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New rules for self-employment grant create ‘climate of fear’

Stricter rules around the third SEISS grant are ‘troubling’ warns trade association

Applications for the third Self-employment Income Support Scheme (SEISS) grant opened on Monday (30 November), however, the new eligibility rules have been criticised for being stricter and more complex than before. 

Earlier on in the month, Chancellor Rishi Sunak was forced to change the third SEISS grant to cover 80 per cent of trading profits up to £2,500 per month, due to the continued economic impact of the Coronavirus pandemic.

The self-employment grant, which is taxable, will cover the period from 1st November to 29th January and is open to anyone who is self-employed, whether working as a sole trader or in a partnership. Freelancers and contractors who work through their own limited company are, once again, unable to make a claim through SEISS.

Previously, in order to be eligible for the SEISS grant, claimants had to simply prove their business had been “adversely affected” by the pandemic. But now, businesses must show they have been affected by “reduced demand” or be “unable to trade” during the qualifying period.

Must have ‘reasonable belief’ in loss of trading profits

The government guidance states: “[…] You must reasonably believe you will suffer significant reduction in trading profits due to reduced business activity, capacity or demand or inability to trade due to Coronavirus during the period November 1 to January 29, 2021.

“You must keep evidence that shows how your business has been impacted by Coronavirus resulting in less business activity than otherwise expected.”

It goes on to add that claimants “must decide if the impact on your business will cause a significant reduction in your trading profits for the tax year you report them in.”

“[…] You should wait until you have a reasonable belief that your trading profits are going to be significantly reduced, before you make your claim.”

Attempt to make self-employment support targeted is ‘troubling’

Andy Chamberlain, Director of Policy at self-employment association, IPSE, 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.

“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.

“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.”

By Contractor Weekly

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2 thoughts on “New rules for self-employment grant create ‘climate of fear’”

  1. Andrew Harrison

    I can’t see how this requirement is difficult? For many self employed it will be all too obvious, your customers aren’t phoning you (at least not with good news). For the less obvious cases put last years monthly turnover figures alongside this years.

  2. Gary Andrews

    “One in three freelancers who have still received no support …”
    Why not drop the failed IR35 policy and for most of these, clients will start calling again.
    No need for handouts, tax starts flowing back to the revenue and fair competition resumes.
    HMRCs “climate of fear” has infected clients too.

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