The Chancellor of the Exchequer issued a financial package targeted at those who derive the majority of their income from self-employment who are facing hardship due to the Covid-19 pandemic, called the Self-Employed Income Support Scheme (SEISS). The self-employed includes partners in a partnership.
The most recent announcements from the Government include checks on previous claims and how to apply for the next grant. Some taxpayers not previously eligible, may now be eligible as the latest grant takes into account figures from the 2019/20 tax return.
LATEST UPDATE ON THE SELF EMPLOYED INCOME SUPPORT SCHEME (SEISS) grant extension
The Chancellor has confirmed that the next self-employed income support scheme (SEISS) will cover the period February 2021 to April 2021.
However the criteria for qualification has changed from previous claims which may mean you may have been eligible for earlier grants but not this one, or may qualify for the first time.
To make a claim for this fourth grant your business must have had a new or continuing impact from coronavirus between 1 February 2021 and 30 April 2021, which you reasonably believe will cause a significant reduction in your profits.
You will have to declare that you intend to continue to trade and either:
- are currently actively trading but are impacted by reduced demand due to coronavirus
- were previously trading but are temporarily unable to do so due to coronavirus
HMRC have confirmed that they expect you to make an “honest assessment” about whether you reasonably believe your business will have a significant reduction in profits. They will expect you to keep evidence to support this claim.
The level of grant payable for the fourth grant will be an amount worth 80% of average monthly profit, with a ceiling of £7,500 for the 3-month period.
This will represent taxable income and need to be reported on future tax returns. The level of the later extension grant covering the period February 2021 to April 2021 will be reviewed and set by the government in due course, we will keep you updated on this page once we get further details.
Deadline for applications
The online service for applying for the fourth grant will be available from mid-April and the closing date for this application is 31 May 2021.
The Chancellor has confirmed that there will be a fifth and final grant covering May until September. To qualify for this grant you must have traded in 2019 to 2020 and submitted your return on or before 2 March 2021 and also be trading in 2020 to 2021. The service for claiming this grant will be available from late July 2021.
The level of this grant will be calculated by looking at how much the turnover has been reduced in the year April 2020 to April 2021:
- 80% of 3 months’ average trading profits, capped at £7,500, for those with a turnover reduction of 30% or more
- 30% of 3 months’ average trading profits, capped at £2,850, for those with a turnover reduction of less than 30%
HMRC will be issuing guidelines as to how to calculate the reduction by the end of June.
Once we have had further information regarding this fifth grant we will update this page.
There is, however, still the following help available to those that are self-employed who are not eligible for the grant:
- Deferral of self-assessment and VAT payments
- Grants for businesses that pay little or no business rates
- Business Interruption Loan Scheme
- Bounce Back Loan
Any grant paid will be subject to income tax as well as National Insurance and will need to be reported on a future tax return.
Do you qualify for the scheme?
To qualify, the individual must be self-employed or a member of a partnership and you must have submitted your 2019/20 tax return by 2 March 2021 Firstly HMRC will look at the 2019/20 Tax Return, where the following tests must be passed:
One of two tests must be passed:
Taxable trading profits for the individual in 2019/20 of less than £50,000 and these profits constitute at least half of your total taxable income; OR
Average taxable trading profits for the individual in 2016/17, 2017/18, 2018/19 and 2019/20 of less than £50,000 and these profits constitute more than half the average taxable income in the same period.
Where the individual has not been trading for all the previous years, HMRC will only use the relevant tax years.
Finally, HMRC have confirmed that you can only claim if your trade has been adversely affected by Covid-19. Examples have been provided, and include instances where:
- You are shielding, self-isolating, on sick leave because of coronavirus, have caring responsibilities because of coronavirus; or
- You had to scale down or temporarily stop trading because:
- your supply chain has been interrupted
- you have fewer or no customers or clients
- your staff are unable to come in to work
How to submit your SEISS Claim
If you are eligible, HMRC have said that they will contact you in mid-April to give you your personal claim date, this will be either by phone, email, letter or SMS. This will be the date you will be able to make your claim from. Any applications made before your personal claim date will not be processed.
How will the grant process work?
It will only be possible to claim using the GOV.UK online service. If you have not set up a Government Gateway Account, please contact us at the earliest opportunity and we can provide a help sheet to walk you through the process.
If you receive texts, calls or emails claiming to be from HMRC, offering financial help or a tax refund and requesting you to click on a link or to give personal information, we suspect it will be a scam.
Once the taxpayer has lodged a claim with HMRC, the SEISS grant will be paid within 6 working days.
What if I no longer qualify?
HMRC will also be contacting previous claimants for the SEISS Grants but are no longer eligible due to either :
- Not filing their 2019/20 tax return before 2 March 2021, or
- Not meeting the criteria when their filed 2019/20 tax return is taken into account