Changes to self-employed income support scheme 4th and 5th grants

March 18, 2021|In KRW Insight|By Keith Witchell

It was confirmed in the Budget earlier this month that two further SEISS grants will be available to self-employed taxpayers whose businesses continue to be adversely affected by Coronavirus.

While detailed guidance is yet to be published, we wanted to bring you up to date with what we know so far about the changes compared to the previous three SEISS grants.

The main change is that the fourth and fifth grants, which are designed to cover April to June 2021, and July 2021 to September 2021 respectively, will be open to those who became newly self-employed (or a partner in a partnership or LLP) during the 2019/20 tax year. This is a welcome step for those people that fell through the cracks from the first claim.

The fourth grant will be once again set at 80% of your average trading profits, paid out in one single instalment, and capped at £7,500. However, this time it will take into account your profit for the 2019/20 tax year, which means the amount of the grant could be higher or lower than previous grants for those already eligible.

The eligibility criteria is largely unchanged, but your 2019/20 tax return must have been submitted to HMRC by 3 March 2021 to be able to claim, and you must still be trading in the 2020/21 tax year.

This means that if your profits exceeded £50,000 in 2019/20 or were less than your non-trading income in that year you may not qualify for the grant, although its suggested that they will look at the previous 3 tax years as well in these situations.

The online claims service for the fourth grant is expected to be available from late April 2021 to 31 May 2021, with those eligible contacted by HMRC directly in mid-April and given a personal claim date.

Anyone that became self-employed for the first time during 2019/20 that will become eligible to make a claim will need a Government Gateway account in place. Please contact us if you need help with this.

There is a means test for the fourth grant, which means one the following criteria must be met to be able to claim it:

  • You are currently trading but are impacted by reduced demand due to Coronavirus; OR
  • You have been trading but are temporarily unable to do so due to Coronavirus.

In addition, you must also declare that:

  • You intend to continue to trade; AND
  • You reasonably believe there will be a significant reduction in your trading profits due to reduced business activity, capacity, demand or inability to trade due to Coronavirus.

Full details of the fifth (and potentially final) grant have not yet been released but it is expected to become available in late July and to be calculated on the same basis as previous SEISS grants, although this time with an additional turnover test leading to two levels of grant:

  • 80% of 3 months’ average trading profits (capped at £7,500) for those with a turnover reduction of 30% or more between 6 April 2020 and 5 April 2021; OR
  • 30% of 3 months’ average trading profits (capped at £2,850) for those with a turnover reduction of 30% or less between 6 April 2020 an 5 April 2021

We’ll update you with further details as they emerge, but please contact your Client Manager with any questions in the meantime.

Key Facts

  • 4th and 5th SEISS grants were confirmed in the Budget
  • They will be open to those newly self-employed during 2019/20 for the first time
  • Claims will be based on 2019/20 so those already eligible may get different claims this time
  • A turnover test will be introduced for the first time with the 5th grant, with two levels of claim
  • Those eligible for the 4th grant will be contacted by HMRC in April, with the 5th grant due in July

For further advice on this matter, please contact me.

Keith Witchell