The latest round of grants for the SEISS has been announced, with more applicants potentially qualifying.
Applications for the third grant for the Self-employed Income Support Scheme closed on 29 January 2021, with the details of the fourth grant slated for announcement on Budget day. The chancellor in fact went further in the Budget announcement that a fourth and fifth grant will be paid to the self-employed.
As lockdown restrictions are phased out with more and more opening up of the economy, further SEISS grants will be made available as follows.
The fourth SEISS grant will be set at 80% of three months’ average trading profits, paid out in a single instalment, capped at £7,500. This covers the three-month period from 1 February to 30 April 2021.
For the first time, some of the relatively newly self-employed – who completed tax returns for the 2019-20 financial year – will qualify. They previously lost out if they had not been trading in 2018-19. The fourth grant will therefore take into account 2019-20 tax returns and will be open to those who became self-employed in tax year 2019-20.
To work out an individual’s eligibility HMRC will first look at the 2019-20 self-assessment tax return. Trading profits must be no more than £50,000 and at least equal to non-trading income.
If not eligible based on the 2019-20 tax return, HMRC will also look at the tax years 2016-17 through to 2018-19 along with the 2019-20 return. Eligibility will also depend on the following.
The individual must have traded in both tax years:
- 2019-20 and submitted their tax return by 2 March 2021, and
They 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.
They must also declare that:
- they intend to continue to trade
- they reasonably believe there will be a significant reduction in their trading profits due to reduced business activity, capacity, demand or inability to trade due to coronavirus.
The claims portal for the fourth grant will open from late April and will be available until 31 May 2021.
There will be also be a fifth and final grant covering the period May to September. Individuals will be able to claim from late July if they are eligible for the fifth grant.
The amount of the fifth grant will be determined by how much an individual’s turnover has been reduced in the tax year 2020-21.
The fifth grant will be worth:
- 80% of three months’ average trading profits, capped at £7,500, for those with a turnover reduction of 30% or more
- 30% of three months’ average trading profits, capped at £2,850, for those with a turnover reduction of less than 30%.
Further details will be provided on the fifth grant in due course.
This article has been shared from ACCA In Practice, to whom copyright belongs. Whitefield Tax are an ACCA Member Firm