SEISS: How to apply for the self-employment grant

If you’re self-employed and have been affected by the pandemic, you may be eligible to claim a grant though the Self-Employment Income Support Scheme (SEISS). The scheme first opened in May 2020 and was worth 80% of past average monthly trading profits for those eligible. Since then, a second grant worth 70% was opened in August and closed for applications on 19 October and a third SEISS grant, worth 80%, was opened to claim on or before 29 January. A fourth SEISS grant covered the three-month period from the start of February until the end of April, with a different application process and eligibility requirements to previous rounds.

In late July, a fifth SEISS grant will open, covering the five-month period from May to September 2021. This grant will be worth either 80% or 30% of three months’ average trading profits, depending on how much your turnover has been reduced.

SEISS scheme and IPSE advice

When to apply for the fifth grant

The online service for the fifth grant opened on Wednesday 28 July - those eligible will have been contacted by HMRC to be given the date from which they can apply.

You must make your claim on or before Thursday 30 September 2021.

How the fifth grant is different 

The percentage of average trading profits you can claim under the fifth grant will now be based on turnover reduction in the year April 2020 to April 2021. The grant will provide two levels of cover – 80% or 30% – based on your turnover reduction:

  • If turnover is reduced by 30% or more, you will receive 80% of three months’ average trading profits (capped at £7,500)
  • If turnover is reduced by less than 30%, you will receive 30% of three months’ average trading profits (capped £2,850)

Fifth SEISS grant claim process

1. Check for your eligibility for the SEISS grant

To be considered eligible for SEISS 5, you must have filed a 2019-20 tax return on or before 2 March 2021 and traded in the 2020-21 tax year, earned most of your income though trading, and have average trading profits of less than £50,000. Your business must also either be currently trading but impacted by “reduced activity, capacity and demand”, or have been trading but are “temporarily unable to do so.”

“Reduced activity, capacity and demand” includes, for example:

  • having fewer customers or clients than you’d normally expect, resulting in reduced activity due to social distancing or government restrictions
  • having one or more contracts that have been cancelled and not replaced
  • carried out less work due to supply chain disruptions

However, you cannot claim if the only impact on your business is increased costs – for example, costs associated with buying face masks and cleaning supplies.

“Previously trading but temporarily unable to do so” includes, for example:

  • your business has had to close due to government restrictions
  • you’ve been instructed to shield or self-isolate in-line with NHS guidelines and are unable to work from home
  • you’ve tested positive for COVID-19 and are unable to work
  • you cannot work due to caring responsibilities, for example as a result of school or childcare facility closures

However, this does not include being temporarily unable to trade as a result of needing to quarantine or self-isolate after returning to the UK from abroad.

If you are not eligible based on your 2019-20 tax return, HMRC will then look at the tax years 2016-2017, 2017-2018, 2018-2019 and 2019-2020.

You must also declare that you intend to continue to trade in 2021 to 2022, and that you reasonably believe there will be a significant reduction in your trading profits due to reduced business activity, capacity, demand or inability to trade due to coronavirus from 1 May 2021 to 30 September 2021.

You must keep evidence that shows how your business has been impacted by coronavirus, and HMRC expects applicants to make an “honest assessment” about whether you reasonably believe there will be a significant reduction in your trading profits.

There isn’t a clear-cut definition of what constitutes a “significant reduction” – HMRC say that they cannot make this decision for you, as individual and wider business circumstances will need to be considered to determine whether the reduction is significant.

However, HMRC say that you should wait until you have a reasonable belief that your trading profits are going to be significantly reduced, before applying.

HMRC also say that if your business recovers after you’ve claimed, your eligibility will not be affected as this is based on your reasonable belief that your trading profits would have been significantly reduced at the time you made your claim. You must keep evidence to support this.

HMRC have provided examples of how different circumstances affect eligibility for SEISS 5.

2. Understand how much you can claim

As stated above, successful applicants will be able to claim either 80% or 30% of three month’s trading profits, depending on how much your turnover fell in 2020 to 2021.

Your trading profits are shown on your tax calculation as profits either from self-employment or a partnership. HMRC will work out your total trading profits after deducting allowable expenses – such as capital allowances, deductions, flat rate expenses and tax-free allowances. However, HMRC will not deduct losses brought forward from previous years or your personal allowance.

If you have traded in 2016 to 2017, 2017 to 2018, 2018 to 2019 and 2019 to 2020, HMRC will add together profits and losses in all four years, then divide by four, to work out your average trading profits. If you only began trading in 2019 to 2020, HMRC will only use that year’s average trading profits to determine your grant.

The way average profits are calculated for those who did not trade in one or more of those years is slightly different – check HMRC’s guidance on how HMRC works out trading profits if this applies to you.

3. Calculate your turnover reduction

To determine your turnover reduction, you will need to compare your turnover from the 12-month period (starting from 1 April to 6 April 2020), with turnover from a reference year.

Finding a reference year

In most cases, your reference year should be 2019 to 2020. However, if this was not a “normal year” for your business – for example, if you went on long-term sick leave, had a new child or lost a big contract – you may be able to use 2018 to 2019 as your reference year.

You can find previous tax returns by logging in to personal tax account online, by checking business records, or by asking your accountant.

There is a box for turnover on your tax return. If you submit a paper return, the box is different depending on which Self-Assessment sections you complete. For section:

  • SA200, it is box 3.6
  • SA103S, it is box 9
  • SA103F, it is box 15
  • SA800, it is box 3.24 or 3.29 (for partnerships)

Calculating your 2020 to 2021 turnover

There are a few ways to determine your 2020 to 2021 turnover:

  • Refer to your 2020 to 2021 self-assessment tax return, if you’ve completed it
  • Check your accounting software, if you use any
  • Check bookkeeping records or spreadsheets that cover your self-employment invoices and payments received
  • Check the bank account you use for your business to account for money coming in from customers
  • Ask your accountant or tax adviser, if you have one

Previous SEISS grants, Eat Out to Help Out payments and local authority/devolved administration grants should not be included in your turnover calculation.

If you started or ceased a business in 2020 to 2021, you should still include turnover from that period, even if it covers less than 12 months.

Other considerations

There are other considerations for partnerships, sole traders with more than one business and others when measuring turnover in 2020 to 2021 and your reference year – check HMRC’s guidance on working out your turnover for full details.

4. Gather evidence for your SEISS claim

In order to submit a claim, you must show that the coronavirus pandemic and concurrent lockdowns have had a negative impact on your business.

As noted above, you must declare that you intend to continue to trade and that you reasonably believe your trading profits will be significantly reduced due to Covid-19 from May-September.

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
  • A record of dates where you had reduced demand or capacity due to government restrictions

If your business is temporarily 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 

5. Make your SEISS claim

In preparation for SEISS 5, it’s worth ensuring you have access to information that has been required when applying for previous grants. These are: 

  • 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

This page will be updated as further information about SEISS 5 is made available.  Also, be sure to check our COVID-19 hub for regular updates and advice for the self-employed affected by the pandemic. The GOV.UK guidance for the fifth grant can be found here.

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