Self Employed Income Support Grants Four and Five
Those who had filed a tax return by March 2 2021 will now be eligible for both grants, where they meet the wider criteria.
GRANT FOUR
No date has been announced as yet for the claim date for the 4th round of SEISS grants.
Applications will not be open until late April for the fourth grant and close on May 31
If you are eligible, HMRC will contact you in mid-April to give you your personal claim date.
A fourth grant at 80% of average trading profits, with new eligibility including 2020 tax returns. 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.
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 we will first 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, we will then 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
GRANT FIVE
There will be a fifth and final grant covering May to September and 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%
The grant does not need to be repaid if you’re eligible but will be subject to Income Tax and self-employed National Insurance and must be reported on your 2020 to 2021 Self-Assessment tax return.
You must keep evidence to support your claim.
Grants under the Self-Employment Income Support Scheme are not counted as ‘access to public funds’, and you can claim the grant on all categories of work visa.
You can follow these steps to help you understand what you can do now.
FOR REFERENCE THESE ARE THE CRITERIA USED FOR GRANT THREE
The phrase HMRC uses is to make an,"honest assessment", before you submit a claim.
You must have a, "reasonable belief" that from November 1 to January 29, 2021 you have suffered reduced business activity, capacity or demand, or inability to trade which will mean a significant reduction in trading profits due to Coronavirus, when you come round to report that when you fill in your tax return for the period
We have provided the links to the claims page and a link to show you what evidence you must keep to back up your claim, should it be questioned in the future, as well as the full official guidance below the examples.
Don't forget if you are unsure on the rules after you have read that through just give our Covid team a call and we'll walk through your own circumstances with you.
Examples of reduced demand or unable to trade
These are examples of people who have been impacted by coronavirus between 1 November 2020 and 29 January 2021.
Reduced demand and reasonable belief
A cafe owner has fewer customers due to government restrictions on households mixing, which reduces her takings. She reasonably believes this will significantly reduce her trading profits. She is eligible to claim.
A plasterer cannot get materials due to supply chain issues due to coronavirus. This has reduced the amount of work he can complete and be paid for. He reasonably believes this will significantly reduce his trading profits. He is eligible to claim the third grant.
A part-time personal trainer works in a gym that has closed due to government restrictions. This reduces her business activity on the days that she works. She reasonably believes this will have a significant reduction on her trading profits. She is eligible for third grant.
Reduced demand and no reasonable belief
A cafe owner has fewer customers due to government restrictions on households mixing, which initially reduces her takings. She increases her prices and believes her trading profits will not reduce significantly, so she is not eligible to claim the third grant.
A plasterer cannot get materials due to supply chain issues due to coronavirus. This has reduced the amount of work he can complete and be paid for, but he manages to quickly find a new supplier. He does not believe that the reduced demand will cause a significant reduction in his trading profits. He is not eligible to claim the third grant.
Unable to trade and reasonable belief
A hairdresser has had to shut his shop due to government restrictions. He will not have any income due to the closure and reasonably believes the reduction in his trading profits will be significant. He is eligible to claim the third grant.
A builder has received a letter from the NHS identifying him as clinically extremely vulnerable and it asks him to stay at home. As he is unable to work from home he has a reasonable belief that there will be a significant reduction in his trading profits. He is eligible to claim the third grant.
Unable to trade and no reasonable belief
A hairdresser was unable to work for 2 days as his hair salon closed to be deep-cleaned due to a positive coronavirus case. He does not believe this will significantly reduce his trading profits. He is not eligible to claim the third grant.
A builder has developed coronavirus symptoms and self isolates for 5 days before receiving a negative test result. During those 5 days he was unable to work from home but was able to rearrange his contracts. He does not believe there will be a significant reduction in his trading profits. He is not eligible to claim the third grant.
Other examples
An electrician is still trading but has had increased costs due to buying masks, cleaning supplies and screens. She is not eligible for the third grant because increased costs were the only impact on her business and she has not lost customers.
A dentist returns from a holiday abroad and has to self-isolate for 14 days due to quarantine rules. As this is the only impact on her business, she is not eligible to claim the third grant. This is because reduced demand due to self-isolation after foreign travel is not included in the eligibility criteria.
An accountant reduces his business activity because he wants to partially retire. He reasonably believes this will have a significant reduction on his trading profits. He is not eligible for third grant because the reduced business activity was not caused by coronavirus.
The client of a dog walker cancels a contract due to coronavirus. The dog walker could but chooses not to look for additional work to replace the contract. This means her business activity and her trading profits are reduced because she chooses not to replace the contract and not because of coronavirus. She is not eligible for the third grant.
A IT consultant has other income from renting property. He has made losses on renting due to renovation costs. This is not related to his trading profits from his IT consultancy service. As his consultancy business has not been affected due to coronavirus, he is not eligible for the third grant.
THE SELF EMPLOYED INCOME SUPPORT SCHEME
If you're self-employed or a member of a partnership and have been impacted by coronavirus (COVID-19) find out if you can use this scheme to claim a grant.
How we work out the amount of the third grant
The scheme has been extended. If you were not eligible for the first and second grant based on the information in your Self-Assessment tax returns, you will not be eligible for the third.
HMRC expects you to make an honest assessment about whether you reasonably believe your business will have a significant reduction in profits.
To make a claim for the third grant your business must have had a new or continuing impact from coronavirus between 1 November 2020 and 29 January 2021.
The third taxable grant is worth 80% of your average monthly trading profits, paid out in a single instalment covering 3 months’ worth of profits, and capped at £7,500 in total.
Applications for the third grant will open from 30 November 2020. Make your claim from the date we give you either by email, letter or within the service. If you’re eligible, you must make your claim for the third grant on or before 29 January 2021.
The grant does not need to be repaid if you’re eligible but will be subject to Income Tax and self-employed National Insurance and must be reported on your 2020 to 2021 Self-Assessment tax return.
You must keep evidence to support your claim.
Grants under the Self-Employment Income Support Scheme are not counted as ‘access to public funds’, and you can claim the grant on all categories of work visa.
You can follow these steps to help you understand what you can do now.
WHO CAN CLAIM?
To be eligible for the third grant you must be a self-employed individual or a member of a partnership. You cannot claim the grant if you trade through a limited company or a trust.
If you claim Maternity Allowance this will not affect your eligibility for the grant.
a) You must have traded in both tax years:
· 2018 to 2019 and submitted your Self Assessment tax return on or before 23 April 2020 for that year
· 2019 to 2020
b) 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
c) You must also declare that:
· you intend to continue to trade
· you reasonably believe there will be a significant reduction in your trading profits
Reasonable belief
In order to claim, you must reasonably believe that you will suffer a significant reduction in trading profits due to reduced business activity, capacity or demand or inability to trade due to coronavirus during the period 1 November to 29 January 2021. You must keep evidence that shows how your business has been impacted by coronavirus resulting in less business activity than otherwise expected.
Significant reduction
Before you make a claim, you must decide if the impact on your business will cause a significant reduction in your trading profits for the tax year you report them in.
HMRC cannot make this decision for you because your individual and wider business circumstances will need to be considered when deciding whether the reduction is significant.
You should wait until you have a reasonable belief that your trading profits are going to be significantly reduced, before you make your claim.
Here are some examples that can help you decide.
HOW HMRC WORKS OUT ELIGIBILITY
To work out your eligibility we will first look at your 2018 to 2019 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 the 2018 to 2019 Self Assessment tax return, we will then look at the tax years 2016 to 2017, 2017 to 2018, and 2018 to 2019.
How different circumstances affect the scheme
Some circumstances can affect your eligibility such as if:
o If your tax return is late, amended or under enquiry
o If having a new child affected the trading profits you reported for the tax year 2018 to 2019
o If you claim averaging relief
o If you’re a military reservist
o If you’re non-resident or chose the remittance basis
Find out more information on how your circumstances affect your eligibility.
HOW TO CLAIM
The online service for the third grant will be available from 30 November 2020.
You can then make your claim here on or before 29 January 2021.
You should contact HMRC if you receive any suspicious texts, calls or emails claiming to be from HMRC as this may be a scam.
How we work out the amount of the third grant
This is an example of how we will work out how much grant you’ll get if your average trading profits were £42,000 over the last 3 tax years.
If you’re eligible, you’ll receive a grant worth of 80% paid out in a single instalment covering 3 months’ worth of profits and capped at £7,500 in total.
Example
Average trading profit £42,000
Divide by 12 £ 3,500
Multiply by £10,500
Work out 80% £ 8,400
You will only receive £7,500 due to the cap
FURTHER SUPPORT IN FEBRUARY
There will be a fourth grant covering February 2021 to April 2021. We will set out further details, including the level of the fourth grant in due course.
OTHER SELF-EMPLOYED HELP
Get other financial support
You may be able to claim Universal Credit, but even if the claim is not approved it will affect any tax credits you claim and may affect other benefits. So you should:
· check how tax credits and other benefits affect each other
· find out what to do if you’re already getting benefits
If you make a claim for Universal Credit the grant may affect the amount you get, but will not affect Universal Credit claims for earlier periods.
The government is also providing the following help for the self-employed:
· grants for businesses that pay little or no business rates
· Business Interruption Loan Scheme
· Test and Trace support payments
If you have other employment as a director or employee paid through PAYE your employer may be able to get support using the Coronavirus Job Retention Scheme.
The online service has closed for the first and second grant.
Find out about the first and second grant in a previous version of this guidance on The National Archives.