HM Revenue & Customs (‘HMRC’) are preparing self-employed individuals for an available third Self-Employment Income Support Scheme (‘SEISS’) grant. HMRC have recently published additional claim guidance, inclusive of the newly implemented criteria. Claimants must meet HMRC’s stringent application specifications, including the ability to outline the negative impact the COVID-19 pandemic has had on their business and income.
Given this, the White Hart Associates (‘WHA’) team have highlighted what has changed —and what hasn’t — when it comes to claiming the third grant.
Overview
This grant extension offers 80% of 3-months’ average trading profits paid out in a single taxable instalment (capped at £7,500). The availability on this extension covers the period from 1st November 2020 to 29th January 2021. Self-employed individuals who are eligible (and in need of support) will be able to claim this further grant at any time between 30th November 2020 to 29th January 2021.
The online service for this grant will be available from 30th November 2020, and to make the claim you will need to visit the webpage of ‘GOV.UK’ and search for ‘Self Employment Income Support Scheme’.
What remains the same?
- You will still need to have submitted a Self-Assessment Tax Return for the tax year 2018 to 2019 showing self-employment income in order to make a claim (unless one of the existing exemptions applies).
- You will still need to check if you are eligible to claim as this is different in some aspects to the previous SEISS grants.
- Be aware that, similar to the first and second SEISS grant schemes, WHA cannot make this claim on your behalf as accountants and agents, you must claim for it yourself.
- The application process is almost identical for the first SEISS grant. It should only take a few minutes of your time to claim, and you can do it easily on a smartphone device.
- This third scheme extension will also be subject to Income Tax and self-employed National Insurance Contributions, and must also be reported on your 2020 to 2021 Self-Assessment Tax Return.
- To meet the criteria, you must be a self-employed individual or a member of a partnership. Please note, you cannot claim the grant if trading through a limited company or a Trust.
- You must have traded in both the tax years 2018 to 2019 and 2019 to 2020.
What has changed?
You must meet a number of conditions, and make an honest assessment about whether you reasonably believe your trading profits will be significantly reduced due to COVID-19.
In other words, to make a claim for the third grant you must now declare yourself to be either currently trading and negatively impacted by reduced demand due to the pandemic, or to have been trading but temporarily unable to do so due to the pandemic.
Your business must have been impacted on or after 1st November 2020.
Additionally, the following must apply:
- You must either be currently trading but are impacted by reduced activity, capacity or demand, or have been previously trading but are temporarily unable to do so due to coronavirus.
- You must declare that you intend to continue to trade, and must reasonably believe that the impact on your business will cause a significant reduction in your trading profits.
- You must only claim if the reduction in profits is caused by reduced business activity, capacity or demand, or inability to trade due to coronavirus. Please note a reduction in profits due to increased costs (such as having to buy masks) does not count for this purpose.
What constitutes a ‘significant reduction’ in trading?
HMRC state that they cannot make this decision for a business because individual and wider business circumstances will need to be considered.
But their guidance provides a helpful list of examples to aid you to ascertain if you do meet the stipulated application criteria:
Example 1:
A café owner has fewer customers due to the Government restrictions on socialising and social distancing measures and thus experiences a reduction in trade as a result. Furthermore, the owner of the café reasonably forecasts a significant reduction in trading profits ongoing.
RESULT: Deemed as eligible to claim the third grant.
In the instance the café owner increases their prices and believes their trading profits will not reduce significantly.
RESULT: NOT eligible to claim the third grant.
EXAMPLE 2:
A builder with coronavirus symptoms who self-isolates for 5 days before receiving a COVID-19 negative test is unable to work from home, but is able to rearrange their contracts. Furthermore, this builder does not believe there will be a significant reduction in their trading profits due to this situation.
RESULT: NOT eligible to claim the third grant.
An electrician is still trading, but has incurred increased expenses due to having to purchase Personal Protective Equipment (‘PPE’) and additional cleaning supplies. However, these increased costs are the only negative impact on the business and they have not lost any customers.
RESULT: NOT eligible to claim the third grant.
EXAMPLE 3:
A dentist returns from a holiday abroad and has to self-isolate for 14 days due to the quarantine rules. As this is the only impact on their business, rendering reduced demand for their services due to self-isolation after their foreign travel.
RESULT: NOT eligible to claim the third grant.
More information
There is expected to be a fourth extension to the SEISS grant. This fourth extension will cover the 3-month period from February 2021 to April 2021.
Of course, the White Hart Associates team will inform you with more details and guidance nearer the time of this becoming available, including how much it will be for and the regulation and rules for making another claim against this extension.
