COVID-19 Update – 1 June – 2nd SEISS grant

The Chancellor has announced a second and final grant to the self-employed who are eligible for the Self-employment Income Support Scheme (SEISS), based on 70% of earnings and capped at £6,570.

HMRC has confirmed the same eligibility criteria will be used to establish self-employed individuals’ entitlement to a further SEISS grant; the grant will be 70% rather than 80% of average earnings for three months and the maximum amount will be capped at £6,570, down from the £7,500 for the first grant. Applications will open in August and HMRC expects to publish further guidance on 12 June.

How long does the scheme run?: The first grant covers March to May 2020, and the second grant covers June to August 2020.

When can claims be made?: For the first grant, the application portal opened in phases between 13 and 18 May and will close on 13 July 2020. Applications for the second grant will be made in August.

When will grants be paid?: For the first grant within six working days of the claim.

Who makes the application?: Claims have to made by the taxpayer themselves and cannot be made by agents. HMRC is warning taxpayers that they must make the claim themselves. If an agent or adviser attempts to make a claim on behalf of a client this will trigger a fraud alert and the taxpayer will have to contact HMRC. This will cause a significant delay to the payment.

Who does the calculations?: HMRC does all the calculations needed for the claim, using the information in the submitted tax returns. The taxpayer does not have to provide any figures.

Is the grant taxable?: Yes, the grant is subject to income tax and self-employment national insurance contributions. HMRC’s policy intent (subject to legislation being enacted) is that the grant is taxable when received and there is no requirement to allocate the grant to the months to which it nominally relates (March to May). HMRC does not expect any element of the grant to be reported on 2019/20 self-assessment tax returns.

Eligibility criteria

Claims can be made by self-employed individuals or members of a partnership where the taxpayer:

• has submitted their self-assessment tax return for the tax year 2018/19 by 23 April 2020;
• traded in the tax year 2019/20;
• intends to continue to trade in the tax year 2020/21;
• carries on a trade which has been adversely affected by coronavirus.

HMRC has provided some guidance on the meaning of ‘adversely affected’.  This includes being unable to work because the taxpayer is shielding, self-isolating or is on sick leave or has care responsibilities because of coronavirus. It also includes scaling down or temporarily stopping trading because the supply chain has been interrupted, the business has fewer or no customers or staff are unable to work. The taxpayer should keep evidence of the impact on their trade, but there is no link between the amount of the grant and the financial loss.

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