To help self-employed individuals through the next stage of the COVID-19 pandemic, the Government announced there will be a fourth and fifth (SEISS) grant.
So far, there have been three SEISS grants provided, covering the period from March 2020 to January 2021. The SEISS has already supported 2.7 million people, with claims totaling £19.7 billion.
At the Budget it was confirmed that the fourth SEISS grant will be set at 80% of 3 months’ average trading profits, paid out in a single instalment, capped at £7,500. The fourth grant will take into account 2019 to 2020 tax returns and will be open to those who became self-employed in tax year 2019 to 2020. The rest of the eligibility criteria remain unchanged.
Your eligibility for the scheme will now be based on your submitted 2019 to 2020 tax return. This may also affect the amount of the fourth grant which could be higher or lower than previous grants you may have received.
Fourth Self-Employment Income Support Scheme grant
As with the third SEISS grant, the fourth grant will be worth 80% of three months’ average trading profits, paid out in a single instalment and capped at £7,500 in total.
The grant will cover the period from February 2021 to April 2021.
It is expected claims can be made from late April.
Further details on eligibility are due to be released but self-employed individuals who completed tax returns for the 2019/20 tax year will qualify, provided their return was submitted to HMRC by midnight on 2nd March 2021.
The Government estimates this means that over 600,000 individuals may be newly eligible for SEISS grants, including many newly self-employed. The provisional guidance is that other eligibility criteria will remain the same as the third grant.
Fifth Self-Employment Income Support Scheme grant
The Government also announced a fifth and final SEISS grant covering the period from May 2021 to September 2021.
The value of the fifth grant will be determined by a new turnover test.
Individuals whose turnover has fallen by 30% or more will continue to receive the full grant worth 80% of three months’ average trading profits, capped at £7,500.
Individuals whose turnover has fallen by less than 30% will receive a 30% grant, capped at £2,850.
It is expected that the final grant can be claimed from late July 2021.
1. Who can claim
To be eligible for the fourth grant you must be a self-employed individual or a member of a partnership.
To work out your eligibility, look at your 2019 to 2020 Self Assessment tax return. Your trading profits must be no more than £50,000 and at least equal to your non-trading income.
If you’re not eligible based on your 2019 to 2020 Self Assessment tax return, look at the tax years 2016 to 2017, 2017 to 2018, 2018 to 2019 and 2019 to 2020.
You must also have traded in both tax years:
2019 to 2020 and submitted your tax return by 2 March 2021
2020 to 2021
You must either:
be currently trading but are impacted by reduced demand due to coronavirus
have been trading but are temporarily unable to do so due to coronavirus
You must also declare that:
you intend to continue to trade
you 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 coronavirus
2. What the fourth grant covers
The fourth grant will provide a taxable grant calculated at 80% of 3 months’ average trading profits. The fourth grant will be paid out in a single instalment and capped at £7,500 in total.
3. How to claim
The online claims service for the fourth grant will be available from late April 2021 until 31 May 2021.
If you are eligible, HMRC will contact you in mid-April to give you your personal claim date. This will be the date that you can make your claim from.
There will be more guidance about the fourth grant in due course.
4. Further support
The UK government has also announced that there will be a fifth and final grant covering May to September.
You will be able to claim from late July if you are eligible for the fifth grant.
The amount of the fifth grant will be determined by how much your turnover has been reduced in the year April 2020 to April 2021.
The fifth 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%
Further details will be provided on the fifth grant in due course and more information can be found here.
If you need help with your small business and navigating the support available, get in touch with Purple Accounts on 01925 268753 or email: email@example.com