Self-employed income scheme expanded to include new parents

Eligibility for the Self-Employed Income Support Scheme (SEISS) has been expanded to include new parents in the tax year 2018/19.

SEISS is a taxable grant for the self-employed based on 80% of their average monthly profits over the last three tax years, (reducing to 70% of the average monthly profits for the second tranche of grant payable in August).

Self-employed parents whose trading profits fell in the tax year 2018/19 due to them taking time out to childcare will be able to claim for a grant under the SEISS.

The first grant was payable in May 2020, covering the months March to May 2020, and the second grant is payable in August 2020, covering the months of June - August 2020.

HMRC calculates the grant and then invites those eligible to claim the amount.

The scheme requires those eligible to have traded in the tax year 2018/19, with their profits making up at least half of their total income.

They must also have submitted a self-assessment tax return for the 2018/19 tax year by 23 April 2020.

However, new parents who saw their income drop in 2018/19 due to the birth or adoption of a child that they took time away from their business to care for could be unfairly penalised under SEISS, as their income - upon which the grant is based - will have been consequently lower in that year than would otherwise have been the case had they not been caring for a child. 

The government wants to ensure that such parents who took time away from trading to provide that childcare within the first 12 months of the child's birth, or within 12 months of an adoption placement, will be eligible to use either their 2017-18, or both their 2016-17 and 2017-18 self-assessment returns instead as the basis for their eligibility for the SEISS.

This could then give them a higher figure on which the grant is based.

Other eligibility criteria for SEISS remain the same as for other claimants.

Further details of the change for self-employed parents will be set out by the start of July in published guidance.

If you feel this change may affect your eligibility for a grant under the scheme, you may wish to speak to your usual Bishop Fleming advisor.

For more information about SEISS generally, see our detailed article.