In the second of our four Finance Directors' Bitesize Briefings we looked at the changes to the Job Retention Scheme (CJRS), the potential tax changes that…
The Government has published guidance on the extension of self-employed income support scheme and how this will operate.
What will it cover
As with the previous instalments of the Self-Employment Income Support Scheme grant, the extension will provide support to the self-employed in the form of two further grants, each available for three month periods, the first covering November 2020 to January 2021 and the second from February 2021 to April 2021.
Who is the scheme available to?
The scheme will be available to the self-employed or a member of a trading partnership. The individuals must:
- Have been previously eligible for the Self-Employment Income Support Scheme first and second grant (although they do not have to have claimed the previous grants)
- 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
These measures are stricter than the requirements for the first and second grants, which only required that an individual was adversely affected.
As a reminder, to have been eligible for the SEISS first or second grant, your self-employed trading profits must no more than £50,000 and more than half of your income come 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
This extension unfortunately does not support those who have commenced trading from 6 April 2019 or had profits of greater than £50,000 historically.
What support is available?
The extension will last for six months with grants payable in two instalments covering each three month period.
Support for the period from 1 November 2020 until 31 January 2021 will provide a taxable grant of 80% of three months average trading profits, capped a £7,500 per instalment. This now bears a closer resemblance to the CJRS scheme for furloughed staff, rather than the initially announced support of 55% of profits.
Details of the fourth grant covering the period 1 February to 30 April 2021 are not yet released. We will update this blog once they are announced.
How to claim
There will be an online service for the next grant, which will be available from 30 November. Further details about claiming and applications will be released in due course.
What other support is available to the self-employed immediately?
The self-employed could also gains access to funding via the business interruption loan scheme which has been extended, universal credit and the deferral of income tax payments.