MSE News
Coronavirus Self-Employed & Small Limited Company Help
With the third income support grant NOW open we've got the full details
The Self-Employment Income Support Scheme is made up of four grants. While the first two are closed, the third grant, which covers November to January, is now open. And with much of the UK in lockdown again, many businesses are now eligible. Read on for more about your rights as a self-employed person and what support's out there, including help for limited company directors and what to try if you're excluded from support.
Important: The info below is the best we have currently, but as this is a fast-changing situation we're updating this guide all the time. 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 travel, but also see:
- Coronavirus employees' help for the latest on the furlough scheme.
- Coronavirus self-employed & small limited co help for the latest on support schemes.
- Coronavirus universal credit & benefits for the latest on universal credit and other help.
- Coronavirus finance & bills for help with mortgages, rent, debts and bills.
- Coronavirus life in lockdown for help with shopping, weddings, MOTs etc.
Plus we've specific info on: Bounce Back Loans | Payment holidays | Wedding cancellation rights | Ryanair refunds | Static caravan fee refunds | WFH tax reclaiming | I'm self-employed – can I claim the third grant?
Tip Email
FREE Weekly MoneySaving email
For all the latest deals, guides and loopholes simply sign up today - it’s spam free!
The Self-Employment Income Support Scheme (SEISS) is made up of four taxable Government grants for self-employed individuals.
While the first two grants are closed, the third grant is now open for applications and you have until 29 January 2021 to apply.
While the fourth grant won't be available until February, here's a blog that Martin has written about it – a glimmer of hope for excluded new starter self-employed.
What period does the third grant cover and how much will I get?
Here's the lowdown on how it works:
- It covers the period from 1 November 2020 to the end of January 2021 and it's now open to apply. The deadline to apply is 29 January 2021. This is to ensure HMRC's systems can cope with the volume of traffic – as the deadline for filing self-assessment income tax returns is 31 January 2021.
- You can get as much as £7,500. This is made up of 80% of three months' worth of average monthly trading profits capped at £2,500/mth. To calculate this HMRC looks at your tax returns from 2018/19, 2017/18 and 2016/17. This is exactly what the first grant was worth.
NOTE: The max amount that you can claim has been upped THREE TIMES since SEISS 3 was first announced. At first, it was announced that it'd be worth £1,875 (20% of average profits), and then this was upped to a max of £3,750 (so 40% of average profits) and then increased to a max of £5,160 (55% of average profits), and finally to the current £7,500.
Broadly, eligibility for the third SEISS grant is similar to the first two, though there are some key differences. But in short, to be eligible to claim for the third SEISS grant, you'll need to fulfil the following criteria...
- Your business must have had a new or continuing impact from coronavirus between 1 November 2020 and the end of January 2021, which you believe WILL cause a "significant reduction" in trading profits in this same period. This can be for one of two reasons – either because of "reduced demand, activity or capacity" OR you're temporarily unable to trade. Importantly, you wouldn't be eligible for this third grant if the impact between 1 November 2020 and the end of January 2021 was not significant, even if you suffered a significant reduction in profits due to problems over other periods in the year (however, you'd likely have been eligible for, and may well have claimed, the previous two grants). Unsure? We've put together a guide to walk you through the new criteria, complete with some real world examples.
- You must intend to continue to trade. You cannot make a claim if you have plans to close your business.
- You must have filed a tax return for 2018/19. This means you must have been self-employed prior to 6 April 2019. The last possible moment to file a 2018/19 tax return was 23 April 2020 (the deadline had been extended from 31 January 2020). If you only had a few months' self-employment on your 2018/19 return, this is counted as your total profit for the year – the Government won't pro-rata it based on your monthly profits.
- You must earn at least 50% of your total income from self-employment. To check this, HMRC will first look at your 2018/19 tax return to see if it was the case then. If you're not eligible based on 2018/19 alone, it will then look at the tax years 2016/17, 2017/18 and 2018/19 to see if the average of your trading profits across the three years were more than 50% of your total income.
Income from 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 less than £50,000/year. 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.
Again, HMRC says it will first check your 2018/19 tax return – if you met the requirements that year, you'll be eligible. However, if you earned more than £50,000 (or earned less than half of your income from self-employment) in 2018/19, it'll check your 2016/17 and 2017/18 tax returns if you filed them for those years. If on average over the three years you earned less than £50,000 and made more than half your income from self-employment, you'll be eligible. See more info below if you made a loss.
- You don't need to have applied for an earlier grant to get it. As long as you meet the eligibility criteria, it is possible to apply for just one or any combination of the four grants.
- You CAN keep working if you claim the grant. Though you need to declare your business has been impacted for the period you're claiming for. HMRC will check for fraudulent claims.
- You can also 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. But you will NOT have to pay back previous months of universal credit because of your SEISS payment. If you can wait, in some cases it could be worth delaying your SEISS application to maximise your universal credit award. We have all the details in our Coronavirus Universal Credit & Benefits guide.
- You can claim the SEISS grants on top of local lockdown payments. If you own a business premises that needs to shut, you can get both, however you must be trading and intending to continue to trade at the time of application for the SEISS grant. See more on what local lockdown payments are available.
The SEISS has been extended, but there are two 'missing months'
When the Government first announced the SEISS grant, its own press release from 26 March 2020 stated: "The income support scheme... will cover the three months to May," ie, March, April and May.
Then it announced a second grant covering another three months' worth of trading profits. Logic (and basic counting) would suggest that this second three-month grant would cover June, July and August – but to get this you strangely had to declare your work was impacted only after mid July.
But after initially setting out that the three-month grants corresponded to actual specific months of business disruption, HMRC then said that the grants don't relate to specific months after all. They are just grants, it said, though each is based on three months of trading profits.
Now a third grant kicks in covering the period from 1 November 2020 until 31 January 2021, and a fourth will run from 1 February 2020 to 30 April 2021. Each covers three months' worth of support.
So do the maths
That's 12 months of grants in total to cover 1 March 2020 to 30 April 2021, a total of 14 months. That leaves two months missing, which in our view are September and October.
How to apply for the third SEISS grant
You need to apply via the official Government claims portal and can claim at any time until 29 January 2021. Once you apply, HMRC will check your claim and pay your grant into your bank account within six working days. You will get an email when your payment is on its way.
To apply, or check, you need the following information:
- Self-assessment unique taxpayer reference (UTR) – if you do not have this, find out how to get your lost UTR.
- National insurance (NI) number – if you do not have this, find out how to get your lost NI number.
- Government Gateway user ID and password – if you do not have a user ID, you can create one when you make your claim.
- UK bank details (only provide bank account details where a Bacs payment can be accepted) including the bank account number, sort code, name on the account and address linked to your bank account.
- You must make the claim yourself. Your tax agent or financial adviser must not claim on your behalf as this will trigger a fraud alert.
- Need to create a Government Gateway account or recover your password? Do it online and have two pieces of identification to hand – your UK passport and UK or NI driving licence.
- If you only have a UK passport or a UK or NI driving licence, you may also be able to set up your account or reset your password by answering questions about information on your credit file.
Need to know: The third SEISS grant has stricter criteria. To find out if you meet these, you can read the full guidance and see some real scenarios about what you can and can't claim for here.
Tip Email
FREE Weekly MoneySaving email
For all the latest deals, guides and loopholes simply sign up today - it’s spam free!
New business grants (Eng) for retail, leisure, hospitality & others. Business finance isn't our bag. Yet there's to be a) one-off top up grants for retail, hospitality & leisure biz up to £9,000 per property b) a £594m discretionary fund for other businesses c) more funding for local authority discretionary grants. The Fed for small biz has info, and it says it'll add more.
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 launched its own business restriction grants.
Wales: The Welsh Government has announced 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.
Self-assessment tax payment help
Eligible taxpayers who haven't already done so need to file an online self-assessment tax return to HMRC for the 2019/20 tax year, which ended on 5 April 2020, by 31 January 2021. This deadline hasn't changed as a result of the pandemic and is the same as always.
The self-employed and others who do self-assessment tax returns also need to pay any so-called taxes 'on account' that had been due on 31 July 2020 by 31 January 2021. The Government gave people an extra six months to make this payment due to the pandemic - the only exception is for those who've separately agreed a 12-month repayment plan; see below for more on this. You'll also need to make your January 2021's 'on account' payment as usual by the same deadline, unless you've also agreed a repayment plan.
Those who owe tax of less than £30,000 (up from £10,000 from 1 October 2020) and more than £32 in January 2021 (so that'd be the deferred July payment and January 2021's 'on account' payment) have been able to use HMRC's 'Enhanced Time to Pay' mechanism to agree a repayment plan to spread that tax bill and repay it by direct debit over up to 12 months - even if that goes beyond the 31 January 2021 deadline.
To use this service you need to have filed your 2019/20 tax return by the 31 January 2021 deadline and set-up the repayment plan no later than 60 days after the due date of a debt. In addition, you need to have no outstanding tax returns, other tax debts or other payment plans set up. You can set up a Time to Pay plan online through your tax account, or you can call HMRC on 0300 200 3822 (open Monday to Friday, 8am to 4pm).
However, bear in mind that those who use this system will pay simple interest (meaning it doesn't compound) of 2.6% a year from 1 February 2021 until their bill has been repaid in full.
No fines for a late return
People who file their tax returns late won’t face a fine this year, as long as they can show that the delay was due to coronavirus. Usually the penalty is £100 if your tax return is up to three months late.
More time to pay VAT too
If your business is VAT registered and you deferred March to June 2020's VAT payment, you will now have the option to spread your payment over the 2021/22 financial year (6 April 2021 to 5 April 2022). You'll need to opt in to the scheme though. The Government says it'll have the opt-in process up and running in early 2021.
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, but there are other things you can try:
- The Government small business bounce back loans can be used to SUPPORT YOUR INCOME, including for those with no other support (eg, newly self-employed, limited company directors). Since May, the new 100% state-backed bounce back loans, for up to £50,000, have been available. They're interest-free and payment-free in the first year – so pay it off then and it's no cost, and at a very low 2.5% annual interest after that.
The Government announced that a new 'Pay As You Grow' scheme will give those who've borrowed bounce back loans more flexibility in how they repay, while the time you have to apply for a new bounce back loan has also been extended. For more information, see our Bounce Back Loans guide.
Normally we don't cover business finance, but Martin wanted to here, as he'd had an inkling you could effectively turn this into a state support scheme for those who've missed out on the official ones, ie, newly self-employed, self-employed with £50,000+ profits, limited company directors (to an extent) and more.
We've had it officially CONFIRMED there's nothing in the loan rules stopping you using these loans to support your income (though there can be tax/regulation issues depending on your firm's structure). Of course it's far from ideal – these are loans, not grants – but it's an option. So we've rapidly put together our new Bounce Back Loans guide, outlining how the loans work.
IMPORTANT: The deadline to apply is 31 January 2021. However, if you're considering applying it's important you do so as soon as possible – especially for people who apply to a lender where they're not an existing customer, as many lenders are shutting their doors to new customers.
- Alternatively, you can apply for a business interruption loan. The temporary Coronavirus Business Interruption Loan Scheme is open to self-employed people and offers access to loans, overdrafts, invoice finance and asset finance of up to £5 million for up to six years. The Government could also give you a Business Interruption Payment to cover the first 12 months of interest and fees on the loan.
The scheme is now open for applications, and is offered by all major banks. Read more on the Government's Business Support website. The two loan schemes will run alongside each other.
- You can't get statutory sick pay if you're self-employed, but you might be entitled to benefits. But if you have to take time off work because you're sick or self-isolating – or you've lost all your income due to coronavirus – check if you can claim benefits towards housing and other costs.
You may qualify for benefits if you're sick or self-isolating
The various contact tracing schemes in England (Test and Trace), Scotland (Test and Protect), Wales (Test, Trace and Protect) and Northern Ireland (Test and Trace) are all now up and running. If you've been in close contact with someone who tests positive, you may be told to self-isolate for 10 days. 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, but note it's only in cases where households are ill or self-isolating. You won't be able to make a claim because your child's school is closed and you have to take time off to care for them. You can only get help with childcare costs if you're using a registered childcare provider, rather than caring for your kids yourself.
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 have been delayed a year
Controversial reforms which will lead to tax bills going up for many self-employed people have been delayed by a year as a result of coronavirus. Changes to IR35 'off payroll working' rules – anti-tax avoidance rules – will now come in during April 2021 instead.
The changes will mean every medium and large private sector business in the UK will become responsible for setting the tax status of any contracted worker. Currently the rules only apply to the public sector.
In simple terms, this means self-employed people working for a company will pay more tax. The fear is that businesses will find the changes too complicated and use fewer self-employed people as a result.
However, while the delay comes as a respite for some, it's been made clear the reforms will definitely still go ahead in April 2021.
Martin Lewis, founder of MoneySavingExpert.com, said: "When the Chancellor's financial support schemes first came out, they were rightly lauded for protecting millions of people's jobs and incomes in this unprecedented health and economic catastrophe. At the time, I said in one interview I'd give it an A-grade, but what'd really count is how they'd help those who'd fallen through the cracks.
"Yet whether its new starter furlough or self-employed support, freelance PAYE, limited company directors, dental nurses, shielders whose firms won't furlough and many more – those cracks are now fissures, with up to three million people desperate, without help or support. And so that grade has degraded.
"All my attempts to be allocated a journalistic question at the Downing Street press conferences about this have been turned down, so thank you to Andrew Marr who raised it, in my name, with the Chancellor on the BBC's The Andrew Marr Show.
"Listening to it will not make many hopeful. And indeed if you're in this situation while you can hope for the best, its best to plan for the worst. There's a new group, Excluded UK, set up as a community interest company by three people to try and give a voice to those missing out. It's early days, but at least it means there's a voice being heard, aiming to raise awareness."
Andrew Marr discusses the excluded with Chancellor Rishi Sunak on Sunday 14 June. Content shared at the courtesy of The Andrew Marr Show / BBC.
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 March 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.
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 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, ie, get 80% of their salary up to £2,500/month. 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.
Limited company directors can use the Government's small business bounce back loans to SUPPORT THEIR INCOME
Since early May, businesses have been able to apply for 100% state-backed bounce back loans, worth up to £50,000 and interest-free and payment-free in the first year – so pay it off then and it's no cost, and at a very low 2.5% annual interest after that. The application deadline for these loans has now been extended to 31 January 2021.
We don't normally cover small business loans, but because these can – in some cases – be used to replace lost personal income, we've been including them in our help guides.
Tip Email
FREE Weekly MoneySaving email
For all the latest deals, guides and loopholes simply sign up today - it’s spam free!
Related Articles
-
Coronavirus Employees' Help
19 January 2021![]()
If you're worried about work during the coronavirus crisis, this guide looks at your rights as an employee including who's eligible to be furloughed. -
Top 15+ holiday destinations from the UK – where can you still travel to?
18 January 2021![]()
We've looked at the top tourist destinations to sort out where you can go without needing to quarantine -
'I'm self-employed but confused about whether I can claim the third grant' – Unsure? Here's what you need to know
18 January 2021![]()
100s of self-employed people are confused about what constitutes being “adversely affected” by coronavirus, we have some helpful scenarios to work out where you stand, as well as HMRC’s guidance. -
Coronavirus Universal Credit & Benefits
18 January 2021![]()
If you're suddenly unable to work due to the coronavirus crisis, or you've been laid off, this guide looks at what benefits you can claim, what you're entitled to under universal credit plus tells you how to make a claim.
13 January 2021
FREE Weekly MoneySaving email
-
Martin's 0% January masterclass
How to slash all debt costs
-
'£13.34/mth' UNLIMITED Sim
Cheapest we've ever seen
-
£5 off a £25 spend at Lidl
For app newbies
-
Martin on Premium Bonds
Should your money be there?
-
Don't trust energy comparisons right now
Many save MORE than they say
-
£50 of Lottie London make-up £19 delivered
10-piece cruelty-free set
-
HMRC waiving self-assessment fines (for some)
If you file after 31 Jan
-
Read the full email
For all the latest deals, guides and loopholes simply sign up today - it’s spam free!
-
Coronavirus Employees' Help
19 January 2021![]()
If you're worried about work during the coronavirus crisis, this guide looks at your rights as an employee including who's eligible to be furloughed. -
Coronavirus Self-Employed & Small Limited Company Help
19 January 2021![]()
If you're worried about work during the coronavirus crisis, this guide looks at your rights if you're self employed, including what help's there for limited company directors. -
Cold weather payments triggered - can you get £25 towards your energy bills?
18 January 2021![]()
Cold weather payments worth £25 have been triggered in some parts of the UK after another cold snap. It's the third week the payments, which are designed to help households pay for energy bills when temperatures plummet, have been dished out this winter -
Top 15+ holiday destinations from the UK – where can you still travel to?
18 January 2021![]()
We've looked at the top tourist destinations to sort out where you can go without needing to quarantine -
'I'm self-employed but confused about whether I can claim the third grant' – Unsure? Here's what you need to know
18 January 2021![]()
100s of self-employed people are confused about what constitutes being “adversely affected” by coronavirus, we have some helpful scenarios to work out where you stand, as well as HMRC’s guidance.
-
Martin Lewis VIDEO: Should you pay off your Plan 1 student loan?
11 January 2021![]()
If you started university between 1998 and 2012, or since then in Scotland and Northern Ireland, you'll have a Plan 1 student loan. While much is written about whether those with savings should overpay the current English Plan 2 student loans, there's little out there about Plan 1. I wanted to change that, so here's a video explaining how to decide... -
Martin Lewis: Payment holidays coming to an end – but should you take one? Mortgages, credit cards, loans, payday loans, car finance and more
5 January 2021![]()
Within the last week, we've seen the extension of coronavirus credit card, personal loan and overdraft help to 31 October 2020, with mortgage payment holidays already extended. The regulator's other help schemes are also likely to be extended too, including car finance and payday loans, yet should you do it?
Clever ways to calculate your finances
Have your say
This is an open discussion and the comments do not represent the views of MSE. We want everyone to enjoy using our site but spam, bullying and offensive comments will not be tolerated. Posts may be deleted and repeat offenders blocked at our discretion. Please contact fbteam@moneysavingexpert.com if you wish to report any comments.