European Foundation
for the Improvement of
Living and Working Conditions

The tripartite EU agency providing knowledge to assist
in the development of better social, employment and
work-related policies

COVID-19 EU PolicyWatch

Database of national-level responses

Eurofound's COVID-19 EU PolicyWatch collates information on the responses of government and social partners to the crisis, as well as gathering examples of company practices aimed at mitigating the social and economic impacts.

Factsheet for case GB-2020-13/214 Updated – measures in United Kingdom

Self-employed income support scheme

Self-employed income support scheme

Country United Kingdom , applies nationwide
Time period Temporary, 26 March 2020 – 29 January 2021
Type Legislations or other statutory regulations
Category Income protection beyond short-time work
– Extensions of income support to workers not covered by any kind of protection scheme
Author Claire Evans (Warwick University) and Eurofound
Case created 31 March 2020 (updated 22 February 2021)
Related ERM support instrument

Background information

The Self-employed Income Support Scheme was announced by the British government on 26 March 2020 in the context of more stringent lock-down measures which entered into force on 23 March 2020. As such measures required many self-employed individuals to close their businesses or restricted their ability to make a living, the scheme was introduced to bring support in line that available to employees under the Coronavirus Job Retention Scheme.

Content of measure

On 26 March 2020 the Self-Employed Income Support Scheme was announced to allow certain groups of self-employed individuals to claim a taxable cash grant worth 80% of average monthly trading profits over the last three years up to a maximum of €2,820 (GBP 2,500) for three months (could be extended). The grant will be subject to Income Tax and National Insurance contributions but does not need to be repaid. This is intended to match the protection provided to employed individuals, thus covering this group for the first time. The scheme is run directly through Her Majesty's Revenue and Customs (HMRC) which contacts eligible individuals from May 2020 onwards.

On 29 May the Government announced a second round of the SEISS, with those eligible able to claim a second grant, worth 70% of their average monthly trading profit, for a further three months, capped at £6,570 in total. On 2 July a second Treasury Direction was published to this effect. Applications for the second grant were opened on 17 August, and were closed on 19 October.

On 24 September the Government announced an extension to the SEISS to be introduced in November, to cover the six months up to the end of April 2021. The SEISS Grant Extension would be made in two taxable grants – first to cover November to January, second to cover February to April.

Initially it was proposed that the first of these grants would cover 20% of average monthly trading profits, capped at £1,875, but this figure has been revised three times. On 22 October the Chancellor announced the first grant would cover 40% of average monthly trading profits, capped at £3,750. On 2 November the Chancellor announced that the payment for the first month (November) of the first grant would be set at 80% – increasing the total level of this grant to 55% of trading profits, capped at £5,160. Subsequently on 5 November the Chancellor announced that all three months of the first grant would be calculated on the basis of 80% of average trading profits, up to a maximum of £7,500.[1]

On 24 November the Government published a further Treasury Direction underpinning the scheme. Applications for the third SEISS grant opened on 29 November and are to close on 29 January 2021.

There is to be a fourth round; details of this will be announced on 3 March 2021.

Updates

The following updates to this measure have been made after it came into effect.

03 March 2021

The scheme has been extended, and is now coming into a fourth round for claims. Claims for the third SEISS grant have now closed, with the last date for making a claim for the third grant was 29 January 2021. Details as to the fourth grant will be announced on 3 March 2021.

To have made a claim for the third grant, a business must have had a new or continuing impact from coronavirus between 1 November 2020 and 29 January 2021, which will have entailed a significant reduction in profits.

The third taxable grant is worth 80% of average monthly trading profits, paid out in a single instalment covering 3 months’ worth of profits, and capped at GBP 7,500 in total. The grant does not need to be repaid if a self-employed person is eligible, but it will be subject to Income Tax and self-employed National Insurance and must be reported in the 2020 to 2021 Self Assessment tax return.

24 September 2020

In the Chancellor's Winter Economy Plan, outlined in a speech to the House of Commons on 24 September, an extension to the SEISS was announced. An initial taxable grant will be provided to those who are currently eligible for SEISS and are continuing to actively trade but face reduced demand due to coronavirus. The initial lump sum will cover three months’ worth of profits for the period from November to the end of January next year. This is worth 20% of average monthly profits, up to a total of GBP 1,875.

An additional second grant, which may be adjusted to respond to changing circumstances, will be available for self-employed individuals to cover the period from February 2021 to the end of April - ensuring our support continues right through to next year. This is in addition to the more than GBP 13 billion of support already provided for over 2.6 million self-employed individuals through the first two stages of the SEISS.

07 July 2020

The Government has published data as to the number of claims made and the total value of those claims (please see the 'use of measure' section. It has also published a breakdown of claims made by age and gender, sector of the economy, and by geography. This is the first time this information has been released publicly and has been produced using data from both the SEISS and HMRC’s Self-Assessment (SA) system. A second update was published on the 18th of September, incorporating data collected up to the 31st of August. Links to the updated analyses are provided in the 'sources' section.

Use of measure

Following the criticism that businesses are likely to have to wait five weeks for first payments to be made (the delay is partly to accommodate firms having to file tax returns - required to be able to claim the benefit) and that the wait may be difficult for businesses already struggling, the Government has released data as to the take-up and cost of the scheme up to the end of June 2020.

3.4 million self-employed individuals were identified as potentially eligible for the SEISS scheme. This means that they met the income and trading activity criteria for the scheme based on Self-Assessment returns from 2018-19 and earlier years. However, some of these businesses will not have continued trading since 2018-19 or will not have been adversely affected by Coronavirus so will not be eligible.

  • On the 13 May, there had been 441,000 claims made, with a total value of GBP 1.3 billion.
  • By the 31 May, the total number of claims was 2.5 million, with a value of GBP 7.2 billion.
  • By the 30 June, the total number of SEISS claims was 2.6 million (75% of the potentially eligible population), with a value of GBP 7.7 billion. The average value per claim was GBP 2,900.

Around two-thirds of the potentially eligible population are male (2.3m). A lower proportion of potentially eligible females have claimed a SEISS grant (70%) compared to males (78%). The average claim for females is also lower at GBP 2,300 compared to the average claim for males of GBP 3,200. By 30 June, HMRC had received 1,805,000 claims from men totaling GBP 5.7bn compared to 745,000 claims from women for GBP 1.7bn.

Around 90% of claimants are aged between 25 and 64 and take-up of the grant in those age groups is at or above 75%. No one age group dominates and claims are evenly spread.  The take up rate is noticeably lower for those who are aged 65 and over (60% have claimed), although they have the highest average claim value at GBP 3,300. The youngest age group have the second lowest take up rate (68%) and the lowest average claim value at GBP 2,100.

The sector with the highest number of potentially eligible individuals and the highest proportion of claims is the construction industry. By 30 June, construction workers had made 867,000 claims for SEISS totaling GBP 3.1bn, an average of GBP3,500 per claimant.  Self-employed individuals in the transportation and storage sector make up 8% of the potentially eligible population and made 221,000 claims totaling GBP 481m. Administrative and support services also make up 8% of the potentially eligible population and have made 193,000 claims totaling GBP 399m.

The two regions with the highest number of claims are London (484,000) and the South East (373,000), reflecting their relative sizes.

On the 18 September, a further update on take-up of the scheme was published. The data covers the period up to the 31 August. Around 5 million individuals reported self-employment income for the tax year 2018 to 2019, and had their data assessed for potential SEISS eligibility. In order to be assessed, a self-employed individual needed to have traded in the tax year 2018 to 2019 and submitted a Self Assessment tax return on or before 23 April 2020 for that year. Via this process then, 3.4 million self-employed individuals were identified as potentially eligible for the SEISS scheme. This means that they met the criteria for the scheme based on Self Assessment returns from the tax year 2018 to 2019 and earlier years. However, some of the potentially eligible businesses will not have been adversely affected by Coronavirus or have ceased trading since the tax year 2018 to 2019 so will not have been eligible.

The updated data shows that:

  • by 31 August, 2.0 million (60%) of the potentially eligible population had claimed a second SEISS grant with the value of these claims totalling GBP 5.1 billion
  • the average value per claim was GBP 2,500
  • around two-thirds of the potentially eligible population are male (2.3 million). A lower proportion of potentially eligible females have claimed a SEISS grant (54%) compared to males (62%)
  • the average claim for females is also lower at GBP 2,000 compared to the average claim for males of GBP 2,700
  • around 90% of claimants are aged between 25 and 64 and take-up of the grant in those age groups is at or above 56%. No one age group dominates and claims are evenly spread
  • the sector with the highest number of potentially eligible individuals and the highest proportion of claims is the construction industry. By 31 August, construction workers had made 693,000 claims for SEISS totalling GBP 2.1bn
  • the two regions with the highest number of claims are London (390,000) and the South East (292,000), reflecting their relative sizes
  • of the 1.6 million that did not meet the SEISS criteria, 1.4 million (87%) had trading profits less than non-trading profits (eg. income from employment or investment income), 0.5 million (33%) had trading profits of GBP 0 or made a loss and 0.2 million (11%) had trading profits over GBP 50,000. (N.B. Individuals may be counted more than once if they have trading profits which meet more than one of these criteria which explains why the figures sum to more than 1.6 million)

The latest data (November 2020) show that:

  • around 5 million individuals reported self-employment income for the tax year 2018 to 2019, and had their data assessed for potential SEISS eligibility. In order to be assessed, a self-employed individual needed to have traded in the tax year 2018 to 2019 and submitted a Self Assessment tax return on or before 23 April 2020 for that year.
  • via this process, 3.4 million self-employed individuals were identified as potentially eligible for the SEISS scheme. This means that they met the criteria for the scheme based on Self Assessment returns from the tax year 2018 to 19 and earlier years. However, some of the potentially eligible businesses will not have been adversely affected by Coronavirus or have ceased trading since the tax year 2018 to 19 so will not have been eligible.
  • by 31 October 2.3 million (69%) of the potentially eligible population had claimed a second SEISS grant with the value of these claims totalling GBP 5.9 billion.
  • compared with the end of September, an additional 89,000 people had claimed the grant by 31 October.
  • the average value per SEISS 2 claim was GBP 2,500.
  • around two-thirds of the potentially eligible population are male (2.3 million). the average claim for females is also lower at GBP 2,000 compared to the average claim for males of GBP 2,700.
  • around 91% of claimants are aged between 25 and 64 and take-up of the grant in those age groups is at or above 67%. No one age group dominates and claims are evenly spread.
  • the sector with the highest number of potentially eligible individuals and the highest proportion of claims is the construction industry. By 31 October, construction workers had made 800,000 claims for SEISS totalling GBP 2.4 billion.
  • the 2 regions with the highest number of claims are London (465,000) and the South East (338,000), reflecting their relative sizes.
  • of the 1.6 million that did not meet the SEISS criteria, 1.4 million (87%) had trading profits less than non-trading profits (e.g. income from employment or investment income), 0.5 million (33%) had trading profits of £0 or made a loss and 0.2 million (11%) had trading profits over GBP 50,000. (N.B. Individuals may be counted more than once if they have trading profits which meet more than one of these criteria which explains why the figures sum to more than 1.6 million).
  • by 31 October, 2.7 million individuals had claimed for either the first or second SEISS grant. Of these 2.3 million individuals (86%) claimed both grants, 319,000 (12%) claimed only the first grant and 61,000 (2%) only claimed the second grant.
  • claims for only the first grant totaled £951 million and claims for only the second grant totalled GBP 129 million.

Target groups

Workers Businesses Citizens
Self-employed
One person or microenterprises
Does not apply to citizens

Actors and funding

Actors Funding
National government
National funds

Social partners

Social partners' role in designing the measure and form of involvement:

Trade unions Employers' organisations
Role Informed Informed
Form Not applicable Not applicable

Social partners' role in the implementation, monitoring and assessment phase:

  • No involvement
  • Main level of involvement: Peak or cross-sectoral level

Involvement

The social partners were informed as to the government's emergency raft of measures at the start of the crisis; however, they were not formally involved in the design, implementation or monitoring of this measure.

Views and reactions

The scheme was welcomed by both the CBI and the TUC (see sources).

Sources

Citation

Eurofound (2020), Self-employed income support scheme , case GB-2020-13/214 (measures in United Kingdom), COVID-19 EU PolicyWatch, Dublin, http://eurofound.link/covid19eupolicywatch

Disclaimer: This information has not been subject to the full Eurofound evaluation, editorial and publication process. All information is preliminary and subject to change.