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Second SEISS grant

The self-employed scheme will open for applications in August, but with the grant reduced to 70% of their average monthly trading profits. As with the SEISS scheme, the money will be paid in a single instalment covering three months’ average monthly profits up to £6,570, down from the £7,500 cap of the first grant

As with the first version, individuals will have to confirm that they have been adversely affected by Covid-19. However, a self-employed worker does not have to have claimed the first SEISS grant in order to be eligible for this final handout

Taxpayers will need to apply for a further three months of SEISS grant, to be paid at a reduced level. Applications for the first SEISS grant will also close on 13 July 2020

HMRC will extend the self-employed income support scheme (SEISS) for a further three months, but warned that this will be the final tranche of SEISS grants to be made available

HMRC confirms that those who are self-employed and able to return to work as normal in June will not be eligible for a second grant, although they can claim a grant for the first period

Up until 13 July, SEISS allows self-employed individuals (including those trading as a partnership) to claim a taxable grant worth 80% of average monthly trading profits, paid out in a single instalment covering three months’ worth of profits and capped at £7,500.

A second and final grant can be claimed in August 2020. It is worth 70% of average monthly trading profits and will also be paid out in a single instalment covering three months’ profits and is capped at £6,570. While eligibility for the second grant is the same as the first grant, it is a separate claim and those claiming will have to confirm their business has been adversely affected by COVID-19 on or after 14 July 2020

HMRC’s guidance gives the following examples of when a business might be adversely affected:

  • The business owner is unable to work because they are shielding, are self-isolating, are on sick leave because of coronavirus, or have caring responsibilities because of coronavirus
  • The business has had to scale down or temporarily stop trading because the supply chain has been interrupted, there are fewer or no customers or clients, or staff are unable to come in to work

To summarise: if the business is adversely affected in the period up to 13 July 2020 they can claim the first grant, if they are adversely affected in in the period from 14 July 2020 they can claim the second grant

The SEISS grant is taxable income. The coronavirus grants will be taxed entirely in the year of receipt (2020/21), and no part will be apportioned to 2019/20. The SEISS grants will have to be reported on the taxpayer’s 2020/21 self-assessment tax return

For construction industry subcontractors, who are used to receiving their income with CIS-tax deducted at 20% or 30%, the SEISS grant will be a cashflow fillip as no tax is deducted at source. This means those CIS subbies may well have tax to pay for 2020/21 rather than be due a tax refund

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