SEISS, aka the Self-Employment Income Support Scheme, was extended last week to provide ongoing support, although those working for themselves have been warned of the tax implications of the scheme.
SEISS was implemented earlier in the year as the impact of the coronavirus, especially of the lockdown, began to be felt by the self-employed. Initially offering support through two grants, the Government has now decided to provide two further grants via an extension of the scheme. The Treasury, together with Chancellor Rishi Sunak, expanded the programme last week.
The support will cover 80pc of average trading profits for a three-month period, up to a maximum of £7,500, where possible. But awareness of the potential tax burden the self-employed may have to bear is important for those thinking of claiming SEISS in the coming months.
It is worth remembering this to avoid a nasty surprise in the future, as the Government has said the grants made available will be regarded as taxable income. In addition, they will also be subject to National Insurance contributions.
Not all self-employed eligible for SEISS
Simon Warne, partner at leading accountancy firm Crowe UK, has commented on the SEISS extension, saying that although it will no doubt prove to be a lifeline for many who cannot trade due to Covid-19 restrictions, applicants should bear in mind that the grants are taxable.
Other elements of assistance, he added, include the recently extended Bounce Back Loan Scheme (BBLS), tax deferrals for Income Tax and Value Added Tax (VAT), as well as targeted business support grants and rates relief.
Mr Warne mentioned that many banks have also recently announced extended mortgage holidays, which may help with cash flow, but will come at the price of increased interest to pay in the months ahead.
The third SEISS grant, covering the period from the beginning of November 2020 to the end of January 2021, will provide essential support to many, particularly during the second lockdown. The self-employed can expect this to be paid in a single instalment.
Mr Warne pointed out that the chancellor may come under pressure to consider those who have so far been excluded from the programme, while lockdown measures continue. These groups include those who are newly self-employed, as claimants must have filed a tax return for the year 2018-19 to be eligible for SEISS.
Other exclusions include those who have other income of more than 50pc of their total income, as well as those having average annual trading profits of more than £50,000.
Fears of double-dip recession
Mr Warne finds it odd that the last of these groups should be excluded from assistance, especially as there is no equivalent support scheme apart from the furlough programme. Whereas employees are not excluded but do receive a capped amount.
Another group that receives no help concerns workers who operate as freelancers for personal service companies, a position that is unlikely to alter any time soon.
He concluded that the present second lockdown is likely to result in more redundancies as companies decide to cut costs, with landlords increasingly sharing some of the woe, as we head towards what many now predict will be a double-dip recession.
Sunak gives assurance
When announcing the extension of the furlough scheme and further support for the self-employed last week, Mr Sunak repeated that he would do whatever it takes to protect jobs and livelihoods across the UK, an objective which has involved adapting the help given as the trajectory of the coronavirus altered.
It is clear, he said, that for businesses the economic effects (of the pandemic) are much longer lasting than the duration of any restrictions, which is why the Government has decided to further extend its support.
Expanding SEISS for the self-employed and prolonging furlough will help protect millions of jobs and give people and businesses the assurance they will need during what may well be a difficult winter.