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Coronavirus Self-Employed & Small Limited Company Help
Full info on the fifth & final self-employed grant, small business help and more
The deadline to apply for the fifth and final grant is this Thursday (30 September), so if you're self-employed and your business has been impacted by coronavirus, you need to act fast. This guide runs through who's eligible to claim the final SEISS grant (worth up to £7,500) and how to do it, plus other help available for the self-employed, including for limited company directors, and what to try if you're excluded from support.
If you've a question that isn't covered below or in the other coronavirus guides, please email it to us (we can't respond with personal advice but we'll try to add answers in these guides).
Looking for other help? This guide focuses on the self-employed, but also see:
- Coronavirus employees' help for how furlough is winding down.
- Coronavirus universal credit & benefits for benefits updates.
- Coronavirus finance & bills for help with mortgages, rent, debts and bills.
- Coronavirus life in lockdown for the latest on refund rights etc.
- Coronavirus travel rights for the latest on what the rules around travel are and insurance.
Plus we've specific info on: Wedding cancellation rights | WFH tax reclaiming | Payment holidays
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Closing on Thursday. Claim the fifth and final self-employed grant
The fifth and final self-employed grant is open. Unlike the previous grants, for the first time, it's now not "all or nothing". How much you'll get depends on the extent to which your business has been hit by coronavirus. This can be complex to work out, so we've a full step-by-step rundown to help you do it, but first, here's a summary of this fifth grant:
SEISS 5: at a glance
- The grant covers 1 May to 30 September – five calendar months. However, it is only worth three months of average trading profits. This seems unfair compared to the furlough scheme, though it is not the first time that this has happened for the self-employed.
- The deadline to claim is 30 September (this Thursday – so act urgently if you need to apply). Just like previous grants, you apply online using your Government Gateway account. See How to apply. So far more than 800,000 people have applied for the fifth grant.
- The eligibility criteria is the same as for SEISS 4. So if you claimed or were able to claim the previous grant, you'll be able to claim again here (see eligibility criteria). That means the 600,000 recent self-employed starters, who got the fourth grant for the first time, can also get the fifth.
Of course, sadly, that also means there are millions who are STILL excluded, namely those who fall foul of the strict profit thresholds or are directors of limited companies and mainly take dividends.
- The maximum grant amount anyone can claim is £7,500. How much you get is based on a calculation of 80% of your average trading profits over three months. Yet you won't be able to claim more than £7,500 - even if your calculation should mean you'd get more. Yet this time, it's not that straightforward...
- You now don't automatically get the amount your average profits make you eligible for. The size of your 5th grant also depends on how much your turnover has been hit. For the first time, the grant is not "all or nothing" that is, you either qualify or you don't. The final amount you get for the 5th grant will also depend on how much your turnover has dropped. Though there's one exception to this...
- If you became newly self-employed in 2019/20 and meet the other criteria, the amount you can get will be based on just this year's tax returns. You will automatically get 80% of three months of your average trading profits (capped at £7,500) without regard to turnover. You missed out on the first three grants, so this may help redress this balance a touch.
- If you're looking to remortgage, claiming the grant might scupper your chances. If you're struggling these grants are an invaluable lifeline - but do bear in mind that claiming SEISS can impact mortgage applications.
Now you've read the basics, we'll take you through a step-by-step of how the 5th grant works.
Common questions on SEISS
Step 1: Are you eligible?
The obvious first question, is "are you eligible to get a grant?". This is how to work this out (though also see our help for different circumstances in the I'm confused whether I can claim the fifth grant guide)...
- You must have filed a 2019/20 tax return. The deadline to file this with HMRC was originally 31 January 2021, but the Chancellor specifically said in the Budget that the scheme will be open to you as long as you filed your tax return by 11.59pm on 2 March 2021.
- You must have traded in both the 2019/20 and 2020/21 tax years and intend to continue to trade. This means you must be currently trading or temporarily unable to do so because of coronavirus - you cannot make a claim if you have plans to close your business.
- You must reasonably believe there will be a significant reduction in your trading profits between May and September this year. This must be due to reduced business activity, capacity, demand or inability to trade due to coronavirus. You'll need to be able to make a declaration to this effect. In practice, to be able to make the declaration:
1) Your business must continue to be affected by Covid in the claim period, or be newly affected in this time. Your business must have been facing an ongoing hit from coronavirus from the beginning of May to 30 September, or have been newly affected in this period.
So you cannot apply if your business was struggling in, say, February, March and April but was no longer affected from May onwards. You also cannot apply if the only impact was increased costs.
If you’re not sure yet how it's going, don’t apply now, you have until the end of September to make the decision.
2) You need to believe the impact during this period WILL cause a 'significant reduction' in trading profits. For many this will be straightforward, but others might not yet be sure – again if not sure, wait.
3) This 'significant reduction' must be due to 'reduced demand, activity or capacity' OR being temporarily unable to trade. For example:
- Lower demand, activity or capacity could be fewer customers, cancelled contracts or supply chain issues.
- Being temporarily unable to trade could be because of a local lockdown, being officially told to shield/self-isolate or parental or caring responsibilities.
You must keep evidence that shows how your business has been impacted. HMRC expects you to make an honest assessment about whether you reasonably believe your business will have a significant reduction in profits. See our 'I'm confused whether I can claim the fifth grant' guide for more information about the declaration and examples of where you will and won't be able to claim the fifth grant.
- At least 50% of your total income must be from self-employment. This will first be judged on your 2019/2020 self assessment tax return. If you're under the 50% criteria with that, then HMRC will look at the tax years 2016/17, 2017/18, 2018/19 and 2019/20 to see if the average of your trading profits across the four years made up more than 50% of your total income.
Income from other jobs, property, dividends, savings, pensions and taxable benefits all count as "non-trading income" and, to qualify for the SEISS, the total of these combined must NOT exceed 50% of your total income. Confused about what counts as "taxable income"? Here's our full list.
- Your average trading profit must be £50,000 a year or less. This is essentially a 'cliff-edge' requirement – so those whose average annual trading profit is more than £50,000 (to be specific, £50,000.01 and above) won't be able to get any support from this scheme.
If you’re not eligible based on your 2019/20 tax return, ie, you earned more than £50,000, it will then look at the tax years 2016 to 2017, 2017 to 2018, 2018 to 2019 and 2019 to 2020. If on average, you earned less than £50,000 over those four years, you will be eligible.
- You CAN keep working if you claim the grant. Though you need to declare your business has been impacted by coronavirus for the period you're claiming for. HMRC will check for fraudulent claims.
- Losses in a year (or more years) can affect claims. If you made a loss in one of the tax years that counts, this will reduce your overall average earnings, and if you've other non-trading income which accounts for more than 50% of your total income, you'll be ineligible.
If you think you're eligible based on the above, now read step 2 to find out how much you could claim.
Eligibility quick questions
Step 2: The maximum you can get depends on profits
Now that you have a clear picture of whether you're eligible, the next step is to figure out how much you may be able to claim:
- The grant is capped at £7,500. This means the most anyone can claim (regardless of their individual circumstances) is £7,500 - this amount is the same as grants 1, 3 and 4. Grant 2 was capped at £6,570.
- The amount you could claim is based on 80% of three months of your average trading profits. Your average trading profits are worked out from your tax returns (see below) but due to the cap - even if 80% of three months' worth of your average trading profits work out to be more than £7,500, you won't be able to claim more.
- To work out your average trading profits HMRC will use up to four years of tax returns. If you've traded and submitted tax returns for 2016/17, 2017/18, 2018/19 AND 2019/20 - all the profits and losses will be added together and divided by four (then divided by four again to get the three-months worth of profit figure).
- If you didn’t submit tax returns for all four years, the grant will be based on your most recent consecutive returns.
- If you did not trade in two consecutive years, your average trading profit will be just based on your most recent return(s). So if you submitted 2016/17 not 2017/18 then 2018/19 and 2019/20 it would only be the last two that counted.
- Losses in a year can affect claims. If you made a loss in one of the tax years that counts, this will reduce your overall average earnings.
For previous grants, this would have been it. You'd have got 80% of your average trading profits over three months (subject to the cap). But unlike all the other grants, for this 5th grant there's an extra step in determining how much you'll get. Read on to see how this works.
For the first time, the SEISS grants are not "all or nothing". There are now two levels of grant available - a higher amount of 80% of three months of average trading profits or a lower amount of 30% of three months' worth of average trading profits.
Which you'll get - unless you’re newly self-employed - depends on the extent of your drop in turnover. To work this out, you will need to give HMRC two different turnover figures so they can compare how your business fared during the pandemic and how it performed before it.
Here's what you need to do:
- First, you need to get your turnover figures for 2020/21. Turnover includes takings, fees, sales or money earned by your business. You should NOT include past SEISS grants and other Covid support, such as "Eat Out to Help Out" payments, local authority or devolved administration grants.
- To find your figures, you'll need to refer to your self-assessment tax return - if you have already completed it. (Help if you're not sure where to find it).
- If you've not yet completed it, you can also ask your accountant or tax adviser (if you have one) to check the accounting software you use for your business, or you can go through your bookkeeping or spreadsheet records that cover invoices and payments received, or you can check the bank account you use for your business to account for money coming in from customers.
- Many people have accounting periods that fall outside of 12 months. This is not a problem, but you'll need to work out your 12-month figure.
For example, if you have a 15-month accounting period and declared a turnover of £45,000 on your 2020 to 2021 tax return: To get your 12-month turnover for 2020/21 you need to divide your 15-month figure by 15 to get your turnover for 1 month, then multiply this by 12.
- Next, you'll need to find your turnover "reference" figure - for most this will be your turnover in the 2019/20 tax year. This is the figure that HMRC looks at to see how your business performed before the pandemic. In most cases will be tax year 2019/20. If this was not a normal year for your business (eg, you were on maternity leave etc), you can use your reported turnover from 2018/19 instead.
You can find this figure on your tax return. For previous years' tax returns log into your personal tax account; check your business records, or ask your accountant if you have one.
- HMRC then uses difference between your 2020/21 turnover figure and your pre-pandemic "reference turnover figure" to determine whether you get the higher or lower amount. Then...
- If your turnover's fallen by 30% or more you'll be able to claim the full 80% of the three months’ average trading profits you worked out in step two (capped at £7,500).
- If your turnover's fallen by less than 30% you'll be able to claim a grant worth 30% of the three months' average trading profits you worked out in step two. In this category, the maximum grant is £2,850.
- The newly self-employed who started trading in 2019/20 automatically get the maximum grant. If you started trading in 2019/20 you will be able to claim the maximum grant amount worth 80% of three months’ average trading profits - without a turnover test, as there are no previous figures to compare your turnover to.
- Extra help is available from HMRC. Guidance is available online. You can also speak to an adviser online about the scheme, use HMRC’s digital assistant or call 0800 024 1222 - but bear in mind the line is extremely busy and there are fewer advisers due to coronavirus.
Applying for universal credit won't make you ineligible for SEISS
You can apply for and get universal credit - SEISS doesn't make you ineligible.
But once you start receiving self-employed income support too then this will be classed as income, meaning the amount of universal credit you receive will decrease. You will NOT have to pay back previous months of universal credit because of your SEISS payment.
Claiming online is the quickest and easiest way. HMRC. You can claim online by searching for 'SEISS' on the Gov.uk website until 30 September 2021.
To make your claim, you'll need:
- Turnover figures for April 2020 to April 2021 and 2019/20 and/or 2018/19.
- Your National Insurance number
- Self Assessment Unique Taxpayer Reference (UTR) number
- Government Gateway user ID and password
- Bank account number and sort code, and roll number for a building society account
When will I get my money?
After you've submitted your claim, HMRC will do checks to confirm the details and pay the money into your bank account within six working days of receiving your claim.
While receiving a SEISS grant in the past isn't an automatic reason for mortgage rejection, sadly some have been told it is evidence of business viability problems (as by applying you declared you needed help) and have been rejected.
Though receiving an earlier grant but not a later one can sometimes be viewed as evidence of a turnaround.
In June, MSE asked 13 lenders and six explicitly said they wouldn't take SEISS grant money into account, while only two said they would - the rest were vague.
As for whether those who are eligible, and struggling, if you need the cash, do it - mortgage savings are usually no substitute for direct cash being paid into your account.
For those struggling to get a mortgage due to these schemes, product transfers from your existing lender, and using mortgage brokers, are the best routes to navigate through this.
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What if I'm not eligible for the Self-Employment Income Support Scheme?
Not all self-employed people can get the SEISS grant – for example, if you earn more than £50,000 a year, or if less than half of your income is from self-employment. If you don't meet the eligibility requirements, unfortunately you won't be able to claim.
Until recently, one option was to apply for a business interruption loan, but the temporary Coronavirus Business Interruption Loan Scheme, which was open to self-employed people and offered access to loans, overdrafts, invoice finance and asset finance of up to £5 million for up to six years, has now closed to new applications. See more below though on what other grants are available for affected businesses.
You may qualify for benefits if you're sick or self-isolating
If you've been in close contact with someone who tests positive, you may be told to self-isolate for 10 days by any of the various contact tracing schemes. If so, and you can't operate your business from home and it's disrupted, you can apply for universal credit, though what (if anything) you get depends on your costs, savings and income.
If you're sick, you can apply for new-style employment support allowance (ESA) and claim from the first day of sickness. You can also apply at present if you're caring for a child who is ill with coronavirus, or self-isolating according to Government advice - though these provisions may change at short notice.
However, it's still worth checking that you're claiming all the other benefits and support you're entitled to, or checking if you can take a mortgage payment holiday or delay energy bills.
IR35 tax reforms are now in place
Controversial reforms of 'off payroll working' rules, which will lead to tax bills going up for many self-employed people that had been delayed by a year as a result of coronavirus are now in place.
The changes mean every medium and large private sector business in the UK is now responsible for setting the tax status of any contracted worker. Previously the rules only applied to the public sector.
In simple terms, this means self-employed people working for a company must pay more tax. The fear is that businesses will find the changes too complicated and use fewer self-employed people as a result.
Gig worker, zero hours, freelance or agency? Check what you're entitled to
If you work in the 'gig' economy – for example, you freelance, work through an agency or are on a 'zero-hours' contract – it's important to check what you're entitled to.
The best way to tell this is to see how you're taxed. If you're taxed through PAYE, then you're considered as an employee, so you should have the same rights as an employee. These include being furloughed as part of the furlough scheme, which has now been extended until the end of September 2021.
If you are self-employed (therefore taxed through self-assessment and not PAYE), you won't be eligible for furlough, but you may be eligible for the Self-Employment Income Support Scheme grants, or be able to claim benefits.
For more info, see Martin's video below on zero-hours workers. Please note: this video was recorded towards the beginning of the pandemic.
Help for limited company directors whose small firms are struggling
Those who work via small limited companies that they're directors of (as many firms ask them to) have very limited state support available. Yet there is a small amount of wriggle room, which Martin works through in his 10-minute video guide below.
The video, which was recorded towards the beginning of the pandemic, includes the following:
- No official scheme exists for limited company directors. There's no cover for lost dividends, although many are lobbying for it.
- Limited company directors, even if they're the only employee, can furlough the PAYE element of their income. This isn't likely to be huge, as more income is dividends (and there's no help there), but it's something.
- If you do furlough yourself you can't then work for the firm, but you can continue to perform your statutory obligations as directors, eg, official legal filings (in the video Martin discusses how far this reaches).
- When furloughed, it's acceptable that you can work for other people, so you could freelance yourself and work outside of your limited company.
- Those struggling for income are likely eligible for, and so should also claim, universal credit.
It's worth noting that Bounce Back Loans, which offered help for small businesses and in some cases income support for limited company directors, have now closed to applications - see our Bounce Back Loans guide.
Door 'firmly shut' on more financial support for limited company directors
Following the announcement of the 2021 Budget, the Chancellor, Rishi Sunak, told MoneySavingExpert.com founder Martin Lewis that limited company directors wouldn't be getting any additional financial support during the pandemic, admitting that when it comes to extra help, the door is "firmly shut".
See exactly what the Chancellor said below in this clip from his interview with Martin Lewis, courtesy of ITV's The Martin Lewis Money Show.
Business finance isn't our bag. Yet there has been different routes of help available throughout the pandemic for businesses that need it, including: one-off top up grants for retail, hospitality and leisure businesses up to £9,000 per property, a £594m discretionary fund for other businesses, more funding for local authority discretionary grants.
In the 2021 Budget the Chancellor announced a new "recovery loan" scheme. Businesses of any size can apply for loans from £25,000 to £10m through to the end of this year. The Government will provide a guarantee to lenders of 80%. The Fed for small biz has all the info along with how the Government's re-opening "roadmap" will affect businesses.
In Wales, Scotland or Northern Ireland?
Business support is fully devolved, so it is up to the devolved nations to decide how to support businesses in their areas.
Scotland: The Scottish Government has given one-off "restart grants" for business in the retail, hospitality and leisure sector specifically to support them in meeting the costs associated with the costs of reopening.
Wales: The Welsh Government has a package of support, to see what's available at Gov.wales.
Northern Ireland: For businesses in Northern Ireland, there is a range of business support available.
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