Government grant schemes are often provided to foster innovation, bring jobs to a specific location, or provide financial aid to crucial sectors.
This is mainly reserved for businesses, and various regional and national grant schemes are available. However, one type of worker often overlooked is those in self-employment.
Self-employed workers are in a precarious situation since they don’t always qualify for business schemes, but they aren’t protected by the benefits associated with employment. In recent times, the only grant available to them was the Self-Employment Income Support Scheme (SEISS).
Therefore, this article will look at the SEISS grant, what grants and benefits are available to self-employed workers right now, and more.
A self-employed grant is a determined amount of money given by the government to self-employed workers in order to help with the cost of living. Currently, there are no self-employment grants offered by the government.
Throughout 2020 and 2021, the government offered the Self-Employment Income Support Scheme to self-employed workers who were affected by the coronavirus pandemic. However, since September 2021, this grant has officially closed. Before we explain what it was, let’s explore what financial aid is currently available to self-employed people.
Although there are grants available to self-employed workers, there are various benefits that they could be entitled to, such as Universal Credit, Employment and Support Allowance (ESA), and Council Tax Reduction. Let’s take a look at them in more detail.
Self-employed people can be eligible to claim:
- Universal Credit
- Employment and Support Allowance (ESA) for employers
- Council Tax Reduction
- Pension Credit
Universal Credit (UC)
Universal Credit is a monthly payment that can help with living costs for those who are on a low income. It replaces several previous ‘legacy’ benefits, such as:
- Jobseeker’s Allowance
- Child Tax Credit
- Working Tax Credit
- Housing Benefit
- Income Support
In order to claim Universal Credit, you must satisfy the following criteria:
- Your main source of income is from your self-employment job
- You receive regular work from your self-employment job
- You expect to make a profit
- Your work has the paperwork to prove this, such as invoices, receipts, accounts, etc
- You live in the United Kingdom
- You have no more than £16,000 in cash, savings, and investments
- You must be 18 years old or older
- You must be below the State Pension age.
How much Universal Credit can I get?
For self-employed people, your monthly payments will be calculated using the minimum income floor. The minimum income floor is an assumed level of earnings based on what an employed worker in similar circumstances as yours would earn on the National Minimum Wage when working up to 35 hours per week.
If you earn more than the minimum income floor, your Universal Credit payments will be based on your actual income. However, you may get less in UC payments if you earn less than the minimum income floor.
For example, suppose you are expected to work 35 hours per week, and your hourly wage is £10. Your calculations would be as follows:
- £10 x 35 = £350 per week
- £350 x 52 weeks = £18,200 per year
- £18,200 / 12 months = £1,516.67 per month
- £1,516.67 - Income Tax - National Insurance contributions = £ 1,366.54 per month
Thus, £1,366.54 would be your minimum income floor. This value is then used to determine how much Universal Credit you receive.
Can I get an exemption from the minimum income floor?
If your business is a start-up – i.e., less than 12 months old – you will qualify under the ‘start-up period’, which means you will be exempt from the minimum income floor for one year. As such, your actual monthly income will be used to determine your UC payments. However, you must simultaneously prove that you are taking the necessary steps to build your business.
Employment and Support Allowance (ESA)
Self-employed workers aren’t eligible to receive Statutory Sick Pay if they fall ill with a health condition or disability. This is because Statutory Sick Pay is reserved for workers in employment. However, self-employed workers have an alternative option: Employment and Support Allowance.
ESA allows self-employed people to receive money to help with the cost of living and the support needed to get back into work once they have recovered. In some cases, you may even be eligible to receive ESA alongside Universal Credit.
Not everyone can get it, though. It depends on your illness, age, how long it will take to get back to work, and whether you have made sufficient National Insurance contributions in the years leading up to it.
How much Employment and Support Allowance can I get?
How much you receive depends on what stage of the application process you are in. In the assessment phase, during which your application is being assessed, you can expect to receive up to £61.05 per week if you’re under 25, and up to £77.00 per week if you’re 25 or older.
Suppose you’re deemed eligible for ESA. In that case, you will be added into one of two groups: work-related activity or support. The work-related activity group is for those who can return to the workforce in the future. In contrast, support group members is for those who cannot.
Work-related activity members will receive up to £77.00 per week, and support group members will receive up to £117.60 per week.
Employment Allowance for employers
Employment Allowance for employers allows you to reduce your National Insurance contributions each year. In order to be eligible for this benefit, you must either be a sole trader, in a limited company, or in a partnership with more than one employee and make Class 1 National Insurance contributions on their earnings.
How much Employment Allowance can I get?
If you’re deemed eligible for Employment Allowance, you can expect to receive up to £5,000 for the 2022/23 and 2023/24 tax years.
Council Tax Reduction
Council Tax Reduction allows people on a low income to reduce their annual Council Tax bill. It is available for those in employment, self-employment, and even unemployment.
How much Council Tax Reduction can I get?
How much you receive is determined on a case-by-case basis, the criteria of which include your location since each local council has its own schemes, your age, household income, if you have a partner or a child, and if you live with another adult.
Pension Credit is a government top-up that helps pensioners on a low income with living costs. If you’re above the State Pension age – currently set at 66 for both men and women – it can increase your weekly income to a minimum amount and is available whilst you’re in self-employment.
How much Pension Credit can I get?
If you’re single, your weekly income will be topped up to £182.60. If you have a partner, your combined weekly income will be topped up to £278.70.
The Self-Employment Income Support Scheme was a government grant given to self-employed workers during the coronavirus pandemic. Announced on 26 March 2020, the SEISS grant began on 13 May 2020, calculating the payouts based on three-months average trading profits. However, as the coronavirus pandemic continued, it was extended four times up until September 2021, resulting in five total SEISS grants – each with separate payouts and eligibility criteria. Let’s explore them below.
The first SEISS grant was made available for a claim on 13 May 2020, and the application process was open until 13 July 2020. Those who applied were able to receive a grant of 80% of their three-month trading profits up to £7,500 in total, which would be paid out in a single instalment. To be eligible for this grant, self-employed workers would have to satisfy all of the following criteria:
- Must have filed a Self-Assessment tax return for the 2018/19 tax year
- Trading profits must have been between £0 and £50,000*
- You will continue trading as a self-employed worker for the 2020/21 tax year or would have if not for the pandemic
*Those who were ineligible based on the 2018/19 tax year, HMRC would average out the annual trading profits between 2016 and 2019.
Government statistics show that over 2.6 million claims were made for the first grant, resulting in a £7.6 billion payout.
The second SEISS grant was made available for a claim on 17 August 2020 and was open until 19 October 2020. This time, the grant was reduced. Applicants were eligible to receive 70% of their three-month trading profits up to £6,570 in total, which would be paid out in a single instalment. To be eligible, applicants would need to satisfy the following criteria:
- All criteria related to the first SEISS grant
- The coronavirus pandemic negatively impacted your business’ average trading profits on or after 14 July 2020.
There were 2.35 million claims for the second SEISS grant, which resulted in a £5.9 billion payout.
The third SEISS grant was made available on 30 November 2020 and remained open until 29 January 2021. Under this third iteration, eligible applications would receive 80% of their three-month trading profits up to £7,500 in total, which would be paid out in a single instalment. The eligibility criteria were similar to the previous grants, but the government were a little more specific with their words:
- All criteria related to the first SEISS grant still applied
- The coronavirus pandemic negatively impacted your business’ average trading profits on or after 1 November 2020
- You were continuing to trade or declared your intention to continue trading, and either:
- Had reduced demand, activity, or capacity
- Reasonably believed that the business would or did experience a significant reduction in profits due to the reduced demand, activity, or capacity compared to expectations
In total, a little less than 2.2 million claims were made for the third grant, resulting in a £6.2 billion payout.
The fourth and fifth grants were announced simultaneously but covered different periods. The fourth SEISS grant covered the months of February to April 2021, with applications opening up on 22 April 2021 and closing on 1 June 2021. Applicants could receive 80% of their three-month trading profits up to £7,500 in total, which would be paid out in a single instalment.
There were some distinct changes to the fourth grant compared to the previous three, primarily that Self Assessment tax returns for the 2019/20 tax year would be considered. The eligibility criteria were as follows:
- Trading profits must have been between £0 and £50,000
- The coronavirus pandemic negatively impacted your business’ average trading profits from February to April 2021,
- You filed your Self Assessment tax return before 2 March 2021
- You continued to trade in the 2019/20 and 2020/21 tax years
- You intended to continue trading into the 2021/22 tax year
For the fourth SEISS grant, 1.95 million claims were made, resulting in a total payout of £5.5 billion.
The fifth SEISS grant was made available on 29 July 2021, and the application process ran until 30 September 2021. Unlike the previous grants, the payouts for the fifth grant were divided into two categories: those who experienced a turnover reduction of less than 30%, and those who experienced a turnover reduction of 30% or more. As such, applicants were able to receive the following:
- Less than 30% – 80% of their three-month trading profits up to £7,500 in total, which would be paid out in a single instalment.
- 30% or more – 30% of their three-month trading profits up to £2,850 in total, which would be paid out in a single instalment.
The eligibility criteria were as follows:
- All of the criteria for the fourth grant, except that your average monthly trading profits were negatively impacted due to the pandemic from May to September 2021.
It is reported that 1.26 million claims were made for this final grant, resulting in a total payout of over £2.8 billion.
The Self-Employment Income Support Scheme officially ended on 30 September 2021 with the closing of the fifth and final grant application process.
Was the SEISS grant taxable?
SEISS grant payouts were considered taxable income. As such, both Income Tax and National Insurance contributions (Class 2 & 4) applied and would have to be declared on your Self-Assessment tax return.
Do I have to pay my SEISS grant back?
Since the Self-Employment Income Support Scheme was a grant, it does not have to be paid back. In effect, it is a ‘gift’ from the government that helped self-employed workers out during the pandemic.
The only time you have to pay your SEISS grant back is if you were wrongly given money. Examples include if you received too much – in which case you would have to pay the excess amount back – or if you were found to be ineligible – in which case you would pay it all back.
A self-employed grant is a financial ‘gift’, typically given to self-employed workers to help with the costs of living. Since the SEISS grant ended on 30 September 2021, there are no grants available for those in self-employment.
However, there are various benefits they can apply for, such as Universal Credit, Employment and Support Allowance, and Council Tax reduction.