you’re temporarily unable to carry out your business activities due to coronavirus in the qualify period (e.g. had to close due to restrictions, instructed to shield or self-isolate, you've tested positive, cannot work due to caring responsibilities). The only exception that does not count is if you have returned to the UK from travelling abroad.
3. Gather evidence for your SEISS claim
In order to submit a claim, you must show that the coronavirus pandemic and concurrent lockdown has had a negative impact on your business.
As noted above, there has been a slight change in the criteria between the first two grants and the third one. You must declare that your business has been impacted by reduced demand due to COVID-19 in the qualifying period (November - January), rather than simply being 'adversely affected', and you must reasonably believe that this has led to a signficiant reduction in your trading profits for the tax year as a whole.
As such, it is worth keeping some evidence of the impact Covid-19 has had on your business.
To show you have experienced reduced demand, examples of evidence include:
- business accounts showing reduction in activity compared to previous years
- records of reduced or cancelled contracts or appointments
- fewer invoices
- a record of dates where you had reduced demand or capacity due to government restrictions
If you're business is temrporarily unable to trade, you should keep any evidence such as:
- a record of dates where you had to close due to government restrictions
- NHS Test and Trace communications - if you’ve been instructed to self-isolate in-line with NHS guidelines and are unable to work from home (if you’ve been abroad and have to self-isolate, this does not count)
- a letter or email from the NHS asking you to shield
- test results if you’ve been diagnosed with coronavirus
- letters or emails from your child’s school if you have had parental caring responsibilities
4. Make your SEISS claim
You must submit a claim yourself rather than have someone submit one on your behalf. To apply, you will need:
Your Self Assessment Unique Taxpayer Reference (UTR)
Your National Insurance number
Your Government Gateway user ID and password – if you do not have an existing user ID you can create one when you claim
Your UK bank details including a bank account number, sort code, name on the account and your address linked to your bank account
You must make your claim on or before 29 January 2021.
The link to make your claim can be found on the government website.
5. Receiving the SEISS grant
Claims will be checked and grants paid into your bank account within 6 working days. You will receive an email once the payment is on its way.
If you are still unsure about claiming, then you can visit the GOV.UK SEISS guidance in full here.
At IPSE, we understand how frustrating it is that key self-employed groups like directors of limited companies and the newly self-employed have been left out of the scheme. We are campaigning hard against to change this: find out more about our work here.
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For more information on how COVID-19 is affecting the self-employed, visit our dedicated hub