Today’s budget has now clarified the extent of the fourth instalment of the Self Employment Income Support Scheme (SEISS) and included an announcement that the scheme will be extended beyond May with a fifth and final instalment.
The fourth SEISS grant will be worth 80% of three months’ average trading profits, paid out in a single instalment and capped at £7,500 in total. This covers February to April. On a positive note, it’s claimed there will now be over 600,000 newly eligible individuals for the fourth and fifth grants - including those who were newly self-employed in 2019-20 - as it will now include those who have filed a 2019-20 Self-Assessment tax return, provided they filed a tax return by midnight last night.
On a less positive note, people will still have to wait until the end of April to get the fourth grant and that will be frustrating news for those who need that money now, especially as previous grants have managed to be delivered quicker. There have been calls for assurances on this matter, and some might suggest it was kept back until budget day only so it could hit the headlines at the same time as all other support measures. All other eligibility criteria will remain the same as the third grant and so this also still means the self-employed earning more than £50,000 will continue to be excluded, even if their income has fallen off a cliff since last March.
The fifth and final SEISS grant covering May to September will be determined by a turnover test, so as to “…ensure that support is targeted at those who need it the most as the economy reopens”. Those whose turnover has fallen by 30% or more will continue to receive the full grant worth 80% of three months’ average trading profits, capped at £7,500. Where turnover has fallen by less than 30% they will receive a 30% grant, capped at £2,850. The final grant can be claimed from late July.
What’s noticeable is that the grant extension is claimed to cover the self-employed to September, but that is a five month period starting in May and the grant only provides for 3 months’ average profits. This approach also didn’t go unnoticed by the self-employed last year when September and October were essentially missed. Those who pay themselves a salary and dividends through their own company will continue not to be covered by the scheme and will only be covered for their company salary by the Coronavirus Job Retention Scheme if they are operating PAYE schemes. This is another unfortunate gap that continues.
Whilst these announcements may be broadly welcomed, not least as more people are now captured, there will still be some frustration that too many still fall through the gaps.