Coronavirus Self-Employed & Small Limited Company Help
The third income support grant closes this Friday, we've got the details on how to apply
The Self-Employment Income Support Scheme is made up of four grants. The first two are closed and the third grant, which covers November to January, closes on Friday. 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 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?
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 open for applications, but only until the end of the week - it closes this Friday (29 January).
IMPORTANT UPDATE ON THE 4TH GRANT: On Friday 22 January Martin was told that there will be no official announcement about the fourth grant until the 3 March Budget - more than a month after the grant period starts. See Martin's exclusive 4th grant delay video explainer.
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 open for applications until Fri 29 Jan. It's shutting a couple of days before the end of the month 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.
Broadly, eligibility for the third SEISS grant is similar to the first two, though there are some key differences. 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 £50,000/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.
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.
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.
Yet, when the third grant kicked in, it was there to cover 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.
You need to apply via the official Government claims portal and can do that at any time until 11:59pm on 29 January 2021. But it's advisable not to leave this until the last minute in case you have any technical issues, as there won't be any extensions. 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.
Grants one and two are now closed and HMRC has confirmed they will not accept any late claims, but this is how they worked:
- Grant one. It was available from 13 May to 13 July 2020 and was worth up to £7,500 in total. This was made up of 80% of three months' worth of average monthly trading profits, capped at £2,500/mth.
- Grant two. It was available from 14 July to 19 October 2020 and was worth up to £6,570 in total. It was made up of a single payment of 70% of three months' worth of average monthly trading profits, capped at £2,190/mth.
Yes. If the leave was taken in 2018/19 and it meant you weren't previously eligible for SEISS, you now can apply. The special HMRC application link is now live and you can find it here.
If you took parental leave away from your business and didn't need to submit a self-assessment tax return because your earnings fell below £1,000 – previously you would not have passed the eligibility criteria. However, special dispensation has been announced for new parents who took their leave in 2018/19.
You might have also earned more than £1,000 from your business, but still failed to be eligible if you had income from other sources (such as a part-time job) which meant your self-employed income was below 50% of your total income.
This means parents – including mothers, fathers and those who have adopted – who took time out of trading to care for their children within the first 12 months of birth (or adoption placement) will now be able to use their 2017/18, or both their 2016/17 and 2017/18, self-assessment returns as the basis for eligibility.
IMPORTANT: You can only disregard your 2018/19 trading year if it meant you were ineligible altogether. Unfortunately, if you were eligible, you must still count your 2018/19 tax year when calculating your grant amount, which is based on average trading profits.
Yes, but some benefits could have an impact on your eligibility.
To qualify for SEISS, your non-trading income has to be less than the trading profits, and some benefits count as "non-trading income".
Generally speaking, a "taxable benefit" will count as non-trading income, while a "non-taxable benefit" won't count.
Key benefits that are taxable – and count as income – are:
- Employment and support allowance
- Carer's allowance
- Bereavement allowance
Key benefits that are non-taxable – and don't count – are:
- Universal credit
- Child tax credit
If you're unsure whether a benefit you get is taxable or non-taxable, click the drop down menus below for the full list.
These benefits are ignored when you apply for SEISS
- Attendance allowance
- Lump sum bereavement payments
- Bereavement support payment
- Best start grant
- Child benefit
- Child dependency additions paid with carer's allowance, incapacity benefit, state retirement pension and widowed parent's allowance
- Child tax credit
- Christmas bonus for pensioners
- Cold weather payments
- Council tax reduction
- Disability living allowance
- Employment and support allowance (income-related)
- Funeral support payment
- Guardian's allowance
- Health costs, including eye tests, prescriptions and travel under the Hospital Travel Costs Scheme
- Housing benefit
- Income support, unless you are on strike when you claim
- Industrial injuries benefits, including constant attendance allowance, disablement benefit, exceptionally severe disablement allowance and reduced earnings allowance
- Maternity allowance
- One-parent benefit, only available if your claim was made before April 1997
- Pension credit
- Personal independence payment
- Return to work credit
- Severe disablement allowance
- Social fund payments, including budgeting loans, funeral expenses payments and sure start maternity grants
- Universal credit
- War disablement pension, including allowances
- War widow's/widower's pension
- Winter fuel payments
- Young carer grant
These benefits are considered "non-trading income" when you apply for SEISS
- Bereavement allowance
- Carer's allowance
- Employment and support allowance – contributory and youth
- Incapacity benefit – except for the first 28 weeks (higher rate) and those who were receiving the former invalidity benefit at 12 April 1995 for the same incapacity (long-term)
- Income support paid to people who are on strike
- Industrial death benefit pensions
- Jobseeker's allowance – both contribution-based and income-based up to a taxable maximum
- State pension
- Widowed mother's allowance
- Widowed parent's allowance
- Widow's pension
Additions for dependent children paid with any of the above benefits are not taxable. An addition for a spouse or civil partner is taxable.
No, unfortunately not. If you weren't able to file a tax return for self-employed earnings in 2018/19, you won't be able to apply. This is to try to prevent fraud – people saying that they have a self-employed business to get the grant.
The Government says individuals must "do the right thing" and only make a claim through the scheme if you've genuinely been adversely affected by coronavirus and need financial support.
However, if you are struggling now and claim the grant, but later in the year your profits increase, the Government has confirmed the grant WON'T be "clawed back" by HMRC.
It's worth noting that the grants are taxable – so claiming the grant will mean you have a higher taxable income when you come to do your 2020/21 tax return.
Yes. The Scottish Government announced on a further £220 million in grants to help businesses, including the recently self-employed. About £100 million of that support is designed for self-employed people and viable micro and SME businesses in distress due to coronavirus. Wales and Northern Ireland have also announced targeted support and lockdown support payments. See below for more.
Yes. You must keep any evidence that your business has had reduced activity, capacity or demand due to coronavirus at the time you made your claim, such as:
- Business accounts showing reduction in activity compared to previous years.
- Records of reduced or cancelled contracts or appointments.
- Fewer invoices.
- A record of dates where you had reduced demand or capacity due to Government restrictions.
You must keep evidence if your business has been unable to trade due to coronavirus, such as:
- A record of dates where you had to close due to Government restrictions.
- NHS Test and Trace communications – if you've been instructed to self-isolate in line with NHS guidelines and are unable to work from home (if you've been abroad and have to self-isolate, this does not count).
- A letter or email from the NHS asking you to shield.
- Test results if you've been diagnosed with coronavirus.
- Letters or emails from your child's school.
When looking at what your total income actually is, HMRC takes into account the following:
- Income from earnings
- Trading profits
- Property income
- Savings income (this includes interest from PPI payouts)
- Pension income
- Miscellaneous income
Possibly. Being a landlord doesn't preclude you from being a part of the scheme – if you can meet the other criteria. Income from property does count towards your 'total income', but it doesn't count towards trading profits and the scheme looks at trading profits.
Private landlords are also now eligible for a three-month buy-to-let mortgage payment holiday if their tenants are experiencing financial difficulties.
Yes, provided you fulfil the other eligibility criteria. The Government has said that any reservists who currently cannot access the scheme as a direct result of their service in 2018/19 will be able to make a claim for both grants.
All of the following must apply:
- You carried out specified reservist activities for at least 90 days in the period for which your trading profits or total income for the 2018/19 tax year are determined.
- These reservist activities affected your trading profits or total income for that year.
- You were self-employed in the 2017/18 tax year and have submitted your self-assessment tax return for that year.
Specified reservist activities are:
- Full-time service commitment
- Additional duties commitment
The Government website says that you will be contacted with more information if it thinks you may be eligible.
If you think you were underpaid
If you believe you have not received enough money, there is now an official review process. But first HMRC says you should double-check your calculations using the information on its website, then contact your tax agent adviser if you have one. Then if you still think it's incorrect, you can ask for a review of your claim. HMRC has confirmed there is no specific deadline for people to do this, but it encourages people to do so as soon as possible.
To do this, you will need to login into your Government Gateway account and have the following information:
- Your grant claim reference
- Your national insurance number
- The unique taxpayer reference you used on your claim
- Details about why you think the grant amount is too low
If you think you were overpaid
If you think you got grants one and two but were not eligible, or received more than HMRC said you were entitled to, you MUST tell HMRC. You can do this by logging into your Government Gateway account.
HMRC is not trying to catch people out who genuinely needed to claim – it has assured us that the rule applies in the following cases:
- You were not adversely affected.
- You had ceased trading or did not intend to continue trading at the time of the claim.
- You mistakenly gave HMRC incorrect information that affected its SEISS calculation or eligibility.
- You knowingly provided false or wrong information to inflate a SEISS claim or make yourself eligible.
The deadlines depend on the date you received your grant. If you received the grant:
- Before 22 July 2020, you must have told HMRC on or before 20 October 2020 (this deadline has now passed).
- On or after 22 July 2020, you must tell HMRC within 90 days of receiving the grant.
You can also tell HMRC if you want to voluntarily pay back some or all of the grant you received. You can do this at any time.
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 last May, the 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.
There's also a 'Pay As You Grow' scheme available, which gives those who've borrowed bounce back loans more flexibility in how they repay. 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 March 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.
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, 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.
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.
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 May 2020, 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 March 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.
Self-assessment tax payment help
Eligible taxpayers 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 been extended as a result of the pandemic and is the same as always.
The Government gave people an extra six months to make their 31 July 2020 payment "on account" due to the pandemic. If this is you, you'll now have to pay this, along with your January 2021's 'on account' payment by 31 January. The only exception is for those who've separately agreed a 12-month repayment plan (see below).
If you're struggling, here's the help you can get:
- You can spread your tax repayments over 12 months. If you 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. If you use this system, you'll pay simple interest (meaning it doesn't compound) of 2.6% a year from 1 February 2021 until your bill has been repaid in full.
How to apply:
- To use this service you need to have filed your 2019/20 tax return by 31 January 2021.
- You need to have set-up the repayment plan no later than 60 days after the due date of a debt.
- 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).
- 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. We will update this guide as soon as the scheme is up and running.
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.
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