So, here we go again. The 4th SEISS grant (this is the Self-Employed Income Support Scheme grant) is upon us. Here we look at who is eligible, as well as when and how much you'll be able to claim.
We have already sent out information to anyone who commenced self-employment in the 2019/20 tax year and advised on the way HMRC would be contacting them for verification that they are eligible to claim.
While we endeavour to ensure the accuracy of the information we have provided, before making any claim you should always check gov.uk for the very latest information.
The 4th SEISS Grant covers the period between February 2021 and April 2021 inclusive.
Geoff Selby, Business Director
When can the 4th grant be made?
If you are eligible, HMRC should contact you around mid-April 2021 to provide you with a date from which you can make the claim through the Gov.UK online portal.
The final deadline for making the claim will be 31st May 2021.
Who is eligible?
You must have been self-employed during the 2019/20 and 2020/21 tax years.
You must have submitted your 2019/20 Tax Return by 2nd March 2021.
If you commenced trading during the 2019/20 tax year, you must have provided the information requested by HMRC when they carried out a pre-verification check on you sometime between 8th March and mid-April 2021.
You must either be trading but impacted by reduced demand due to the pandemic or
Have been trading but are temporarily unable to do so due to the pandemic.
You must intend to continue to trade.
You must reasonably believe there will be a significant reduction in your trading profits due to reduced business activity, capacity, demand or inability to trade due to the pandemic.
Your self-employed profits for 2019/20 tax year must be no more than £50,000 and represent at least 50% of your total 2019/20 income or:
Your average self-employed profits for the tax years 2016/17 to 2019/20 inclusive must be no more than £50,000 and represent at least 50% of your average total income for the same period.
(N.B if you commenced self-employment later than 2016/17 then the average is over the period from the tax year you commenced trading up to and including 2019/20.)
What is meant by "reasonably believe" and "significant reduction"?
You must have experienced reduced activity, capacity or demand or to be temporarily unable to trade in the period from 1st February 2021 to 30th April 2021, compared with what could reasonably have been expected but for the adverse effect on the business due to the coronavirus.
You must reasonably believe the impact will cause a significant reduction in trading profits for the relevant accounting period as a whole (not just the 3 months ending 30th April 2021), compared with what would otherwise have reasonably been expected as a result of that reduced activity, capacity or demand.
Claimants are entitled to either £7,500 or 80% of 3 months average trading profits - whichever is the lower.
Geoff Selby, Business Director
What will you need to make the claim?
Your Unique Taxpayers Reference number.
Your National Insurance number.
Government Gateway ID and password.
Bank account and sort code.
What evidence should be kept?
As we are now finding out with the way HMRC are inspecting previous claims, you will need to keep evidence to hand in case you are visited by the Taxpayer Protection Taskforce. This includes:
A copy of the amount claimed.
A copy of the claim reference number.
Evidence to show the impact and reduction in your business activity across the period from February to April 2021 inclusive.
Evidence that, at the time of making the claim, you had reason to believe that the trading profits were going to be significantly reduced, not just for the period February to April 2021.
It is important to note:
If you are eligible and commenced self-employment during the 2019/20 tax year, the average 3 months trading profits is calculated on a full 12-month period. For example:
Joe commenced self-employment on 1st October 2019. His trading profit for the 6 months up to 5th April 2020 was £12,000. He fits all the eligibility criteria for the 4th SEISS claim. He would be entitled to £2,400.
This is worked out as follows:
(£12,000/12 months) x 3 months = £3,000 x 80% = £2,400
If you made earlier SEISS grant claims, and you are eligible to do so this time around, be aware that the size of the claim may be different as the 2019/20 trading profit is now being brought into account.
The grant will need to be reflected within your self-employed accounts and will be liable for tax and national insurance.
Keeping a copy of evidence backing up the reasons for your claim will help should HMRC look to review your claim in the future.
If you have not been notified by HMRC that you are eligible to make a claim or you are not sure whether you fit the eligibility criteria please do not hesitate to contact us.
Will there be a 5th SEISS Grant?
Yes, there will be a 5th grant and it will cover the period from May to September 2021 inclusive.
If eligible, you will be able to claim from late July 2021 onwards.
The grant will be worth 80% of 3 months average trading profits, capped at £7,500, for those with a turnover reduction of 30% or more or:
30% of 3 months average trading profits, capped at £2,850, for those with a turnover reduction of less than 30%.
While I welcome all of the support that has been provided by the government, please ensure you read all of the application criteria in full here and check the small print.
Don’t fall foul of missing critical information that may apply to your claim. Look out for the forthcoming blog about some of the ways that self-employed people have been caught out by not reading and fully understanding the criteria for their claim.
If in doubt, seek professional guidance. Where there may be a fee attributed to this it will be far less than having to pay the grant back to HMRC and potentially paying any fines.
Geoff Selby, Business Director
M.A.D Accountants operate both locally around West Bridgford, Nottingham and throughout the UK. You can contact the team for more specific guidance on 0115 9989167 or get in touch via our contact form.