If your business has been affected by coronavirus, in many cases there has been support provided by the government.
As a self-employed individual you may have been eligible for the previous SEISS government grants that have now ended.
In the Chancellor’s recent Budget speech, he announced further help for the self-employed to cover the period 1st Feb – 30th April 2021, and extended the amount of people who would be eligible.
So what’s on offer?
The fourth SEISS grant will pay you 80% of your ‘average monthly trading profit’, for 3 months.
HM Revenue & Customs will take the last 4 years’ tax returns, add your profit together and divide by 4 to get an average trading profit.
This is your trading profit only, so it doesn’t take into account income from, say, rental properties or paid jobs.
HM Revenue & Customs then use this figure to work out what an average month’s ‘pay’ should be, and give you 80% of that for 3 months.
They cap this amount at £7,500, and pay it in one lump sum.
Can I claim?
You can claim if:
- You traded in both tax years 19/20 and 20/21, AND submitted your tax returns. (Certain deadlines apply, so if you were late, this could impact on?? your ability to claim).
- Your average profits were no more than £50,000 and at least equal to your other income (such as a paid job).
- You must either be currently trading but impacted by reduced demand, OR have been trading but are temporarily unable to do so due to coronavirus.
- You must be intending to continue trading and reasonably believe there will be a significant reduction in your trading profits.
The wording on this grant is much tighter than the previous one, especially in regard to the ‘significant reduction’ wording.
You need to declare when you make the claim that you believe your business profits will see a significant reduction, due to the impact of coronavirus between 1st February – 30th April 2021. You must keep evidence to back that up.
HMRC give you examples of the ‘reasonable belief’ of reduced demand in their guidance here.
There are further detailed criteria that can prevent you from claiming, but these are the main ones.
If you don’t meet the other criteria, you will be told so during the claim process.
How does the grant work for tax purposes?
The fourth SEISS grant is taxable and therefore needs to be reported on your tax return for the 2021/22 tax year.
This may seem odd as some of the grant covers months in the 2020/21 tax year. HMRC have decided to keep life simple and declare it in the year you were paid.
How do I claim?
You may have already been invited to claim, but if not you can do so here.
Be wary of scammers sending false links to this; it’s a common issue at the time of writing. Accountants or tax agents can’t make this claim for you.
When will I get my cash?
Presuming the claim goes through ok, you will usually be paid within 6 working days.
Are there more grants?
Yes, there will be a 5th grant covering May 21 to September 21. It is thought that this grant will be a two-tier grant, at either 30% or 80% of your average monthly trading profits, depending on the coronavirus impact on your business turnover (sales).
Can my accountant apply for this grant for me?
No, you need to apply yourself via the HMRC website (here’s the link again).
As that tax service website says:
“You should not make a claim on behalf of someone else, or allow someone to claim for you.”
If you haven’t applied before, you will need a Government Gateway account. If you haven’t got one, you will need to set one up.
Once you have your Government Gateway user ID and password, you can log in and apply.
You will also need your:
- Self Assessment Unique Taxpayer Reference (UTR)
- National Insurance number
- UK bank details including account number, sort code, name on the account and address linked to the account
Need any extra help with your accounts in general?
If you are self-employed and think you may be missing out on the various grants and benefits you may be eligible for, call for a chat about how we can help. We offer a 121 advice service where you can ask us all your questions, for a one-off fee. You don’t need to be one of our clients, and we certainly won’t pressure you into becoming one.