Earlier this week, HMRC started contacting those who are eligible for the fourth Self-Employment Income Support Scheme (SEISS) grant, which covers the period from 1 February 2021 to 30 April 2021.
The onus is on taxpayers to determine their own eligibility for this grant and, although as agents we are unable to make applications on your behalf, we are happy to provide a sounding board for your deliberations.
Eligibility, reasonable belief and significant reduction
Unlike the first three grants, the fourth takes into account 2019/20 tax returns and is open to those who became self-employed in the tax year 2019/20.
Applicants must be self-employed individuals or members of partnerships who have traded in tax years 2019/20 (and submitted tax returns on or before 2 March 2021) and 2020/21.
HMRC guidance stipulates that applicants must either:
- be currently trading but impacted by reduced demand due to coronavirus, or
- have been trading but are temporarily unable to do so due to coronavirus.
In addition, applicants must intend to continue to trade and have “reasonable belief” that there will be a “significant reduction” in trading profits due to reduced business activity, capacity, demand, or inability to trade due to coronavirus between 1 February 2021 and 30 April 2021. HMRC clearly states that it expects “you to make an honest assessment about whether you reasonably believe your business will have a significant reduction in profits”, so take a look at some examples that may help you make an informed assessment.
As you might expect, there are a range of circumstances that can affect eligibility for the scheme, from filing late returns or being under enquiry to having loans covered by the loan charge provisions and claiming averaging relief. Find out more about how these and other circumstances can affect SEISS eligibility.
Trading profits must be no more than £50,000 and at least equal to or more than non-trading income.
Once approved, grants are paid out in a single instalment, capped at £7,500 in total, and are subject to Income Tax and self-employed National Insurance Contributions.
Find out more information on how HMRC works out trading profits and non-trading income for the self-employment income support scheme.
How to apply
HMRC is currently issuing “personal claim dates” to taxpayers it deems eligible for the scheme and applicants have until 1 June 2021 to submit a claim.
The Government website includes additional useful information about SEISS, who can claim and what the 4th grant covers.
There will be a fifth grant covering May 2021 to September 2021 and we’ll share what we know about that in due course.
As I’ve already mentioned, unfortunately we are unable to complete SEISS applications on behalf of taxpayers but we can provide a useful sounding board if you have any concerns about your eligibility, so get in touch with your usual Sagars contact if you have any queries