Self-employed to meet “adversely affected” criteria for income support scheme grants

HMRC recently published five examples that demonstrate when a business has been “adversely affected” by coronavirus and is, therefore, eligible to claim either or both of the two Self-employed Income Support Scheme (SEISS) grants.

The “adversely affected” examples include those who are shielding, self-isolating, on sick leave or with caring responsibilities because of coronavirus and businesses that have had to scale down or stop trading because of supply chain interruptions, staff shortages and fewer or no clients or customers.

Grant 1 – Until 13 July 2020, SEISS allows eligible self-employed individuals or members of a partnership to claim the first taxable grant worth 80% of average monthly trading profits for 3 months, paid out in a single instalment and capped at £7,500 in total.

Grant 2 – Claimants who can confirm that they have been “adversely affected” by COVID-19 after 14 July 2020, will be able to make a claim for the second and final grant in August 2020. This will be a taxable grant worth 70% of average monthly trading profits for three months, paid out in a single instalment and capped at £6,750 in total.

HMRC’s examples confirm that those who are self-employed and able to return to work as normal in June will not be eligible for a second grant, although they can claim a grant for the first period. Individuals can claim for the second grant even if they did not claim the first grant, as long as their circumstances have changed due to COVID-19 and all other criteria are met.

*Update 8 July 2020*

If you want to claim for the first Self-employed Income Support Scheme (SEISS) grant, you must apply by next Monday 13 July.

Further to our “adversely affected” criteria guidance above, HMRC have provided additional information for claimants via the ICAEW’s Tax Faculty saying “do not make a claim based on an adverse effect you think may happen in the future” and more reassuringly, “if your business recovers after you’ve claimed, your eligibility will not be affected”.

HMRC have also clarified the following in relation to the periods covered by SEISS:

  • SEISS grants do not relate to any particular periods or seek to replace lost income over a particular period.
  • SEISS is not intended to provide a month-by-month replacement of income.
  • SEISS provides a lump sum payment to support eligible self-employed individuals whose businesses have been adversely affected by coronavirus. The sum is calculated by reference to three months’ average trading profits.
  • Individuals can receive the full grant under the SEISS while continuing to work as long as their businesses have been adversely affected at the date of claim.

There is now also expanded HMRC guidance available on adversely affected examples and clarification for new parents and reservists.

Please contact your usual Sagars manager for help with this, or get in touch with Helen Furniss.

Helen Furniss
Helen Furniss
Senior Manager

Helen specialises in looking after the personal tax affairs of our business clients including many from the legal profession such as solicitors, barristers, judges and QCs. She deals with personal accounts, tax returns, capital gains tax issues and tax planning matters.