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Guidance on the COVID-19 Self-Employment Income Support Scheme (SEISS)

Dr Jane MacArthur FCA DipABRSM of Amati UK Ltd provides useful guidance on the fourth and fifth Self-Employment Income Support Scheme (SEISS) grants, introduced by the government during COVID-19.

This page is intended for information only and should not be considered as a substitute for financial advice.

Page updated 4 June 2021

The Fourth Grant

According to information taken from the Government website, the fourth grant will be:

  • set at 80% of 3 months’ average trading profits
  • paid out in a single instalment, capped at £7,500
  • claimable via the online claims service from late April 2021 until 31 May 2021
    - If you are eligible, HMRC will contact you in mid-April to give you your personal claim date. This will be the date that you can make your claim from.
  • taxable in 2021-22 (SEISS 1-3 are all taxable in 2020-21)

To be eligible for the fourth grant you must:

  • be a self-employed individual or a member of a partnership
  • have traded in both tax years: 2019 to 2020 and submitted your 2019-20 tax return by 2 March 2021 and 2020 to 2021
  • have suffered a significant financial impact from coronavirus between February 2021 and April 2021

The fourth grant will take into account 2019 to 2020 tax returns and will be open to those who became self-employed in tax year 2019 to 2020. The rest of the eligibility criteria remain unchanged.

To work out your eligibility:

  • The Government will first look at your 2019 to 2020 Self Assessment tax return. Your trading profits must be no more than £50,000 and at least equal to your non-trading income.
  • If you’re not eligible based on your 2019 to 2020 Self Assessment tax return, they will then look at your average profit over the four 2016 to 2017, 2017 to 2018, 2018 to 2019 and 2019 to 2020, or the number of years you have been self-employed, if smaller.

As long as your 2019-20 tax return on its own shows less than £50,000 net self-employed profit, and self-employed profit is more than half of your total taxable income, you should be eligible.

If the 2019-20 tax return does not show this, they will instead look at those four years’ averaged, ie 2016-2020. The four year average profit figure will need to be below £50,000, and represent more than half of your of your total taxable income over those four years.

It is therefore possible, for a few people previously eligible for SEISS 1-3, that if your 2019-20 self-employed profit falls foul of the two rules, in a bad enough way to also make your four year average fail the two tests, that you may not be eligible for SEISS 4 and 5.

To work out the value of your grant

The Government guidance says: 'Your eligibility for the scheme will now be based on your submitted 2019 to 2020 tax return. This may also affect the amount of the fourth grant which could be higher or lower than previous grants you may have received.'

The ‘average trading profits’ will now be calculated using four year’s profits where available, 2016-2020, which will mean the amounts paid out will be different to those received by those eligible previously.

Similarly to the third SEISS grant, you will need to reasonably believe there will be significant reduction in your trading profits for February, March, and April 2021.

You must either:

  • be currently trading but are impacted by reduced demand due to coronavirus
  • have been trading but are temporarily unable to do so due to coronavirus
  • You must also declare that:

    • you intend to continue to trade
    • you reasonably believe there will be a significant reduction in your trading profits due to reduced business activity, capacity, demand or inability to trade due to coronavirus

    The Fifth Grant

    There will also be fifth and final grant covering May to September, though this will be a value of a three months’ average trading profits (despite the fact that May to September is five months).

    According to the Government website:

    The online claims service for the fifth grant will be available from late July 2021. If you’re eligible based on your tax returns, HMRC will contact you in mid-July 2021 to give you a date that you can make your claim from.

    The amount of the fifth grant will be determined by how much your turnover has been reduced in the year April 2020 to April 2021.

    The fifth grant will be worth:

    • 80% of three months’ average trading profits, capped at £7,500, for those with a turnover reduction of 30% or more.

    • 30% of three months’ average trading profits, capped at £2,850, for those with a turnover reduction of less than 30%

    Information from the Budget can be read below.

    ISM members get access to a tax and legal helpline to help you with any questions that arise from your work. You can also contact our in-house lawyers for help with contracts and advice on your rights at work.