Taxation of the Self-Employment Income Support Scheme grant for Income Tax
Published 3 March 2021
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Who is likely to be affected
All individuals and individual members of a partnership who receive a payment from the Self-Employment Income Support Scheme (SEISS).
General description of the measure
This measure updates the legislation that confirms that payments from SEISS are subject to tax, as announced by the Chancellor on 26 March 2020. Under the current legislation, a payment from SEISS is taxed as income for the tax year 2020 to 2021.
This measure will provide for future payments from SEISS to be taxed as income for the tax year in which they are received.
Policy objective
In response to COVID-19, the government has set up several schemes to support businesses and individuals, including SEISS.
The measure provides certainty that the tax treatment of payments from SEISS received after the end of the 2020 to 2021 tax year will be taxed in the year of receipt.
Background to the measure
SEISS was announced by the Chancellor as a taxable grant on 26 March 2020 and extensions to the scheme were announced on 29 May and 24 September 2020.
A draft Finance Bill clause and schedule on the taxation of SEISS, among other schemes, were published on 29 May 2020 and a consultation ran from then until 12 June 2020. The legislation was included in the Finance Act 2020 which came into force on 22 July 2020.
Detailed proposal
Operative date
The measure will have effect for tax years 2021 to 2022 onwards and for payments from SEISS received on or after 6 April 2021.
Current law
Current law is included in section 106 and Schedule 16 Finance Act 2020. A payment from SEISS is taxed as income for the tax year 2020 to 2021, except in the case of a payment made to a partner distributed among the partnership where the payment is treated as income of the partnership.
Proposed revisions
Legislation will be introduced in Finance Bill 2021 to tax a payment from SEISS as income for the tax year in which it is received. The exception in the case of a payment made to a partner distributed among the partnership will be unchanged.
Summary of impacts
Exchequer impact (£m)
| 2020 to 2021 | 2021 to 2022 | 2022 to 2023 | 2023 to 2024 | 2024 to 2025 | 2025 to 2026 |
|---|---|---|---|---|---|
| - | Nil | Nil | Nil | Nil | Nil |
This measure is not expected to have an Exchequer impact.
Economic impact
This measure is not expected to have any significant economic impacts.
Impact on individuals, households and families
This measure is expected to impact self-employed individuals and individual partners in receipt of payments from SEISS by ensuring the payments are taxed in the year they are received. Customer experience is expected to remain broadly the same as it does not alter how individuals interact with HMRC. This measure is not expected to impact on family formation, stability or breakdown.
Equalities impacts
It is not anticipated that there will be impacts on groups sharing protected characteristics. HMRC will provide extra support to all customers who need extra help to deal with the taxation of payments from SEISS.
Impact on business including civil society organisations
This measure has no impact on businesses or civil society organisations as it only affects self-employed individuals in receipt of payments from SEISS.
Operational impact (£m) (HMRC or other)
This measure is not expected to have any operational impact or costs.
Other impacts
Other impacts have been considered and none has been identified.
Monitoring and evaluation
This measure will be kept under review through communication with affected taxpayer groups.
Further advice
If you have any questions about this change, please contact Daniel Shaw on Telephone: 03000 511123 or email: [email protected].