The long awaited fourth self-employed income support scheme (SEISS) grant has now been revealed to be set at 80% of average trading profits, capped at £2,500 per month for three months to 30 April 2021, as maximum of £7,500. The portal to apply for this grant will open in late April.
The big difference for this grant will be that the average trading profits will include profits reported for the tax year 2019/20. Also it is only available to taxpayers who have filed their 2019/20 SA tax return by midnight on 2 March 2021. This will allow those who became self-employed in 2019/20 to claim a SEISS grant for the first time, if they have already submitted their 2019/20 tax return.
However, those new traders must still be trading now in 2021, or their business must be temporarily closed due to coronavirus restrictions. The taxpayer must declare, as part of the SEISS application, that they intend to continue to trade in 2021. This is particularly tough for individuals who started trading in 2019, but who were left with no government support in 2020, but still won’t qualify for SEISS support if the business could not survive into 2021.
All traders must also declare that they have suffered a significant drop in trading profits to qualify for the SEISS grant. This is further defined as being a reasonable belief that profits have reduced due to one or more of:
- reduced activity
- reduced capacity
- Inability to trade
There will also be a fifth SEISS grant payable for the three months to 31 July 2021, also up to a maximum of £7,500.
However, there will be a complex turnover test to qualify for the full grant. Only those businesses where turnover (not profits!) have fallen by at least 30% will get the full grant calculated at 80% of average trading profits. Other businesses whose turnover has fallen by less than 30% will receive a grant based on 30% of average profits, capped at £2,850. The portal to claim this grant will open in late July.
In all cases the SEISS grant must be claimed by the taxpayer themselves, you can’t claim it as their tax agent. This is because the taxpayer must use their own government gateway to access the claims portal. All the SEISS grants are taxable income so they will have to be declared as income for the tax year in which they are received.
Written by the Tax Advice Network