Updates to tax charges when a person is no longer eligible to Self-Employment Income Support Scheme payments
Published 3 March 2021
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This publication is available at https://www.gov.uk/government/publications/updates-to-tax-charges-when-a-person-is-no-longer-eligible-to-self-employment-income-support-scheme-payments/updates-to-tax-charges-when-a-person-is-no-longer-eligible-to-self-employment-income-support-scheme-payments
Who is likely to be affected
Self-employed individuals and individual members of a partnership who have received a payment from the Self-Employment Income Support Scheme (SEISS) but subsequently stop being entitled to that payment.
General description of the measure
Current legislation enables HMRC to reclaim overpaid SEISS grants where the claimant did not meet the eligibility criteria at the time of claim. This measure makes changes to the time and circumstances when a 100% tax charge may arise in relation to SEISS payments. It enables HMRC to recover grants where an individual was entitled to the grant at the time of claim but subsequently ceases to be entitled to all or part of the grant. It also extends the Treasury’s regulation making powers in relation to charges if a person is not entitled to a coronavirus support payment, to bring the SEISS within scope of the legislation.
Policy objective
In response to COVID-19, the government set up several schemes to support businesses and individuals, including the SEISS. This measure is consistent with the commitment to tackle fraud and abuse of COVID-19 schemes.
Background to the measure
The Chancellor announced the SEISS on 26 March 2020.
The Chancellor announced an extension to the scheme on 29 May 2020. This was followed by further announcements made by the Chancellor on 24 September 2020 to extend the scheme further, committing to the third and fourth grants. Spring Budget 2021 confirmed the fourth grant and announced a fifth and final grant.
Detailed proposal
Operative date
This measure will apply to SEISS payments made on or after 6 April 2021.
Current law
Relevant provisions are at section 106 and Schedule 16 Finance Act 2020. Under paragraph 8 of Schedule 16, an individual is liable to a charge, if they are not entitled to COVID-19 support payments in accordance with the scheme under which the payment was made.
Proposed revisions
Provisions will be introduced in the Finance Bill 2021 to amend s106(3) and paragraph 8 Schedule 16 Finance Act 2020.
Section 106(3) Finance Act 2020 will be extended so that the Treasury may make regulations about the application of (including provision modifying) Schedule 16 to SEISS Paragraph 8 of Schedule 16 will be amended so that where a recipient of a SEISS grant stops being entitled to keep all or part of the grant due to a change in circumstances, a tax charge equivalent to the amount of the grant to be recovered, can be applied.
Summary of impacts
Exchequer impact (£million)
| 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 supports the Exchequer in its commitment to protect revenue.
Economic impact
This measure is not expected to have any significant macroeconomic impacts.
Impact on individuals, households and families
This measure is expected to impact self-employed individuals and individual partners who receive a grant which they are no longer entitled to. Customer experience is expected to improve given that this measure clarifies and provides certainty on how any SEISS grants that someone is no longer entitled to can be recovered.
This measure is not expected to impact on family formation, stability or breakdown.
Equalities impacts
This measure is expected to have no impact on eligible individuals who received a payment from a COVID-19 support scheme to which they were, and remain, entitled. It is anticipated that those impacted will be represented, proportionately, in each of the groups sharing protected characteristics.
Impact on business including civil society organisations
This measure is expected to have no impact on eligible businesses who have received a payment from a COVID-19 support scheme to which they were, and remain entitled.
This measure is not expected to have an impact on civil society organisations.
Operational impact (£million) (HMRC or other)
HMRC is not anticipating any operational impacts as a result of implementing this measure.
Other impacts
Other impacts have been considered and none has been identified.
Monitoring and evaluation
The measure will be monitored through information collected from tax returns, receipts and compliance activity.
Further advice
If you have any questions about this change, contact the SEISS team by email: seiss@hmrc.gov.uk.