Extension of SEISS Grants for the Self-Employed

Extension of SEISS Grants for the Self-Employed

The recent budget contained confirmation that further grants should be available under the Self-Employed Income Support Scheme (SEISS). A good amount of information is available for the fourth grant (open for claims from late April 2021) and details surrounding the fifth grant (open for claims from late July) will be provided by HMRC 'in due course'.

As before, claims are likely to be made through the designated HMRC portal.  If you are eligible, HMRC will contact you in mid-April to give you your personal claim date.  Please ensure that you are still able to access HMRC's online services (using your Government Gateway user ID and password) so that you have every chance of receiving their communications and can make your claim.  Further information is available here: https://www.gov.uk/log-in-register-hmrc-online-services

 Three excellent sites for keeping up to date with details and for further information are:

·       HMRC- https://www.gov.uk/government/publications/self-employment-income-support-scheme-grant-extension/self-employment-income-support-scheme-grant-extension

·       Chartered Institute of Taxation - https://www.tax.org.uk/policy-and-technical/covid-19/self-employment-income-support-scheme

·       Institute of Chartered Accountants - https://www.icaew.com/coronavirus/self-employment-income-support-scheme (at the time of writing - not yet updated for grants four and five)

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FOURTH AND FIFTH GRANTS

The UK-wide Self Employment Income Support Scheme(SEISS) will be extended to September 2021, with the criteria relaxing so that more people can claim for the first time. Here are the full details of the scheme extension from HMRC.

The 4th SEISS payment take your 2019/2020 tax return into account and will be open to those who became self-employed in the tax year 2019 to 2020.

The amount receivable will be set at 80% of 3 months’ average trading profits. The payment will be capped at £7,500 and paid out in a single installment, likely to be available from late April 2021 to 31 May 2021.

The 4th grant is open to people who meet these criteria:

·       Traded in the tax years ending 5 April 2020 and 5 April 2021;

·       Submitted your 2020 Self-Assessment Tax Return by 2 March 2021;  

·       Trading profits under £50,000 and at least equal to your non-trading income;

·       Currently trading but impacted by reduced demand due to the pandemic or, the pandemic is temporarily stopping you from trading; and

·       Those who intend to continue to trade and who reasonably believe that there will be a significant reduction in their trading profits due to the pandemic.

·       There will also be a 5th grant covering May 2021 to September 2021. The amount of this 5th grant will be determined by how much your turnover has reduced from the year ended 5 April 2020 to the year ending 5 April 2021, i.e. pre-pandemic vs. pandemic.  

This 5th 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;

·       30%of 3 months’ average trading profits, capped at £2,850 for those with a turnover reduction of less than 30%.

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GENERAL CONSIDERATIONS

​We have already seen HMRC make direct inquiries of grant claimants in respect of their eligibility for the grants claimed.  Please make sure that you check your eligibility carefully.  Where the criteria include comments along the lines of 'impacted by reduced demand' or'the pandemic is temporarily stopping you from trading', it would be advisable to keep documented evidence of why you feel that you meet these requirements for grants four and five or met these criteria for previous grants, if applicable.  There is no explicit guidance on the records/evidence that should be kept but it would be advisable to make sure that you have clear reasons to give to HMRC if they inquire into the 'reduced demand' that you have experienced/are experiencing or how the pandemic is stopping you from trading.  

With regards to the fifth grant, it appears that the amount receivable will be calculated with reference to your figures for the year ending 5 April 2021.  Since the claim portal is due to open in late July 2021, it would certainly be advisable for you to have had your tax return for 2021 (and accounts, if applicable) at least drafted at that point, if possible.

All the best and stay safe.

Duncan & Jo

HOLLY LODGE