In the 2021 Budget at the beginning of March, Chancellor Rishi Sunak announced details of the fourth grant in the self-employment income support scheme (SEISS).
The SEISS grant is aimed at helping self-employed people whose business and income has been affected by the Covid-19 pandemic and the fourth grant will cover the period from 1st February 2021 to 30th April 2021.
It is expected that around 600,000 more self-employed individuals will be able to apply this time around as when the scheme was originally launched, the newly self-employed didn’t qualify if they hadn’t filed a 2019/20 tax return. Now that the tax return deadline has passed, as long as an individual filed a tax return on time they will now be able to claim for the grant.
If you need to apply for the fourth SEISS grant, read on for more information on who is eligible and how you can apply.
Who is eligible for the SEISS grant?
To apply for the fourth grant you must be self-employed or a member of a partnership and have been impacted by the coronavirus (Covid19) pandemic. If you trade through a limited company you cannot apply.
You need to have traded in both tax years (2019-2020 and 2020-2021) and submitted your tax return on or before 2nd March 2021
Your business must either be currently trading but impacted by reduced demand due to coronavirus, or have been trading but temporarily unable to do so due to coronavirus.
You must also declare that you intend to continue to trade, and that 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 between 1st February 2021 and 30th April 2021.
To work out your eligibility for the fourth grant, HMRC will first look at your 2019 – 2020 Self Assessment tax return. Your trading profits must be no more than £50,000 and at least equal to or more than your non-trading income.
If you are not eligible based on your 2019 – 2020 Self Assessment tax return, HMRC will then look at the tax years 2016 – 2017, 2017 – 2018, 2018 – 2019 and 2019 – 2020.
How much is the fourth SEISS grant?
The fourth SEISS grant is calculated at 80% of 3 months’ average trading profits and capped at £7,500 in total.
How much you receive will depend on the average trading profits of your business.
Below is an example of how HMRC will work out how much grant you would get if your average trading profits were £42,000 over the last 4 tax years.
- Start with your average trading profit (£42,000)
- Divide by 12 to get the monthly average = £3,500
- Multiply by 3 to get the 3 month average = £10,500
- Calculate 80% of £10,500 = £8,400
- You’ll receive £7,500 due to the cap
When can the fourth SEISS grant be claimed?
The HMRC’s online service to claim the fourth grant will be available from late April 2021.
If you are eligible for the grant based on your tax returns, HMRC will contact you in the middle of April with a date from which you can make your claim. This will be sent either by email or letter, or within the online service.
All claims must be made on or before 1st June 2021.
If you have any questions about your business accounts or tax returns, or would like some advice on managing your cashflow, please get in touch with us here at Magpie Accountancy.