Yes folks, here we are again. We have a 3rd and 4th lockdown grant. The government have announced the UK will be in lockdown from the 5th Nov to 2nd Dec 2020. This will be devastating for a lot of small businesses who were just getting back on their feet. The good news is there’s more money available through the self employment income support scheme grant. The bad news is they will only cover 55% of your profits at best versus 80% for furloughed employees. Oh, and a lot of businesses won’t qualify for them at all. Are self employed folk really 30% less important than employees? Let’s take a look at how it all works.


Update from 5th November!

The government listened! The grant has been changed from the previously announced level of 55% up to 80%, matching the employee rate on the furlough scheme. They’ve also changed the cap from £5,160 to £7,500 over a 3 month period, also matching the furloughed employee cap. This is great news. All we need now is for the 2019/20 tax year to be taken in to account!

The new grant extension in a nutshell

  • You must have qualified for (but not necessarily claimed) the previous SEISS grants (grants 1 & 2)
  • You must be impacted by reduced demand due to coronavirus
  • You must intend to continue to trade
  • Grant 3: Covers Nov 2020 to Jan 2021 and gives you 80% of average monthly trading profits, max £7,500
  • Grant 4: Covers Feb to Apr 2021, amount TBC
  • You can’t claim until 30th Nov 2020keep checking here for further details as and when they’re announced
  • See below for explanation of average monthly trading profits
UK lockdown - 3rd SEISS self employment grant!
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So obviously this 3rd grant depends on whether you qualified for the first grant. If you’re not aware this was the qualification criteria:

  • Must been adversely affected due to coronavirus
  • Must have submitted a 2018/19 tax return by 23rd April 2020
  • Must have traded in the 2019/20 tax year (but this income isn’t considered)
  • You must intend to continue trading in the 2020/21 tax year (this income is also not considered)
  • Must be self employed (not a limited company)

What are average monthly trading profits?

So if you ticked all those boxes your grant would be based on:

  • Trading profits for 2016/17
  • Trading profits for 2017/18
  • Trading profits for 2018/19
  • Total the above and divide by 36. That gives your average monthly trading profits.
  • Grant 1: Covered Mar to May 2020 and gave 80% of average monthly trading profits, max £7,500
  • Grant 2: Covered Jun to Aug 2020 and gave 70% of average monthly trading profits, max £6,570

So yes, the LATEST income taken in to account is money received on 5th April 2019. Had a good 2019/20 tax year? Tough – not counted. Set up in business on or after 6th April 2019? Tough. No grant, sorry.

A bit of background to SEISS grants

To say 2020 has been a difficult year is an understatement. Small businesses have been devastated by the government-imposed lockdowns for the Covid-19 pandemic. Just as businesses were starting to recover through innovative schemes such as ‘Eat Out to Help Out’ we’re back to square one. Time to close the doors once again.

The government introduced the Self Employment Income Support Scheme (SEISS) towards the start of the year but to think this will fix the damage caused is naive at best. Most business owners I’ve spoken to view it as ‘better than nothing’. The reality is that it takes 2-3 years to build up a new business from scratch to break-even point. You can’t just switch a business ‘off’ for a year and assume everything will be OK when you switch it back ‘on’. It doesn’t work like that.

Anyway, thankfully the government have announced extra help for the self employed through additional SEISS grants but is it really on-par with what’s available for furloughed employees who receive 80% of their wage while they can’t work? In a nutshell, no. It’s close to 60% and that’s IF you qualify in the first place. Oh, and the capped level of support is 30% less than if you were an employee.

There are an estimated 5 million people self employed in the UK and only 2.6 million of them claimed the first SEISS grant – little more than 50%. Now it can certainly be argued that those who didn’t claim didn’t need the money. I find that very hard to believe though. According to the ONS fewer than 1 in 20 self-employed people started self-employment after March 2019. So that’s a mere 250,000 who won’t get any help whatsoever from this scheme. That leaves 2.35m who didn’t claim for some reason. A significant amount will earn over the £50,000 profit threshold but what about the rest? I guess we’ll know in good time.

The SEISS grants in a nutshell… 2 months are missing!

For whatever reason Sept and Oct 2020 have been entirely forgotten about in the world of self employment. If you’re one of thousands of businesses impacted by certain sectors still being literally ‘switched off’ then for those two months you’re on your own. Government – if you’re listening, see below for how to fix this! Here’s a quick summary:

SEISS self employment lockdown grant

So as you can see from the above we haven’t had confirmation yet of the 4th grant details. The issue is that September and October 2020 have been forgotten about.

What’s the easy way to fix this? Simple – keep the 4th grant at the same rate as the 3rd grant. That will still only result in a 71% overall level (versus 80% for furloughed staff) but I’m sure most self employed folk would be fine with this. We’re just desperate to get back to work! Here are a couple of examples to illustrate that:

An example for a £15,000 small business

So let’s assume you’re lucky enough to qualify for these grants in the first place. If you’re a very typical small business owner making just £15,000 profit per year (just over minimum wage) here’s what you would get over a 12 month period IF the 4th grant is kept at the same level as the 3rd grant:

Self employment lockdown grant example

What’s the maximum SEISS grant you can claim?

The current SEISS grants assume a maximum annual profit of £37,500. Any profit above that will not be reimbursed. This may cause problems for businesses with higher running costs… but it is what it is. Using £37,500 as an example trading profit and assuming the optimistic level of grant 4 (matching grant 3) here’s what you would get:

Maximum SEISS grant

The disparity between self employed and employed support

So in the above example, over a 12 month period from March 2020 to March 2021 you’ll receive 71% of your average earnings. That’s mainly due to the missing two months and only IF the government keep the 4th grant at the same rate as the 3rd grant. I must stress that this is VERY UNLIKELY. The grant level will probably drop. I would encourage you to make all efforts you can to pressure the government to keep the 4th grant at the same level as the 3rd grant. Write to your local MP. Speak to your local business support organisation. This will only happen with sufficient pressure from small business owners.

Not only that but we’re basing our average earnings on figures from 6th April 2016. That’s over 4 YEARS out of date! Can you imagine if we said furloughed employees would receive support based on their earnings from 4 years ago??

Sadly businesses who don’t qualify, such as those who started their small business journey on the 6th April 2019, have been entirely forgotten about.

How do we fix the SEISS scheme?

The government listened to our pleas for help and on the 5th November 2020 changed the grant level and cap to match that of the furlough scheme. That just leaves a couple of things… along with letting us get back to work:

  • Match the % support to the furlough scheme (80%) – FIXED!
  • Match the cap to the furlough scheme (£2,500 per month) – FIXED!
  • Keep the 4th grant at the same level as the 3rd grant
  • Base earnings on tax returns submitted, including the 2019/20 tax year

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Last Updated on 5 November 2020 by Andy Mac