Self-Employed Income Support Scheme – latest update

Page Kirk Tax Senior Nigel Woodward updates us on the latest help available for self-employed people affected by the coronavirus pandemic.

The window for the fourth claim under the Self-Employed Income Support Scheme (SEISS) is now open and closes on 1 June 2021. The scheme is to be extended to September 2021 with a fifth and final grant. Applications for this claim are expected to open in July 2021. 

This latest claim (fourth grant) covers the period from 1 February 2021 to 30 April 2021 and takes 2019/20 tax returns into account, both for eligibility and in calculating the amount of the grant. This will open up the scheme to new applicants who started trading in 2019/20 but excludes those who are no longer trading and some who had little or no profit relative to other income in 2019/20.

Eligibility is determined by HM Revenue & Customs and the claimant's self-assessment tax return for 2019/20 must have been submitted by 2 March 2021. HMRC will first test eligibility based on 2019/20 profits alone to confirm they are below £50,000 and represent at least one-half of total income. If you fail that test, HMRC will view the four years 2016/17 – 2019/20 to test average profits are below £50,000 and that they represent at least half of total income. If trading hasn't continued throughout all four years, then HMRC will average the most recent continuous two or three-year period.

The amount you are entitled to claim is based on 80% of three months' average profits, capped at an overall maximum of £7,500.

Entitlement to make the fourth claim is based on the following criteria: -

• You must have traded in both years 2019/20 and 2020/21 and intend to continue to trade in 2021/22. You cannot make a claim if you have plans to close your business.

• You must have reasonable belief that there will be a significant reduction in trading profits due to reduced business activity, capacity, demand or inability to trade because of coronavirus. Increased costs alone will not qualify.

However, be aware that HMRC have stated that they will be checking all SEISS claims with the entitlement declarations claimants make. If it later transpires that a claim was made incorrectly, then HMRC will ask for this to be returned, together with possible penalties. This may include a claim in which there was a significant reduction to profits in the qualifying period (1 Feb 2021 – 30 April 2021), but not a significant reduction in the trading profits for the tax year they are reported in.

Should you have any queries regarding any aspect of your claim, then please do not hesitate to contact a member of the Page Kirk Tax Team on 0115 955 5500 or email enquiries@pagekirk.co.uk.