The portal for the 3rd grant under the Self Employed Income Support Scheme (SEISS) opens today but the rules on who is eligible to claim have changed. Claimants need to carefully consider if they are eligible. In the first 2 grants taxpayers had to confirm that their business had been adversely affected by COVID. Now, for the 3rd grant, the condition has to be more precise and an impact on-demand test has been introduced.
The Details are as follows:
Who Can Apply?
You can apply if you’re a self-employed individual or a member of a partnership
- You must have been previously eligible for the Self-Employment Income Support Scheme first and second grant (although you do not have to have claimed the previous cash grants).
- You must have traded in both Tax years 2018/19 and 2019/20
- You must intend to continue to trade, and
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- be currently actively trading and are impacted by reduced activity, capacity or demand due to coronavirus
- were previously trading but cannot do so temporarily due to coronavirus
- you reasonably believe that the impact on your business will cause a significant reduction in trading profits
Significant is not defined in HMRC’s directive and therefore we would have to revert back to the normal English definition of having a great effect or a noticeable change.
- You can only claim if the reduction in trading profits is caused by reduced business activity, capacity or demand, or inability to trade due to coronavirus – reduction in profits due to increased costs (such as having to buy masks and other PPE) does not count for this purpose.
- Your wider business circumstances will need to be considered when deciding whether the reduction is significant. HMRC expect an honest assessment as to whether you believe trading profits will be significantly reduced compared to what you otherwise expect to achieve during this period. Please find some examples here https://www.gov.uk/guidance/how-your-trading-conditions-affect-your-eligibility-for-the-self-employment-income-support-scheme#examples
- HMRC have made it clear that the business needs to consider the accounting period as a whole, for many sole traders and partnerships, this will be for the year that ends 31 March or 05 April 2021 and includes the period 1 November 2020, to 29 January 2021.
How your Accountant can help?
As HMRC have made it clear that the business needs to consider the accounting period as a whole before claiming the taxpayer may need help to forecast their turnover for the full accounting period that includes the period November to January 2021.
Amount that can be claimed
- The third cash grant is worth 80% of your average monthly trading profit, capped at £7,500 in total, and covers 1 November 2020 to 29 January 2021.
- Self-employed people who are eligible and in need of support will have from 30 November 2020 to 29 January 2021 to make their claim.
- You should wait until you have a reasonable belief that your trading profits are going to be significantly reduced before you make your claim.
How to claim
- The online service will be available from 30 November 2020 for the third grant.
- Make your claim from the date that HMRC has given you either by email, letter or within the SEISS service if you are eligible.
- Agents cannot claim the grant on behalf of their clients but can assist in assessing if there has been a significant reduction in business profits based on the new criteria.
- HMRC will check your claim and pay the grant into your bank account within 6 working days. An e-mail will be sent by HMRC to you when your payment is on its way
- Please keep a copy of the grant claim reference and amount claimed for your personal tax records.
