The Self-Employment Income Support Scheme (SEISS) Grant Extension

The chancellor announced two new grants today, each available for three month periods covering November 2020 to January 2021 and February 2021 to April 2021.

Eligibility

Only individuals who have been previously eligible for the first and second grants under the SEISS will be eligible for these further two grants.

To claim the grant the individual must declare that they intend to continue to trade and either:

  • are currently actively trading but are impacted by reduced demand due to coronavirus
  • were previously trading but are temporarily unable to do so due to coronavirus

The Grant

The first grant will cover a three-month period from 1 November 2020 until 31 January 2021. The taxable grant will be based on 40% of average monthly trading profits, paid out in a single instalment covering 3 months’ worth of profits, and capped at £3,750 in total.

The second grant will cover a three-month period from 1 February 2021 until 30 April 2021. The Government will review the level of the second grant and set this in due course.

The grants are taxable income and also subject to National Insurance contributions.

Details of how to claim are not yet available.

A reminder if you have already received an SEISS Grant 

This years Finance Act introduced a requirement for those who claimed amounts under the Self-Employment Income Support Scheme (SEISS) to which they were not entitled to notify HMRC and make a repayment. Failure to do so can result in HMRC recovery action, interest and penalties.

We understand that HMRC is contacting businesses which claimed a grant under the Self-Employment Income Support Scheme to check whether they have stopped trading.

There are a number of conditions which had to be met in order to be eligible for a SEISS grant not all of which are covered by HMRC’s eligibility checks and so it has been entirely possible to claim a SEISS grant, yet not actually have been eligible for it. This may be the case if, for example:

  • the trade was not adversely affected by coronavirus in the relevant period. (For claims under the first round of the SEISS, this was the period up to and including July 13, 2020. For the second round of SEISS, it is the period on or after July 14, 2020);
  • the individual ceased to trade (or incorporated their business) in 2019-20; or
  • at the time of making the claim, the individual did not intend to continue to trade.  Note that eligibility for SEISS is based on the facts at the time of claim and receipt of the grant. There is no requirement to apply hindsight.

If your business has stopped trading, HMRC will need to check whether you were eligible for the grant and whether the grant needs to be repaid. If your business is continuing to trade, you still need to respond to HMRC’s request and may be asked to provide evidence.

Those who received the grant before 22 July 2020 must inform HMRC by 20 November 2020 and those who received the grant on or after 22 July 2020 must inform HMRC within 90 days of receiving the grant. If you do not inform HMRC on time, you may be charged a penalty.

One of the criteria to receive the grant was that the business was continuing to trade or would be except for coronavirus and intended to continue trading. Therefore, if your business permanently stopped trading during the months that the grants covered, you may not have been eligible for part or all of the payment. If following an HRMC check you need to repay the grant, HMRC will contact you with further details and you will have 30 days to pay. If you are not able to pay, you can call HMRC to discuss setting up a payment plan.

If however you need to contact HMRC there is a dedicated online system here: https://www.gov.uk/guidance/tell-hmrc-and-pay-the-self-employment-income...

which should be used wherever possible to notify HMRC and make the repayment. Where it is not possible to use this system, individuals should contact HMRC here: https://www.gov.uk/government/organisations/hm-revenue-customs/contact/g...