Self Employed Income Support Scheme (SEISS) – New Guidance for next claim
With the scheme now extended HMRC have issued somenew guidance and rules around who can claim, what records must be kept and how to make your claim.
If you were not eligible for the first and second grant based on the information in your Self Assessment tax returns, you will not be eligible for the third.
HMRC expects you to make an honest assessment about whether you reasonably believe your business will have a significant reduction in profits.
To make a claim for the third grant your business must have had a new or continuing impact from coronavirus between 1 November 2020 and 29 January 2021.
The third taxable grant is worth 80% of your average monthly trading profits, paid out in a single instalment covering 3 months’ worth of profits, and capped at £7,500 in total.
Applications for the third grant will open from 30 November 2020 and you can make your claim on or after the date HMRC will advise you of by email, letter or within the service. If you’re eligible, you must make your claim for the third grant on or before 29 January 2021.
The grant does not need to be repaid if you’re eligible, but will be subject to Income Tax and self-employed National Insurance and must be reported on your 2020 to 2021 Self Assessment tax return.
Records you MUST keep to support your claim
You must keep a copy of all records in line with normal self employed record keeping requirements including the:
- amount claimed
- grant claim reference
If you’re currently trading but have reduced demand
You must keep any evidence that your business has had reduced demand due to coronavirus at the time you made your claim, such as:
- business accounts showing reduction in activity compared to previous years
- records of reduced or cancelled contracts or appointments
- fewer invoices
- a record of dates where you had reduced demand or capacity due to government restrictions
If your business is temporarily unable to trade
You must keep evidence if your business has been unable to trade due to coronavirus, such as:
- a record of dates where you had to close due to government restrictions
- NHS Test and Trace communications – if you’ve been instructed to self-isolate in-line with NHS guidelines and are unable to work from home (if you’ve been abroad and have to self-isolate, this does not count)
- a letter or email from the NHS asking you to shield
- test results if you’ve been diagnosed with coronavirus
- letters or emails from your child’s school if you have had parental caring responsibilities
Grants under the Self-Employment Income Support Scheme are not counted as ‘access to public funds’, and you can claim the grant on all categories of work visa.
Who can claim
To be eligible for the third grant you must be a self-employed individual or a member of a partnership. You cannot claim the grant if you trade through a limited company or a trust.
If you claim Maternity Allowance this will not affect your eligibility for the grant.
You must have traded in both tax years:
- 2018 to 2019 and submitted your Self Assessment tax return on or before 23 April 2020 for that year
- 2019 to 2020
You must either:
- be currently trading but are impacted by reduced demand due to coronavirus
- have been trading but are temporarily unable to trade due to coronavirus
You must also declare that:
- you intend to continue to trade
- you reasonably believe there will be a significant reduction in your trading profits
In order to claim, you must reasonably believe that you will suffer a significant reduction in trading profits due to reduced business activity, capacity or demand or inability to trade due to coronavirus during the period 1 November to 29 January 2021. You must keep evidence that shows how your business has been impacted by coronavirus resulting in less business activity than otherwise expected.
Before you make a claim, you must decide if the impact on your business will cause a significant reduction in your trading profits for the tax year you report them in.
HMRC cannot make this decision for you because your individual and wider business circumstances will need to be considered when deciding whether the reduction is significant.
You should wait until you have a reasonable belief that your trading profits are going to be significantly reduced, before you make your claim.
HMRC have produced some examples and these can be found at this link examples that can help you decide.
How HMRC works out your eligibility
To work out your eligibility HMRC will first look at your 2018 to 2019 Self Assessment tax return. Your trading profits must be no more than £50,000 and at least equal to your non-trading income.
If you’re not eligible based on the 2018 to 2019 Self Assessment tax return, HMRC will then look at the tax years 2016 to 2017, 2017 to 2018, and 2018 to 2019.
How different circumstances affect the scheme
There are some circumstances that can affect your eligibility such as if:
- your return is late, amended or under enquiry
- you’re a member of a partnership
- you had a new child
- you have loans covered by the loan charge
- you claim averaging relief
- you’re a military reservist
- you’re non-resident or chose the remittance basis
- state aid
Find out more information on how your circumstances affect your eligibility.
How to claim
The online service for the third grant will be available from 30 November 2020.
How HMRC work out the amount of the third grant
This is an example of how HMRC will work out how much grant you’ll get if your average trading profits were £42,000 over the last 3 tax years.
If you’re eligible, you’ll receive a grant worth of 80% paid out in a single instalment covering 3 months’ worth of profits, and capped at £7,500 in total.
|Average trading profit||£42,000|
|Divide by 12||£3,500|
|Multiply by 3||£10,500|
|Work out 80%||£8,400|
You will only receive £7,500 due to the cap
If you have any queries regarding these rules then please get in touch.