Can the Self-Employed Income Support Scheme work for me?

Freelancer’s Question: My bookkeeper is working out if I might qualify for the Self-Employment Income Support Scheme, but my fear is that I’m just over the profits threshold.

Freelancers' Questions: Can the Self-Employed Income Support Scheme work for me?

Also though, I need to keep working to stay sane during this still challenging time due to covid-19 so, assuming I am eligible for the SEISS, can I keep trading? I’ve read that this ability to still work is one perk of the SEISS over the Coronavirus Job Retention Scheme, which I don’t qualify for.

Lastly, my bookkeeper did say on an email to me that any SEISS grant I get might hurt me on the Universal Credit front, but she didn’t explain why or how. And now she’s on holiday for a few days! Can you please help, as I’m concerned?

Expert’s Answer: The Self-Employment Income Support Scheme (SEISS) and the Coronavirus Job Retention Scheme (CJRS) have different qualifying criteria.

So while the CJRS stipulates that you cannot work and claim, the SEISS allows you to work and claim at the same time. The SEISS has two qualifying stages :-

Stage 1

You can claim if you are a self-employed individual or a member of a partnership and all of the below apply :-

  1. You traded in the tax year 2018-2019 and submitted your Self-Assessment Tax return on or before April 23rd 2020 for that year
  2. You traded in the tax year 2019 to 2020
  3. You intend to continue to trade in the tax year 2020 to 2021
  4. You carry on a trade which has been adversely affected by coronavirus (N.B. this ‘adversely affected’ condition includes you self-isolating, having caring responsibilities due to coronavirus; you having fewer clients or no clients, or that you have had to scale down because your supply chain has been interrupted due to the pandemic).

Stage 2

Each of the below must be met :-

  1. 50% or more of your income must have come from self-employment (from your 2018 to 2019 return)
  2. Your trading profits must be no more than £50,000 on your 2018 to 2019 return

Condition two, above, you have some concern in relation to. Well, HMRC have said that if an individual fails on the £50,000 threshold, they will re-assess your eligibility using an average of the last three tax years (2016 to 2017, 2017 to 2018 and 2018 to 2019).

As long as you can show that your income was adversely affected (as outlined above), and that you meet the two-stage test, then you are able to claim for the SEISS.

Universal Credit

Towards the end of your question, you mention Universal Credit. Unfortunately, ‘UC’ will treat your SEISS as earnings and therefore claiming SEISS will affect your Universal Credit payment. This is probably what your bookkeeper is referring to. To reassure you, I don’t believe that it is the government’s intention to specifically hurt the self-employed who are claiming, but the SEISS does help significantly for many small businesses who are able to receive the grant and at the same time reduce their spending on other areas, such as fuel.

The SEISS does enable businesses to continue working – albeit at a reduced amount -- while the scheme is in operation throughout its current/ first leg, and its second leg -- commencing from July 14th 2020. So there are many one-person businesses which are going to be able to have the same income after the SEISS as before the coronavirus outbreak hit. 

Final thought

While the government’s plans undoubtedly have holes and there are people who unfortunately are not able to claim reliefs, and are left with only Universal Credit, the chancellor did suggest at the outset of the crisis that he did not want the perfect being the enemy of the good.

The expert was Marc Seymour at Taxevo, a tax and accountancy firm specialising in freelancers, contractors and the self-employed.