Self Employment Income Support Scheme FAQs

In the Budget on 3 March 2021 the Government announced an update to the Income Support Scheme for the Self-Employed for fourth and fifth grants.  

Applications for the fourth grant opened on 21 April 2021.

Details on how to check your eligibility and make a claim can be found here  

As with all the financial support being provided for both businesses and individuals, we have received numerous queries on how these schemes work. 

We have updated our list of the most commonly asked questions in light of the latest guidance which we hope you will find useful. 

Please read the guidance at the above link as well as our FAQs below. 

FAQs:

Who is this scheme for?

This scheme is available for any self-employed individual or member of a partnership who meet certain criteria. 

You do not need to have claimed a previous grant to receive the fourth or fifth grants, as you may only have been adversely affected in later periods, but you must have submitted your 2019/20 self-assessment tax return by 2 March 2021 to be eligible. 

This therefore opens the scheme to those who became self-employed from 6 April 2019, which was not the case for earlier grants. 

How much will I receive?

The scheme now runs for two additional periods:  

Fourth Grant: Covering the period February 2021 to April 2021, the fourth grant will be 80% of three months average trading profits, over the four years 2016/17 – 2019/20 where available. 

The maximum payment will be a total of £7,500 and the claim will be paid directly to your bank account in one instalment. 

Fifth Grant: Covering the period May 2021 to September 2021, the fifth grant will be 80% of three months average trading profits over the four years 2016/17 – 2019/20 where available. 

The maximum payment will be £7,500, for those whose turnover has reduced by 30% or more. 

For those with a turnover reduction of less than 30%, the grant will be based on 30% of three months average trading profits, calculated as above, and capped at £2,850. 

When can I apply?

HMRC have been contacting eligible taxpayers from mid-April to advise them of the date from which they can claim, with applications for the fourth grant open from late April to the end of May 2021.  

NOTE THAT HMRC have also been issuing pre-verification check letters to up to 100,000 taxpayers who started self-employment in 2019/20 to prove commencement of trade, and should you receive this letter it is important that you complete the checks immediately or you may not be able to claim a grant. 

Claims for the fifth grant are expected to be made from late July 2021.  

What criteria do I have to meet?

The criteria are the same as for the previous grants and therefore to be eligible for the grant you: 

  • must have submitted your Self-Assessment income tax return for the tax year 2019/20 
  • must have traded in the tax years 2019/20 and 2020/21
  • must be trading when you apply, or would be except for COVID-19 
  • intend to continue to trade in the tax year 2021/22 
  • must have lost trading/partnership profits due to COVID-19 

Is there a maximum income level?

  • your self-employed trading profits must be no more than £50,000, AND 
  • more than 50% of your taxable income must come from your self-employment 

My income fluctuates from year to year – how will this be assessed?

Your trading profits must average less than £50,000 per year by meeting one of the following tests: 

  • having trading/partnership trading profits in 2019/20 of less than £50,000 and constituting more than 50% of your total taxable income, OR 
  • having average trading profits in the four years 2016/17 – 2019/20 of less than £50,000 (i.e. divide total trading profit for four years by four) with these profits constituting more than 50% of your average taxable income in the same period. 

I started trading after 2016-17 – am I still eligible?

Yes. Provided that you meet the above average criteria. HMRC will use the average of the years for which you have submitted a Self-Assessment tax return – but this must include 2019/20. 

I have not submitted my 2019-20 tax return yet – will I still be eligible?

You must have submitted your tax return by 2 March 2021.  

Please call or email your usual contact at Rayner Essex to discuss any specific issues you have with this or any of the Coronavirus financial support measures that have been announced so far.

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