To support self-employed workers through the current COVID-19 situation, the Government announced the Self Employed Income Support Scheme (SEISS) on March 26th 2020, which may provide financial relief to around 5m people through taxable grants.
In this article, Chris Paget (pictured right) and Matt Santer (left) from Sheridans set out the key details of the SEISS.
When considering the impact of COVID-19, it is fair to say that esports as a digitally native industry is uniquely placed to continue to successfully scale and operate through the disruption, especially when compared to its neighbours in the traditional sports sector.
Whilst it is of course not immune from disruption, for example the recent cancelling of the Dota 2 Los Angeles Major, its ability to be able to transition to a digital-only delivery model sets it apart.
However, conversely the sector is also supported by huge numbers of self-employed people. Many of these will have been waiting anxiously for measures to support them financially during the COVID-19 crisis. That’s where the Self Employed Income Support Scheme (SEISS) may provide some assistance.
Who is the scheme for?
This scheme is aimed at individuals who are self-employed sole traders or a member of a partnership, who have lost trading profits due to COVID-19.
To be eligible for SEISS, the self-employed person must have:
- Had a trading profit of less than £50,000 in 2018-19; or
- An average trading profit of less than £50,000 from 2016-17, 2017-18 and 2018-19;
- Been making more than half of their income from self-employed work; and
- Are already in self-employed work and have a tax return for 2019.
If the deadline for filing a tax return for 2019 has been missed, the government has given an additional four week window (by April 23rd 2020) to file this.
What does the scheme provide?
Similarly to the Coronavirus Job Retention Scheme (CJRS) for PAYE workers, SEISS provides a percentage of earnings to assist self-employed individuals with lost or reduced work because of the COVID-19 crisis.
The main points of the scheme are:
- A taxable grant from the Government to pay 80% of average monthly profits (not turnover) over the past 3 years:
- up to a maximum of £2,500 per month;
- initially available for 3 months (to be extended if necessary);
- can be backdated to 1 March 2020; and
- paid into the person’s bank account in one lump sum
A brand new system is being designed to facilitate payments of the grants. Eligible people will be contacted by the Government directly, after which they can complete an online form to receive the grant.
The difficulty here could be that the payments will not start reaching recipients until the beginning of June 2020 (but earlier if the Government can do so). Until then, several other options for financial support might be available to the self-employed which are listed below.
Who will not be able to benefit from SEISS?
Many self-employed people in the creative and media industries use limited companies to effectively employ themselves as directors. Earnings go into the company, and the individuals can pay themselves a salary through PAYE, through dividends, or both.
If this is a structure the self-employed person is using, then SEISS is not available to them. Instead, the CJRS would be the alternative if the director is paying themselves through PAYE.
However, if those company directors are paying themselves through dividends and not through PAYE, this will unfortunately mean that they won’t be eligible for either SEISS or CJRS.
I am self-employed, but am not eligible for SEISS. What else is available to me?
While the Government has introduced many measures to ease the effects of the crisis on the UK’s labour market, there are unfortunately still a large number of people who will fall through the gaps and not be eligible for these schemes.
However, there are some other options for self-employed individuals to turn to during the crisis for financial assistance:
- Self-assessment deferrals (deferred to January 2021) to allow more time for tax submissions and payments;
- The Coronavirus Business Interruption Loan Scheme (CBILS), where those individuals have a business bank account (and subject to the scheme’ and lenders’ normal requirements);
- Small Business Grant Scheme, which is a one-off £10,000 grant payable to SMEs which pay little or no business rates;
- Universal credit (subject to normal eligibility) can provide advanced payment from DWP on Universal Credit, as well as access to Housing Allowance; and
- HMRC’s Time to Pay service, available to all businesses and self-employed people in financial distress around tax liabilities. These are on a case-by-case basis, and the dedicated helpline is at 0800 0159 559.
While the SEISS will be seen by many as a positive announcement and will undoubtedly come as a relief to many workers, it is not something that is available immediately and, therefore, isn’t something that provides a cure to the situation that a lot of people find themselves in. However, unlike the reliefs available to employed workers under CJRS (who are ‘furloughed’ and not allowed to work), self-employed workers can continue to work and earn a living.
Unfortunately, the SEISS doesn’t (at present) provide a relief or comfort to the circa 1.8 million owner-managers (or shareholder directors) who trade through their services company and pay themselves either through PAYE or dividends. We will need to wait to see if the position changes for these workers.
The information on SEISS remains relatively limited at this time but we will ensure that this article and the details of the scheme are kept up to date.
If you wish to discuss any of these issues or should you have any further questions or queries then please feel free to reach out to Chris and Matt directly ([email protected] and [email protected]).
This article is up-to-date at the time of publication and always subject to change. The answers given can only be a very brief commentary on the issues raised and should not be relied on as legal advice. No liability is accepted for such reliance.
About the authors
Chris is a Partner in the market leading Sports and Esports team at Sheridans where he advises on a wide range of commercial and regulatory issues affecting the sports, esports and wider entertainment sectors. Chris has unrivalled experience in working with top tier esports tournament operators, teams, players and brands across all facets of their business.
Matt is an Associate in the Interactive team at Sheridans. He advises a wide range of people and businesses on commercial and IP matters, including digital advertising agencies, talent and other entities in the creative media and sports industries. He is currently leading the firm’s guidance and advice on the COVID-19 crisis, particularly its impact on UK businesses and workers.
More Sheridans content: Contract advice for teams, organisations & players: An interview with an esports lawyer