On 26 March 2020, the Chancellor provided details about a temporary scheme to provide grants to individuals who are self-employed or who are members of a partnership and who have been negatively affected by the COVID-19 outbreak; the Self-Employment Income Support Scheme (SEISS).
Over the last year, several grants have been made available to the self-employed under the SEISS:
- A first grant between May 2020 and July 2020;
- A second grant between August 2020 and October 2020; and
- A third grant between November 2020 and January 2021.
Claims for these first three grants have now closed.
A further two grants have been made available under the SEISS, which have extended eligibility criteria to include those who became newly self-employed in the 2019-2020 tax year.
Applications for claims of the fourth grant, covering the period February to April 2021, closed on 1 June 2021. The fifth and final grant being made available under the SEISS will be open to claims in July 2021. We’ve set out below what we know so far about who’s eligible for the fifth grant and how to make a claim.
The fifth grant
What is the fifth SEISS grant?
It’s an additional grant being made available under the SEISS, to support self-employed individuals who have been negatively impacted by the COVID-19 pandemic.
The fifth grant is intended to cover the period from May to September 2021.
When is the fifth self-employed grant available?
HMRC’s online portal for claims of the fifth self employed grant is not yet open. It is expected to be made available from late July 2021. HMRC has confirmed that it will contact eligible individuals in mid-July to advise them of the date from which they can make their claims.
The final day for making your claim is 30 September 2021.
Am I eligible?
You will be eligible if you are either self-employed or a member of a partnership and all of the following requirements are met:
- you have traded in both the 2019-20 and 2020-21 tax years;
- you submitted your self-assessment tax return for the 2019-20 tax year on or before 2 March 2021 (you will not be able to claim if it was submitted after this date);
- you are currently trading but are impacted by reduced demand because of COVID-19 (or you would be trading if you hadn’t temporarily been impacted by COVID-19);
- you intend to continue trading (you will need to confirm this in your application);
- you reasonably believe that your trading profits will be significantly reduced between May and September 2021 due to coronavirus (you will need to confirm this in your application and keep evidence showing that your business has been impacted); and
- at least half your income comes from self-employment, and your self-employed trading profits are no more than £50,000.
HMRC will look at your trading profits in your 2019-2020 tax return to work out your eligibility. If you’re not eligible based on that return, it will instead look at your average trading profits in the 2016-17, 2017-18, 2018-19 and 2019-2020 tax years. Any tax returns submitted after 2 March 2021 will not be taken account of.
For members of partnerships, HMRC will work out eligibility based on an individual’s share of the partnership trading profits. Full details about partnership eligibility are beyond the scope of this article.
What information will I need to make my claim?
To make a claim, you will need the following information:
- Self-Assessment Unique Taxpayer Reference (UTR) number;
- National Insurance number;
- Government Gateway user ID and password;
- Your bank account details (this must be an account which can accept a Bacs payment); and
- Your turnover information (see below).
You will also need to confirm to HMRC that:
- you intend to continue trading; and
- you reasonably believe that there will be a significant reduction in your trading profits between May and September 2021 due to coronavirus.
If I’m eligible for the fifth grant, how much money will I get?
If you are eligible for the fifth grant, the amount of money you will receive will depend on how much your turnover has been reduced in the 2021-21 tax year.
To determine how much your turnover has reduced, HMRC will ask you to provide two separate turnover figures; your turnover over a 12 month period starting between 1 April 2020 and 6 April 2020, and your turnover for either 2019-2020 or 2018-2019. You should not include in your turnover any previous grant money you have received through the SEISS. If you started trading in the 2019-2020 tax year and did not trade in the three previous tax years, you will not be required to provide your turnover figures to claim the fifth grant. Further information about how to calculate your turnover can be found on the Government’s website.
If your turnover reduced by 30% or more, you will receive a grant from the Government equivalent to 80% of 3 months’ average trading profits, up to a maximum cap of £7,500. If your turnover has been reduced by less than 30%, you will receive a grant from the Government equivalent to 30% of 3 months’ average trading profits, up to a maximum cap of £2,850.
This will be paid to you in a single instalment.
Is the grant subject to income tax and National Insurance?
Yes. The grant is subject to income tax and self-employed national insurance in the usual way.
How will I be paid?
The Government will pay the grant in one instalment (to cover 3 months) directly into your bank account.
When will I be paid the fifth self-employed grant?
Approved claims under the SEISS have previously been paid within 6 working days of completion of the claim.
Will I need to repay the grant?
Can I still work if I receive a grant under the scheme?
Yes. Individuals who receive a grant under the scheme can continue to work and/or take on other employed work, including volunteering.
What records do I need to keep?
You should keep records of your claim, including the amount you have claimed, your claim reference number and evidence that your business has been adversely affected by the pandemic.
Remember that any grant money that you receive is subject to income tax and national insurance, and you will therefore need to report it on your self-assessment tax return.
What if I am overpaid?
If you think that you have been overpaid or that you were not eligible for the grant, you must tell HMRC and repay the grant or you may have to pay a penalty.
What do I need to do now?
HMRC’s online service for claims will open in late July 2021.
Before joining Sparqa Legal as a Senior Legal Editor in 2017, Frankie spent five years training and practising as a corporate disputes and investigations lawyer at leading international law firm Hogan Lovells. As legal insights lead, Frankie regularly contributes to Sparqa Legal’s blog, writing content across employment law, data protection, disputes and more.