In the Budget it was confirmed that the fourth Self-Employment Income Support Scheme (“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 the latest 2019/20 tax returns and will be open to those who became self-employed in tax year 2019/20. The rest of the eligibility criteria remain unchanged from the previous rounds of the SEISS grant.
Note that because the calculation of this latest grant is based on a different period to the first three grants, this may affect an individual’s ability to claim or the amount of the fourth grant, which could be higher or lower than previous grants someone may have received.
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 a person’s eligibility HMRC will first look at your 2019/20 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 2019/20 Self Assessment tax return, they will also look at the tax years 2016/17, 2017/18, 2018/19 as well as 2019/20.
You must also have traded in both tax years 2019/20 and 2020/21, and have submitted your 2019/20 tax return by 2 March 2021.
You must either be currently trading but are impacted by reduced demand due to coronavirus, or have been trading but are temporarily unable to do so due to coronavirus. You must also declare that you intend to continue to trade and 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
To allow HMRC to process recently submitted 2019/20 Self Assessment tax returns, 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 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:
Further details will be provided on the fifth grant in due course.
By Chris Hill, Partner