MSE News

Self-employed income support overpaid to thousands

Up to 16,000 self-employed people who received Government grants to support their income during the coronavirus crisis have been paid too much after their payments were miscalculated. If you've been overpaid, the good news is you WON'T have to pay anything back – but you may now receive less than expected if you apply for the second income support grant.

The Self-Employment Income Support Scheme (SEISS) provides a Government grant for self-employed individuals whose incomes have been adversely affected by the coronavirus pandemic. It's open to those whose average trading profit is less than £50,000/year, filed a 2018/19 tax return and meet other eligibility criteria. Some 2.7 million payments have now been made to those who applied to the first grant, which is now closed, while applications for the second and final grant open next Monday (17 August).

How much the grants are worth is based on your profits over three tax years – but HM Revenue & Customs (HMRC), which runs the scheme, now says that in some cases it didn't take all the information from self-employed claimants' tax returns into account, meaning their grants weren't calculated correctly. In one case, a claimant who was actually due just £67 was told she was overpaid by £1,161 – meaning she would have got £1,228 in the first grant.

HMRC says around 0.6% of the grants paid out through SEISS include an overpayment. As about 2.7 million grants have been issued so far, that suggests just over 16,000 claimants have been overpaid – though HMRC hasn't confirmed a precise figure.

Those who've been overpaid are now receiving letters from HMRC about the error – let us know if you've been affected at

For full help on the support available for self-employed people, including how to apply for the second SEISS grant, see our Coronavirus Self-Employed & Small Limited Company Help guide.

What should I do if I've been overpaid?

Crucially, HMRC says that anyone who's been overpaid WON'T be expected to pay anything back, as it doesn't want to cause "unnecessary hardship" to those it's trying to support. So there's no action you need to take at this point.

But if you have received a letter telling you your first grant was larger than it should have been, it's important to understand when you apply for the second grant that the calculation will be adjusted to ensure you receive the correct amount – so you may end up receiving less than you were expecting. HMRC says that no deductions for overpayment will be made from the second grant though – you'll simply receive what you should.

It's also worth noting that both SEISS grants are taxable, so you will need to pay tax on the overpaid amount when you file your self-assessment tax return for 2020/21 (though this would always have been the case).

What does the Government say?

A HMRC spokesperson said: "The Self-Employment Income Support Scheme has been delivered at unprecedented pace and has protected the livelihoods of 2.7 million self-employed people in the UK.

"We have robust processes in place to prevent grants being paid incorrectly, but a small number of people were paid grants in error and some received an incorrect amount. The vast majority of grants were paid correctly, but in a very small number of cases not all the information held on a tax return was taken into account when calculating eligibility and grants.

"Our top priority has been ensuring self-employed people receive grants quickly while protecting public money from deliberate fraudsters. On this occasion we will not reclaim these payments to avoid unnecessary hardship for taxpayers who may have already used the money."

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