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 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 are now being made available under the SEISS, which will have extended eligibility criteria to include those who became newly self-employed in the 2019-2020 tax year.
We’ve set out below what we know so far about who’s eligible for the fourth and fifth grants and how to make a claim.
The fourth SEISS grant
What is the fourth 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 fourth grant is intended to cover the period from February to April 2021 and will be made available for claims from late April 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 1 February 2021 and 30 April 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 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.
How do I apply for the fourth grant?
HMRC’s online portal for claims of the fourth grant is now open. Claims must be made on or before 1 June 2021.
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; and
- Your bank account details (this must be an account which can accept a Bacs payment).
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 1 February 2021 and 30 April 2021 due to coronavirus.
If I’m eligible for the fourth grant, how much money will I get?
If you are eligible for the fourth grant, you’ll get a grant from the Government equivalent to 80% of your trading profits, up to a cap of £2,500 per month, to cover 3 months. This means that the maximum you could receive is £7,500.
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 get paid?
Approved claims 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 April 2021.
We will provide further guidance about the fourth grant once more information is released by HMRC.
If you require financial assistance in the meantime, the Government has said that the self-employed will be able to access increased amounts of Universal Credit, but bear in mind that any grant money you receive under the Self-employment Income Support Scheme will be treated as part of your income for the purposes of your Universal Credit assessment.
The fifth SEISS Grant
The Government announced on 3 March 2021 that it will provide a fifth and final SEISS grant to cover the period from May to September 2021.
This grant will be determined on the basis of an eligible individual’s turnover in the year April 2020 to April 2021. Those whose turnover fell by 30% or more will continue to receive a grant of 80% of 3 months’ average trading profits (capped at £7,500) whilst those whose turnover has fallen by less than 30% will receive a 30% grant, capped at £2,850.
The fifth grant is expected to be open for claims from late July 2021. Further guidance is expected.