On 30 April 2020, the Treasury published its Direction to HMRC for the government’s Self-Employed Income Support Scheme. We consider the provisions in detail below and identify those who fall outside the Scheme.


The Office for National Statistics estimates that just over 5 million people are self-employed. This amounts to 15 per cent of the UK workforce. The government contends the Self-Employment Income Support Scheme (SEISS) will cover 95 per cent of people who get the majority of their earnings from self-employment. However, the Institute for Fiscal Services estimates that just 62 per cent of all self-employed individuals will be covered. The discrepancy is partially explained by the position of those who operate independently through a limited company structure and who the government do not classify as self–employed for the purposes of the SEISS.

Overview of Scheme

The SEISS enables a self-employed person who carries on a trade which has been adversely affected by coronavirus (COVID-19) to claim a taxable grant of 80 per cent of their average monthly trading profits. This will be paid out in a single instalment covering three months (March, April and May) and is capped at a total of £7,500. If someone receives the grant, they can continue to work (contrast with the position of an employee furloughed under the Coronavirus Job Retention Scheme (CJRS) who is unable to work), start a new trade, or take on other employment. The grant is subject to tax and National Insurance.

HMRC will contact individuals around mid-May to ascertain if they are eligible for the SEISS. If they are eligible, they will then be invited to apply for a grant online. The government has asked for people not to contact HMRC directly as this may slow the process down.

Who can claim

In order to qualify for the grant the person applying must:

  • Carry on a trade which has been adversely affected by coronavirus (COVID-19);
  • Have delivered a tax return for a relevant tax year on or before 23 April 2020;
  • Have carried on a trade in the tax years 2018-19 and 2019-20;
  • Intend to continue to trade in the tax year 2020-21; and
  • Have trading profits which must be no more than £50,000 and at least equal to their non-trading income.


One change from the original guidance is that those claiming need to have completed a tax return in one of three relevant tax years (2016-17; 2017-18 and 2018-19) rather than the previous requirement which was to have completed a Self-Assessment tax return for the tax year 2018-19 by 23 April 2020. However it is still necessary to show not only that they traded in 2018-19 and 2019-20 but also that they intend to trade in 2020-21.

There is also a requirement to show the trade of the self-employed person has been adversely affected by coronavirus (COVID-19). The guidance gives some examples of how that might be the case. For example, it can include the fact that someone is unable to work because they are shielding, self-isolating, are on sick leave or have caring responsibilities caused by coronavirus (COVID-19. It will include situations where they have had to scale down or temporarily stop trading because the supply chain has been interrupted or there are fewer or no customers or clients. Provided there is an adverse impact on trade, no matter how slight, those who are self-employed will be eligible for the grant. 

How much will you get? 

The grant equates to 80 per cent of three months’ earnings and is typically calculated by working out trading profit over the last three years, dividing this figure by 12 and then multiplying that figure by three. The figure is then capped at £7,500. The grant is paid in one instalment directly into the bank account of the individual making the claim. The online service to make a claim will be available from 13 May 2020. If a claim is approved, the money should be received within six working days.

Entitlement to a payment under this scheme is without prejudice to any claim a worker may have under the CJRS for any employed work they undertake. So an individual who is employed part time and also works as self-employed will come under both the SEISS and CJRS.

Gaps in the SEISS

The SEISS does not apply to those who operate under a company structure and take dividends. Those who are managers and directors of their own personal service company (PSC) can be furloughed under the CJRS but they will only receive reimbursement of the salary, if any, paid to themselves in their capacity as director of their PSC. This is very likely to be much less than 80 per cent of the total income to the PSC. Furthermore, it may not be practical or possible for owners / directors to furlough themselves as this would require them to stop working, although they are expressly permitted to perform their statutory duties as directors.

The Financial Times has reported it has been contacted by “tens of thousands” of freelancers working in the UK’s creative industries who say they are losing out by being excluded for the SEISS because they trade via a limited company set up. It is not only these industries where individuals trade in this way. Another example is delivery drivers who are also often asked by those to whom they provide services to structure themselves in this way.

The Scheme will not cover those who became self-employed after April 2019 as they will not have a qualifying tax-return. This decision was made as the government considered there were significant risks for the public purse if the government relied on tax returns for 2019-20 (which can now be submitted) as HMRC would not be able to distinguish genuine self-employed individuals who started trading in 2019-20 from false applications by fraudulent operators seeking to exploit the SEISS. This mirrors measures taken in relation to the CJRS in respect of those not on the PAYE Payroll at 19 March 2020 that we refer to in the article above. 

It is understandable the government wants to protect against fraudulent activity but serious questions remain about the legitimacy of a decision to exclude significant numbers of workers from assistance and whether more could have been done for them while still protecting tax payer money. 

The scheme will also not cover those who have made less than 50 per cent of their income from self-employment and those who have earned in excess of £50,000 on average over a three-year period. 

As we reported in a previous LELR [link] the chancellor has previously hinted that in light of what he considers to be a very generous package, there will be a review in the future to consider the tax advantages enjoyed by those who are self-employed. This is a warning shot to many unscrupulous employers operating in the gig economy who force workers into what they label as self-employment arrangements. 

To read the SEISS Direction in full go to: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/882593/SEISS_Direction_Final_-_SIGNED.pdf 

To read the SEISS guidance in full go to: https://www.gov.uk/guidance/claim-a-grant-through-the-coronavirus-covid-19-self-employment-income-support-scheme

To read the guidance on how HMRC works out trade profits in full go to: https://www.gov.uk/guidance/how-hmrc-works-out-total-income-and-trading-profits-for-the-self-employment-income-support-scheme

To read guidance on how different circumstances affect SEISS go to: https://www.gov.uk/guidance/how-different-circumstances-affect-the-self-employment-income-support-scheme

To check eligibility go to https://www.tax.service.gov.uk/self-employment-support/enter-unique-taxpayer-reference

Articles shared by Thompsons relating to coronavirus (COVID-19) are correct at the time of publication. You should check the government's guidelines for the latest information and advice at https://www.gov.uk/coronavirus.