If you’re a sole trader and have been adversely affected by the Coronavirus outbreak, you could be eligible to receive financial support from the government. You may already have heard of the Self-Employment Income Support Scheme (SEISS), which is now in its second phase (more on that shortly).
If you haven’t heard of it, or are just plain old confused (you wouldn’t be alone), read on to discover what kind of support you may be eligible for, and how to apply.
What is SEISS?
It’s a grant, which sole traders can apply for if their business has been affected by the Coronavirus — whether they’re still working or have had to temporarily close.
What is SEISS phase 2 (or ‘grant 2’)?
Right now, we’re in the second phase of the government’s SEISS. Or in other words, we’re in an extension of the original scheme which ran for an initial three months up to 13th July 2020. As the Covid-19 situation developed, the government decided to roll the scheme out for a further three months, offering a second grant to those who need it. Here’s a breakdown of how it all works to date:
- From 13th May 2020, the self employed were able to claim a taxable grant from the government, with a set deadline of 13th July 2020.
- As things progressed, the government then decided to offer a second grant to those who needed it from 14th July onwards – claims for this grant can be made between 17th August and 19th October 2020. To claim this second grant, your business needs to have been adversely affected by the Coronavirus pandemic on or after 14th July 2020.
- If you received a grant from the government in the first phase, you can still apply for the second grant in the second phase.
- If you didn’t apply for or recieve a grant in the first phase, you can also still apply for the second grant in the second phase.
- As these are grants we’re talking about, you won’t need to pay the money back.
Who can claim for SEISS grant 2?
You can apply for SEISS if:
- your profits (your taxable income after business expenses) came in at £50,000 or less last year
- that income amounts to at least half of your total income, and
- your work has been affected by Coronavirus circumstances
If you’re wondering what counts as being affected by the Coronavirus in your work, there’s a list on gov.uk, but the criteria’s pretty clear.
They’ll agree you’re affected if:
- You can’t work because you’re isolating, shielding, on sick leave or caring for others due to Coronavirus.
- You’ve had to stop or cut back operations, or you’ve had to pay out more to keep your business running as a result. (This covers a lot of common problems we’ve seen, like cancelled contracts, supply chain issues and reduced customers.)
- You’ve had to pay out for PPE to keep working.
How much will you get?
While the first grant was slightly more, the maximum you can receive through the second SEISS grant is £6,570. It’s transferred to your bank account in one lump sum.
However, the government will decide what you’ll receive based on your average monthly taxable income. They’ll look at your trading profits and losses for the three years from 2016-2019 to work it out.
Why is SEISS grant 2 capped at £6,570?
To apply for the grant, your maximum income before tax must be less than £50,000.
You don’t pay tax on the first £12,500 of your earnings, as this is your tax-free allowance, so the maximum taxable income would actually be £37,500 (£50,000 – £12,500 = £37,500).
The grant is based on giving you 70% of your average taxable income in a month, for 3 months.
So, 70% of £37,500 would be £26,250. Divided by 12 (to get the monthly income), this works out at £2187.50 per month.
For the total three-month period, the amount you’d receive is £6562.50 (or, roughly speaking, £6570).
It’s important to know that this will affect your tax return. Find out why and how in this article.
What do you need to do?
If you’re going to make a claim, you’ll need to keep track of the following things:
- Your business records that show your income is lower or your spend is higher than usual
- Any times your business closed or your staff couldn’t work due to the Coronavirus
- Any cancelled contracts
- Any PPE purchases you had to make for work
The deadline for the second SEISS grant is 19th October 2020. You’ll need to have completed your claim by that date, or else you’ll miss out.
Don’t forget – this second grant applies to businesses adversely affected on or after 14 July 2020 only, not before.
It doesn’t matter if your circumstances improve after a claim, though. You went through it, so you’re still entitled to it. That’s your mantra.
Once you’re ready, head over to the gov.uk site to make a claim.