UPDATED FOR INFORMATION ON THE 4TH GRANT
The online service for the third grant under the Self-Employed Income Support Scheme (SEISS) is now available and will remain open until 29 January 2021.
The SEISS was extended to provide financial support to businesses over the winter, although it comes with extra conditions.
The Chancellor has confirmed that the third SEISS grant covering November to January will be calculated at 80% of average trading profits, up to a maximum of £7,500.
The window for claiming a grant opened on 30 November, allowing claims to be made on or before 29 January 2021.
Extra welfare support for the self-employed has also been announced.
The extension of SEISS provides two lump sum grants between November 2020 and April 2021.
Grants will be paid in two lump sum instalments each covering a three-month period.
The third grant covers a three-month period from 1 November 2020 until 31 January 2021. The Government will provide a taxable grant covering 80% of average monthly trading profits, paid out in a single instalment covering 3 months’ worth of profits, and capped at £7,500 in total.
The fourth grant will cover a three-month period from 1 February 2021 until 30 April 2021. The Government will review the level of the second grant and set this in due course.
The grants are taxable income and also subject to National Insurance contributions.
To be eligible for the scheme, self-employed individuals, including members of partnerships, must meet the following criteria:
The qualifying period for the third grant is between 1 November and the date of claim.
The criteria to be “actively trading” and to be “impacted by reduced demand” are new.
(See our other article which explains these criteria in more detail.)
Additionally, the actively trading criteria means firms closed during the pandemic may not be able to claim if they have not restarted during the qualifying period.
The grants will be based on the same tax years as the two previous grants, so information on 2019/20 self-assessment tax returns will not be considered.
Some people are excluded from making a claim under SEISS, including the newly self-employed, those with profits of over £50,000, and those who derive more than half of their income from other sources.
Gary has self-employed trading profits for the last three tax years, and has no other income. His business has been affected by the coronavirus:
HMRC has invited Gary to make claims online, and has computed his taxable grants as follows:
1st Grant (80%) payable May 2020 £4,600.
The grant was computed as £18,000 + £24,000 + £27,000 = £69,000, which averages at £23,000 per tax year.
Gary can receive from the government 80% of his average profits of £23,000 for three months, so £23,000 x 80% x 3/12, which is £4,600..
2nd Grant (70%) payable August 2020 £4,025.
Average £23,000 x 70% x 3/12 = £4,025
3rd grant (80%) payable from 30 November 2020 £4,600.
Average £23,000 x 80% x 3/12 = £3,162
4th grant - percentage to be determined - payable May 2021 ?.
Details of eligibility for the fourth grant will be made in the Spring Budget on 3 March 2021.
It is not yet clear whether this grant may include information from 2019/20 returns. If this is the case, there will be a cut-off date by which the 2019/20 return would need to be filed.
This might be 28 February, in line with the penalty relaxation announcement, but should not be assumed to be the case until officially confirmed. Otherwise, the filing date for 2019/20 returns for those who might claim the fourth grant remains 31 January 2021.
Other government measures already in place to support businesses and workers during the coronavirus emergency can be found in our Business after COVID-19: Transition Knowledge Hub.