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30 Sep 2021

Today is the last day to claim the final SEISS grant

Find out how the UK's self-employed income support scheme works

Today (30 September) is the last chance for eligible self-employed workers to apply to claim the fifth and final self-employed income support scheme (SEISS) grant.

The government scheme, which was launched back in March 2020, has been winding down for the past few months, but will finally come to an end today.

It has allowed self-employed workers whose turnover has been affected by the Covid-19 pandemic to claim government grants worth up to 80% of their income.

Here, Which? explains the support for self-employed workers and what it could mean for your finances, as well as how to avoid a scam. You can jump to different sections using the links below:

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What help is available for self-employed workers?

The fifth SEISS grant is the last one the government plans to offer and it is available to claim until 30 September 2021.

HMRC says that it will get in touch with potentially eligible self-employed workers about the grant, allocating each person their own claim date. Once you have this date, you can make a claim any time from then until 30 September 2021.

The tax authority says anyone who tries to make a claim before their claim date will simply find the service isn't available to them yet.

What you'll get with this grant will depend on your fall in turnover. If it's been reduced by 30% or more, you'll get a grant of up to 80% as usual.

For those whose turnover has been reduced by less than 30%, the fifth grant will be worth 30% of lost earnings up to a maximum of £2,850.

The fourth SEISS grant covered up to 80% of average monthly profits in February, March and April up to a maximum of £7,500, but applications for this are now closed.

The Coronavirus Job Retention Scheme, covering 80% of a furloughed employee's salary up to £2,500, will also come to an end today.

Listen: our experts discuss how to become more financially resilient on the Which? Money Podcast.

How much will self-employed workers get?

For grants four and five

Your eligibility and grant amount is primarily based on your 2019-20 tax return, checking to see whether your trading profits exceed £50,000 and if they equal or exceed your non-trading income.

If you're not eligible based on your 2019-20 tax return, HMRC will then look at your tax returns for tax years 2016-17, 2017-18 and 2018-19.

Tax returns for all four tax years will be taken into account to determine your average three-month income; if you have a gap in the years you've traded, only the most recent tax returns will be used in the calculation.

Your average annual profit will be divided by 12, then multiplied by three to find your three-month average income. Your grant will be up to 80% of this figure.

However, there is added complexity with the fifth grant. While the specific amount you'll receive is based on your trading profits, the question of whether you'll get up to 30% or up to 80% of this is based on your turnover.

A turnover calculation includes the takings, fees, sales or money earned or received by your business.

You'll need to submit two turnover figures. One must be from a 12-month period, starting on any day between 1 April 2020 and 6 April 2020. You shouldn't include any previous SEISS grants, Eat Out To Help Out payments, or grants from your local authority or devolved administrations. The other should be from 2019 to 2020 or 2018 to 2019.

The two figures will be compared to work out how much of the grant you'll receive.

See the government's website for more information on how to work out your turnover.

If you only began trading during 2019-20, you won't need to submit any turnover figures, and you'll automatically get up to 80% of your trading profits.

For grants one, two and three

Eligible recipients got a taxable grant based on average profits from the past three tax years.

To calculate the average, HMRC added up the total trading profit for the three tax years, divided this amount by three and used this to calculate the monthly amount.

So, say your profit stood at:

  • £25,000 for 2016-17
  • £21,000 for 2017-18
  • £22,000 for 2018-19.

HMRC would have based your grant on the average of these three years: a total of £68,000 divided by three, giving £22,666.

Those who didn't have three years' worth of tax returns had averages taken from whatever tax return filing history was available.

Grants covering March to May 2020

The grant you'd receive would have been 80% of this average profit, which is £18,133 - equal to £1,511 a month.

The grant was worth up to £2,500 a month for three months, paid directly into your bank account in one instalment.

The upper limit of £2,500 a month applied to people with self-employed profits of £37,500 to £49,999.

Grants covering June to August 2020

The grant you would have received would have been 70%, which in our example is £15,866 - equal to £1,322 a month.

Annual profits were taken after expenses and capital allowances, but before pension contributions and charitable donations. Therefore, workers who have made significant investments into their businesses were likely to lose out.

Grants covering November to January 2021

The grant you would have received was up to 80% of your average profit, which in our example is £18,133 - equal to £1,511 a month.

Grants covering February to April 2021

You can claim up to 80% of your average profit, which in our example is £18,133 - equal to £1,511 per month.

Grants covering May 2021 onwards

If your turnover has been reduced by 30% or more, you can claim up to 80% of your average profit, which in our example is £18,133 - equal to £1,511 a month.

For those whose turnover has been reduced by less than 30%, you can claim up to 30% of your average profit, which is £6,800 in our example - equal to £567 a month.

Who is eligible for the SEISS?

According to data from the Office for National Statistics (ONS), there are currently five million self-employed workers in the UK, many of whom would have been among the first to feel the effects of restrictions caused by the coronavirus outbreak.

For the fourth and fifth grants:

To apply, you must be a self-employed individual or a member of a partnership and:

  • Traded in 2019-20 and intend to continue trading in 2020-21
  • Have trading profits of less than £50,000 a year
  • Earn the majority of your income (ie 50% or more) through self-employment
  • Have filed a tax return for the 2019-20 tax year by midnight on 2 March 2021
  • Intend to keep trading during 2021-22
    Reasonably believe there will be a significant reduction in your trading profits due to the impact of Covid-19 between 1 May 2021 and 30 September 2021.

For the first three grants:

To apply, you must be a self-employed individual or a member of a partnership and:

  • Traded in the tax year 2019-20 and intend to continue trading in 2020-21
  • Have trading profits of less than £50,000 a year
  • Earn the majority of your income (ie 50% or more) through self-employment
  • Have filed a tax return for the 2018-19 tax year. Anyone who missed the 31 January 2020 deadline was given four weeks from 26 March 2020 to file their 2018-19 return and benefit from the scheme.

You can see further details on gov.uk.

When will the help be available?

The scheme is being run through HMRC. The first round of the scheme opened to applications on 13 May 2020.

The second round of applications opened on 17 August 2020.

Applications for the third grant opened on 30 November 2020.

The fourth grant applications opened on 21 April 2021, and closed on 1 June 2021.

Applications for the fifth grant opened in late July. All applications must be made by 30 September 2021, when the SEISS scheme is due to close.

What happens if I was overpaid for my last grant?

If you've received an SEISS grant that you weren't entitled to, or you were overpaid, you should notify HMRC within 90 days of receiving the money and pay it back. Failing to do so may result in being charged a penalty.

If you notify HMRC about the overpaid grant but don't make a voluntary repayment, the tax authority may recover the full value of the grant by making a tax assessment for the amount that you weren't entitled to and haven't repaid. The extra tax payment will be due 30 days after the assessment has been made.

If the assessment hasn't been made by the time you file your 2020-21 tax return, you should include details of the overpaid grant as part of your self-assessment return.

HMRC will charge penalties to those who knew they were not entitled to the grant, based on how much they weren't entitled to receive and the amount left outstanding 30 days after the assessment.

If you didn't know you were overpaid or ineligible, you'll only receive a penalty if you haven't repaid what you owe by 31 January 2022.

Will I have to pay the money back?

The money available through the new self-employed income support scheme won't have to be paid back, but you will need to declare the money you've received as part of your self-assessment tax return as it is taxable.

Can I continue working or get another job?

As long as you intend to continue trading in the self-employed business you're claiming for, you can claim the money and continue to work in whatever capacity is possible.

This can be continuing your usual job or getting another job.

Can I claim from this scheme and be furloughed?

If you already have more than one job, and are both employed and self-employed, as long as the income from your self-employment makes up at least 50% of your earnings, you could feasibly take the self-employment grant and be furloughed from your employment.

What is the recovery loan scheme?

First announced in the Budget on 3 March, the government-backed recovery loan scheme can be paid out to any businesses still trading in the UK that have had trading affected by Covid-19.

Payouts can be up to £10m, with the government backing the loans up to 80%.

The loans are aiming to help businesses get back on track as lockdown measures continue to ease, but businesses can decide for themselves on how to spend the money.

Under the scheme, businesses can get term loans and asset finance for between three months and six years, and overdrafts and invoice finance for between three months and three years.

Fees and charges apply, including interest of up to 14.99%.

Accredited lenders are listed on the British Business Bank website, but it says business owners should approach their own finance provider initially to see if they are offering the scheme.

The scheme is due to run until 31 December 2021, subject to review.

Find out more about the recovery loan scheme from the British Business Bank.

How is Universal Credit changing for self-employed workers?

The minimum income floor (MIF) was reinstated on 1 August 2021 for self-employed workers whose business has been running for more than 12 months. Those who are affected by this should have been given a month's notice ahead of any changes to their Universal Credit payments.

This is an assumed level of earnings - that is, HMRC calculates your earnings based on what it would expect an employed worker to earn under similar circumstances.

It's worked out by multiplying the national minimum wage for your age group by the number of hours you're expected to work, and includes a deduction for National Insurance contributions and income tax.

If your earnings are less than the MIF calculation, it will still be used to calculate your Universal Credit payments. While the MIF was suspended, self-employed workers' actual earnings were used to calculate these payments, so some people may see a reduction.

For those whose businesses are still being adversely affected by the pandemic, their Universal Credit work coaches will be able to suspend the MIF for a further two months. They can do this up to three times, giving a further suspension of up to six months. Eligibility for this will be assessed on a case-by-case basis.

The reinstatement of the MIF will have an effect on Universal Credit payments from September 2021 onwards.

If you're newly self-employed, the MIF won't be applied to your earnings for the first 12 months, but you'll be expected to take steps to build your business and increase your earnings.

How to avoid an HMRC scam

Unfortunately, the coronavirus crisis has caused a huge increase in scams; on 20 March 2020, the City of London Police reported a 400% increase in scams as a result of coronavirus-related fraud.

HMRC scams have been around for some time, so it's likely that fraudsters may also try to use the self-employed income support scheme to their advantage.

If you qualify for the scheme, HMRC will contact you to let you know. It will send you a link to an online form, where you'll be asked to enter your bank details. You'll then receive a payment from HMRC directly into the bank account you've given details for.

If you're contacted and asked to do anything different to this, don't do it. Check whether or not it's actually HMRC contacting you; you can call its helpline or use its webchat services.

Also be wary of phone calls claiming to be from HMRC and carefully check the details of email correspondence you receive.

Other help available for self-employed workers

In the Budget on 3 March 2021, Chancellor Rishi Sunak announced that the government would provide an additional £5bn funding for businesses to support those that have had to close during the latest lockdowns.

The new Restart Grant gave non-essential retail businesses up to £6,000, and up to £18,000 to businesses in the hospitality and leisure sectors, including personal care. This is now closed to new applications.

On 5 January 2021, Mr Sunak announced £4.6bn government support in new grants to support businesses during the national lockdown. This includes one-off grants of up to £9,000 for retail, hospitality and leisure businesses, plus a £594m discretionary fund for other affected businesses.

You can find out more about government business support on gov.uk.

Self-employed and gig economy workers can apply for Universal Credit or new-style Employment and Support Allowance (ESA) to compensate for the fact that they're not entitled to statutory sick pay.

This is only suitable for those who are under state pension age; older workers should apply for pension credit instead.

If you are in financial hardship, you may be able to get an advance on your first Universal Credit payment, as the benefit usually takes around five weeks to set up.

The £1,000 increase to the Universal Credit standard allowance and working tax credit basic element will both be removed from 1 October 2021. This had initially been set to end on 31 March 2021.

Working tax credit recipients had received a one-off payment of £500 to reflect this.

The effect of savings on Universal Credit

As Universal Credit is means-tested, it not only takes your income into account, but also any savings you have to your name.

Universal Credit payments will be incrementally reduced for every £1 of savings of more than £6,000, and anyone with more than £16,000 saved won't be eligible to claim. If you're part of a couple, your partner's savings will also be taken into account, even if you're making a claim as an individual.

Renters will also benefit from increases to housing benefit and the housing element of Universal Credit, so that the Local Housing Allowance will cover at least 30% of the market rents in each area.

Scotland's newly self-employed hardship fund

In a bid to help those who don't qualify for the UK government's self-employed income support scheme, the Scottish government launched an alternative scheme, called the 'newly self-employed hardship fund', which paid grants of up to £2,000 for those who had only been self-employed for a short time.

This scheme has now closed.

Which? advice on coronavirus

Experts from across Which? have been compiling the advice you need to stay safe and make sure you're not left out of pocket. Read the latest coronavirus news and advice from Which?

This story was originally published on 25 March 2020 when the Self-employed Income Support Scheme (SEISS) was announced by the Chancellor. It has since been updated multiple times since then to reflect the changing details of the scheme. The last update was on 30 September 2021, the final day eligible people could apply for the final SEISS grant.