Coronavirus: How to apply for a self-employment grant as claims open for second time

Workers can now claim a second emergency grant worth up to £6,570

Sarah Young@sarah_j_young
Monday 17 August 2020 12:47
Government will pay self-employed up to £2,500 a month

Self-employed workers can apply for a second emergency coronavirus grant worth up to £6,570.

After the government placed the UK under lockdown and unveiled £330bn of government-backed loans for businesses big and small to help them through the coronavirus pandemic, chancellor Rishi Sunak faced increasing pressure to do the same for self-employed workers.

In April, Mr Sunak announced the government’s plans during the daily Downing Street press conference, in which he reassured the self-employed that they had “not been forgotten”.

At the time, the chancellor set out the Self-Employed Income Support Scheme (SEISS), which he described as “one of the most generous in the world”. And now, the government has extended the initiative, meaning people can apply for financial support a second time.

But, what exactly is the grant, who is eligible and how do you apply? Here is everything you need to know.

What help is included in the Self-Employed Income Support Scheme?

The initial SEISS scheme allowed people to claim a taxable grant worth 80 per cent of their trading profits up to a maximum of £2,500 per month over a period of three months.

Mr Sunak said that the money would be given to people in one lump-sum payment, and would start to be paid from the beginning of June 2020.

The second and final taxable grant is worth 70 per cent of your average monthly trading profits, paid out in a single instalment covering three months’ worth of profits, and capped at £6,570 in total.

Who is eligible for a grant?

You can apply for a grant if you are self-employed individual or a member of a partnership. However, the government has issued a number of restrictions on applications, meaning that you can only apply if you:

  • have submitted your Income Tax Self Assessment tax return for the tax year 2018-19
  • traded in the tax year 2019-20
  • are trading when you apply, or would be except for COVID-19
  • intend to continue to trade in the tax year 2020-21
  • have lost trading/partnership trading profits due to COVID-19

To be eligible, your self-employed trading profits must also be less than £50,000 with more than half of your income from self-employment. This is determined by at least one of the following conditions being true:

  • having trading profits/partnership trading profits in 2018-19 of less than £50,000 and these profits constitute more than half of your total taxable income
  • having average trading profits in 2016-17, 2017-18, and 2018-19 of less than £50,000 and these profits constitute more than half of your average taxable income in the same period

If you started trading between 2016-19, HMRC will only use those years for which you filed a Self-Assessment tax return.

Those who pay themselves a salary and dividends through their own company are not covered by the scheme but will have 80 per cent of their salary covered by the Coronavirus Job Retention Scheme if operating through PAYE.

How much money will people get?

Those eligible for the scheme will get a taxable grant which will be 70 per cent of the average monthly profits from the tax years (where applicable) 2016 to 2017, 2017 to 2018 and 2018 to 2019.

To work out the average, HMRC will add together the total trading profit for the three tax years then divide by three and use this to calculate a monthly amount.

The grant will be up to a maximum of £6,570 in total and will be paid directly into your bank account, in one instalment.

How do you apply for a grant?

Applications for the second and final grant are now open. If you are eligible and your business has been adversely affected on or after 14 July 2020, you must make your claim for the second grant on or before 19 October 2020.

You can claim a grant through the SEISS here.

How many people are affected?

According to the latest figures from the Office for National Statistics (ONS), the number of self-employed workers in the UK increased from 3.3 million in 2001 to 4.8 million in 2017.

Approximately one fifth are from the construction sector, with hundreds of thousands more working in the motor trade, professional services, and education.

The first grant saw £7.8bn in taxable grants claimed by 2.7 million people.

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