Self Employment Income Support Scheme – Fourth Grant – 20/04/21

The fourth tranche of the Self Employment Income Support Scheme (SEISS) will cover the period from 1 February 2021 to 30 April 2021. The exact date when online claims will open is still unknown, but HMRC are indicating that it will be late April. The eligibility conditions of this grant have now been issued and there are some changes from the previous tranches.

Who Can Claim?

To be eligible for the fourth grant you must be a self-employed individual or a member of a partnership. You must have traded in both the 2019/20 (and submitted your tax return on or before 2 March 2021) and 2020/21 tax years. You must either:

  • Have been trading in the period but impacted by reduced demand due to coronavirus
  • Have been trading in the period but temporarily unable to do so due to coronavirus

You must also declare that you:

  • Intend to continue to trade
  • Reasonably believe there will be a significant reduction in your trading profits

Reasonable Belief

To claim the fourth grant, you must reasonably believe that you will suffer a significant reduction in trading profits, due to reduced business activity, capacity, demand, or inability to trade to due to coronavirus between 1 February 2021 and 30 April 2021. You must keep evidence that shows how your business has been impacted by coronavirus resulting in less business activity than otherwise was expected

Significant Reduction

HMRC do not give a definition of what is “significant”, but before you make a claim you must decide if the impact on your business between 1 February 2021 and 30 April 2021 will cause significant reduction to your trading profits for the tax year in which you report them.

You do not need to consider other coronavirus scheme support payments (e.g. Furlough Scheme receipts, Business Support Grants) when deciding if you’ve had a significant reduction in your trading profits.

How HMRC works out your eligibility based on your tax returns

To work out your eligibility, HMRC will first look at your 2019/20 Self Assessment tax return. Your trading profits must be no more than £50,000 and at least equal to or more than your non-trading income.

If you are not eligible based on your 2019/20 tax return then HMRC will look at 2016/17, 2017/18 and 2018/19.

How much you will get

The fourth grant is still being calculated at 80% of 3 months average trading profits and capped at £7,500 in total. The average will be based on the last 4 tax returns (2016/17 to 2019/20). If there is a gap in years trading, the most recent returns will be used.

Smarter Guidance

  1. Any grant payment received will be subject to Tax and National Insurance (as most coronavirus grants are)
  2. This fourth grant sees 2019/20 added, which is helpful for those that started trading in 2019/20
  3. We have already seen HMRC looking into some SEISS applications. Some who incorrectly claimed sums in earlier tranches are now having to pay them back. HMRC are continuing to strengthen conditions around ‘Reasonable Belief’ and ‘Significant Reduction’. We would advise that these issues are considered carefully before an application is made. It would also be sensible to document the reasons why you are making a claim for the fourth grant, and therefore how you satisfy the conditions required, in case it is ever questioned by HMRC. We are sure they will be looking at 2020/21 tax returns to evaluate if indeed there has been a reduction in trading profits
  4. There will be a fifth tranche of SEISS covering the May 2021 to September 2021 period

The Smarter Accounting Offices will continue to be staffed but will not be open for face to face meetings. We can always make other arrangements for video conferencing or telephone calls if required. If you are dropping off or collecting records via the office, please notify us in advance and wear a facemask.  Please be aware that we are reviewing our policy regards COVID 19 on, at least, a weekly basis.

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Best wishes and stay safe