As we explained on 1 October 2020, there will be two further grants for the self-employed, but Chancellor Sunak has bowed to pressure and increased the amount of the third grant. The amount of the fourth grant will be set at a review in January 2021.
The third grant (SEISS-3), will be calculated at 40% of average monthly profits, based on the same profit figures used for the earlier grants, ie the self-employed profits reported on tax returns for 2016/17 to 2018/19. It will be capped at £3,750 for three months.
The conditions for the third grant are slightly different to those for the first two grants. The business no longer has to be “adversely affected” by the coronavirus pandemic, but must instead be suffering from reduced demand due to coronavirus. The emphasis is on turnover not on profits.
Also, as we explained on 22 October 2020, the business must be continuing to actively trade, or is intending to start trading again.
The portal to apply for this third SEISS grant is expected to open sometime in November 2020, but the date hasn’t been announced yet. Self-employed traders will have to make the grant application themselves, we won’t be able to apply on behalf of our clients.
As third SEISS grant is much less than the trader’s usual profits, they may have to apply for Universal Credit (UC) to make ends meet. In this case the claimant must be warned that it can take five to six weeks for the first UC award to arrive following the initial claim.
Self-employed individuals normally find that they have a zero award under UC because of the operation of the minimum income floor (MIF). However, the MIF is suspended for the first 12 months of new UC claims by self-employed individuals submitted from 23 September 2020.
Written by the Tax Advice Network