UK Self-Employed Income Support Scheme Grant Extension to Relieve COVID-19 Impacts

September 25, 2020

Update: As part of its continued response to the COVID-19 crisis, the UK government has again revised the Self-Employed Income Support Scheme (SEISS). For more details, please see our Nov. 9, 2020, alert.

As part of its “Winter Economy Plan,” the UK government announced the Self-Employed Income Support Scheme (SEISS) Grant Extension on 24 September 2020 to support self-employed individuals (which includes members of partnerships).

To qualify for the grant, self-employed individuals must be currently eligible for the SEISS (see below), be actively trading and intending to continue to trade, and declare that they are facing reduced demand due to COVID-19.

The grant extension will consist of two lump-sum grant instalments to be paid in respect of two additional three-month periods from November 2020 to April 2021. What would be the third tranche of the grant under SEISS will cover 20 percent of the average monthly profits for the three months from November 2020 to January 2021. The fourth grant, the amount of which is subject to review by HM Revenue & Customs in due course, will be paid in respect of the three-month period from February to April 2021.

HM Revenue & Customs will provide the grant, to be paid in a single installment and capped at a total of £1,875. Any grant made pursuant to the SEISS Grant Extension will be subject to income tax and National Insurance contributions in the usual way.

As before, SEISS grants will be made by reference to average profits over the preceding three tax years — i.e., 2016/17, 2017/18 and 2018/19. Again, for individuals who do not have three years of tax returns, average profits are calculated by reference to the previous year or the last two. As before, to be eligible, individuals must have an average annual trading profit of £50,000 or less and derive at least half of their total income from self-employment. Individuals who did not claim under the original SEISS can claim under the grant extension.

Details on how to claim the SEISS Grant Extension are expected to be released by HM Revenue & Customs shortly.

Delayed tax payment

Self-employed individuals and others who file self-assessment tax returns previously were given an extension to pay any taxes due from 31 July 2020 to 31 January 2021, and this will now be extended to January 2022. Individuals who were liable for tax up to £30,000 by 31 January 2021 will be able to pay over the additional 12 months through HM Revenue & Custom’s ”Time to Pay” service.

For more information on the SEISS Grant Extension or on the government’s new Job Support Scheme for workers, please contact Dan Peyton or Adam Penman.

McGuireWoods has published additional thought leadership analyzing how companies across industries can address crucial business and legal issues related to COVID-19.

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