Guidance

How HMRC works out trading profits and non-trading income for the Self-Employment Income Support Scheme

Find out how your trading profits and non-trading income are used to work out your SEISS eligibility and grant amount.

HMRC look at your trading profits and non-trading income on your Self Assessment tax returns to check if you meet the eligibility criteria for the fourth grant.

We also use your average trading profits to work out how much grant you’ll get.

Trading profits

This is shown on your tax calculation as profits from either:

We’ll work out your total trading profit after deducting any allowable expenses such as:

If your annual gross trading income, from one or more trades or businesses is more than £1,000 you may have used the tax-free allowances, instead of deducting any expenses or other allowances.

We’ll work out your trading profit after deducting any tax-free allowances.

We’ll not deduct from your trading profits:

  • any losses brought forward from previous years
  • your personal allowance

Profits from self-employment

We’ll work out your trading profit after allowable business expenses by adding any losses brought forward from previous years to the amount shown on your tax return as ‘total taxable profits from this business’.

Profits from partnerships

We’ll work out your share of the partnership’s profit after adjustments by adding any losses brought forward from previous years to the amount shown as ‘your share of the total taxable profits from the partnership’s business’.

Any non-trading income, such as investment income, will be deducted from the partnership’s total income before we work out your share of the profits.

Paper short return

Your trading profit after allowable business expenses is shown on your tax return as ‘profit’.

Trading profit if you have claimed the trading allowance

Example

2016 to 2017 2017 to 2018 2018 to 2019 2019 to 2020
Trading income £21,000 £26,000 £16,000 £21,000
Trading allowance claimed 0 £1,000 £1,000 £1,000
Trading profit £21,000 £25,000 £15,000 £20,000

If you have more than one trade in the same tax year

We will add together all profits and deduct any losses for all these trades to work out your trading profit.

Example

2019 to 2020
Trade 1 profit £60,000
Trade 2 loss £20,000
Trading profit £40,000

Non-trading income

This is the amount recorded as ‘total income received’ on your online or paper tax calculation, less your trading income.

This figure does not include losses.

We’ll work out your non-trading income by adding together all your:

  • income from earnings
  • property income
  • dividends
  • savings income
  • pension income
  • overseas income
  • miscellaneous income (including taxable social security income)

How we work out your trading profit and non-trading income eligibility

How we work out your eligibility may depend on how many years you have been trading.

If you have different circumstances it can also affect your eligibility.

To be eligible for a grant, your trading profits must be both of the following:

  • no more than £50,000
  • equal to or more than your non-trading income

If you started trading in 2019 to 2020

We’ll only use your trading profit and non-trading income from your 2019 to 2020 tax return to work out if you’re eligible.

If you have traded for longer

We’ll work out your eligibility based on your tax returns for either:

  • the tax year 2019 to 2020
  • an average of the tax years 2016 to 2017, 2017 to 2018, 2018 to 2019 and 2019 to 2020 - if you are not eligible based on 2019 to 2020 alone

If you have a gap in the years you’ve traded, we’ll only use your most recent tax returns after the gap, to work out your eligibility.

Example – if you’re not eligible based on your 2019 to 2020 tax return

In your 2019 to 2020 Self Assessment tax return you made a loss of £10,000 and your non-trading income was £15,000.

You would not be eligible based on your 2019 to 2020 tax return alone because your non-trading income is greater than your trading profits.

We’ll look at your previous returns to work out if you’re eligible.

2016 to 2017 2017 to 2018 2018 to 2019 2019 to 2020 Average trading profit (4 tax years) Total
Trading profit £50,000 £50,000 £36,000 -£10,000 £31,500 £126,000
2016 to 2017 2017 to 2018 2018 to 2019 2019 to 2020 Total
Non-trading income £15,000 £15,000 £16,000 £15,000 £61,000

In this example, you would still be eligible because:

  • your average trading profit for the 4 tax years is £31,500 - which is no more than £50,000
  • the sum of your trading profits for the 4 tax years is £126,000 - which is more than the sum of your non-trading income of £61,000 for those years

How we work out partnership eligibility

If a partnership started trading in the tax year 2019 to 2020 and made £100,000 in trading profits, and the profits are distributed as follows:

Example

Trading profits received Non-trading income
Partner A £25,000 0
Partner B £75,000 0

Partner A would be eligible for the grant, as the trading profits received are no more than £50,000.

Partner B would not be eligible for the grant, as the trading profits received are more than £50,000.

If partnership rules require Partner A to pay the grant into the partnership pot, the partnership should give the full grant back to Partner A.

How we work out your average trading profits and grant amount

If you’re eligible, we’ll use an average of your trading profits from up to 4 years’ of tax returns to work out your grant.

If you have a gap in the years you’ve traded, we’ll only use your most recent returns after the gap, to work out the grant.

The fourth SEISS grant is calculated at 80% of 3 months’ average trading profits. The most you can get is £7,500.

If you started trading in 2019 to 2020

If you only traded in the tax year 2019 to 2020, we’ll only use those trading profits to work out your grant.

If you have traded for all 4 tax years

To work out your average trading profits we add together profits and losses for all 4 tax years, then divide by 4.

Example

2016 to 2017 2017 to 2018 2018 to 2019 2019 to 2020 Average trading profits for the 4 tax years
Trading profit or loss £60,000 £60,000 -£30,000 loss £10,000 £25,000

If you did not trade in the tax year 2016 to 2017

To work out your average trading profits we add together all profits and losses for the tax years 2017 to 2018, 2018 to 2019 and 2019 to 2020, then divide by 3.

Example

2016 to 2017 2017 to 2018 2018 to 2019 2019 to 2020 Average trading profits for the 3 tax years
Trading profit Did not trade £25,000 £45,000 £47,000 £39,000

If you did not trade in the tax year 2017 to 2018

We’ll work out your average trading profits based on the tax years 2018 to 2019 and 2019 to 2020, even if you traded in the tax year 2016 to 2017.

Example

2016 to 2017 2017 to 2018 2018 to 2019 2019 to 2020 Average trading profits for 2 years
Trading profit £25,000 Did not trade £45,000 £49,000 £47,000

If you did not trade in the tax year 2018 to 2019

We’ll work out your average trading profits based on the tax year 2019 to 2020, even if you traded in the tax years 2016 to 2017 and 2017 to 2018.

Example

2016 to 2017 2017 to 2018 2018 to 2019 2019 to 2020 Average trading profits
Trading profit £25,000 £45,000 Did not trade £30,000 £30,000

If you did not trade in 2 consecutive tax years

We’ll work out your average trading profits based on your most recent returns.

Example 1

2016 to 2017 2017 to 2018 2018 to 2019 2019 to 2020 Average trading profits
Trading profit or loss - £2,000 loss Did not trade Did not trade £35,000 £35,000

Example 2

2016 to 2017 2017 to 2018 2018 to 2019 2019 to 2020 Average trading profits for 2 years
Trading profit or loss Did not trade Did not trade - £3,000 loss £40,000 £18,500
Published 14 April 2020
Last updated 9 April 2021 + show all updates
  1. This guidance has been updated with information about the fourth SEISS grant.

  2. Claims for the third grant have now closed. The last date for making a claim for the third grant was 29 January 2021. Details about the fourth grant will be announced on 3 March 2021.

  3. This page has been updated with the information for the third grant of the Self Employed Income Support Scheme.

  4. The service is now closed for the Self-Employment Income Support Scheme. You can no longer make a claim for the second grant.

  5. Added translation

  6. The Self Employment Income Support Scheme claim service is now open.

  7. Added information to confirm that losses are not included in your non-trading income calculation. Also added an example to show how HMRC will work out the amount of the second and final grant.

  8. Welsh translation added.

  9. Additional examples have been added to show how HMRC works out total income and trading profits for different trading circumstances, and examples have been added to show how we work out partnership eligibility and how much grant you will get.

  10. First published.