New SEISS rules are "stricter and more complex"


Date: 1 December 2020

The third SEISS grant for self-employed workers affected by the pandemic is now open for applications; but freelancer body IPSE is warning that new rules may create a "climate of fear".

The third Self-Employment Income Support Scheme (SEISS) grant opened for applications on Monday 30 November. It is available for the three-month period covering November 2020 to January 2021 and is worth 80% of past trading profits, up to a cap of £7,500. There will be a further SEISS grant to cover February to April 2021.

However, the Association of Independent Professionals and the Self-Employed (IPSE) has warned that the new rules mean that many business owners are unsure whether they are entitled to claim and some even fear having to pay money back at a later date.

It says that where applicants formerly had to prove their business had been "adversely affected" by the pandemic, their business now has to have been affected by "reduced demand" or be "unable to trade" in the qualifying period (1 November 2020 to 31January 2021).

Freelancers that have been able to trade as usual but have spent significant sums to become COVID safe will not be able to claim. Those that have seen a fall in demand or that have had to close will need to present evidence to back up their claims.

Claimants must also "decide if the impact on your business will cause a significant reduction in your trading profits for the tax year you report them in". In other words, claimants will have to be able to confidently predict that their profits will be down at year end.

Andy Chamberlain, IPSE director of policy, said: "We have called for a more focused distribution of SEISS and understand the efforts to target the funds at those most badly affected, but we are concerned these new rules are confusing and risk creating a climate of fear around applying.

"These complex rules may deter many self-employed from claiming support they need - and leave those who do always looking over their shoulder for fear of HMRC demanding the money back."

The SEISS grant extension is open to self-employed workers who were previously eligible for the first and second grants. There are various conditions of eligibility to qualify:

  • You must have traded in the tax year 2018 to 2019 and submitted a self assessment tax return on or before 23 April 2020 for that year;
  • You must have traded in the tax year 2019 to 2020;
  • You must intend to continue to trade in the tax year 2020 to 2021;
  • Your trading profits must be no more than £50,000 and at least equal to your non-trading profits;
  • Limited company directors are not eligible.

"If this is the government's attempt to make SEISS more targeted, it is troubling that it has not taken the opportunity to divert the savings to the one in three freelancers who have still received no support from the scheme," said Andy Chamberlain.

"We urge the government to look again at the policy solutions that have been presented to it to plug the gaps in SEISS - and not to exclude even more self-employed in need with these new regulations."

Self-employed workers must make their claim on or before 29 January 2021. Claims will be checked and grants paid into bank accounts within six working days.

Written by Rachel Miller.

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