Self-employed Income Support SchemeThe Self Employed – How to avoid missing out on the 4th SEISS Grant

Anyone who is self-employed needs to be aware that the window for claiming the 4th Self Employed Income Support Scheme (SEISS) grant is about to slam shut.

The deadline is midnight on 31st May 2021 ….so if you wish to make a claim then time is of the essence.

BUT BEFORE deciding whether to make a claim or not you MUST be SURE that you meet all the qualifying criteria.

 

The qualifying criteria have changed from the first three SEISS grants….and that’s causing a lot of confusion. Number 6 in the list below is new and a biggie.

To help you pick your way through this SEISS minefield so that you avoid making a mistake here’s a guide on what you need to know….

 

THE 4th SEISS GRANT IN SUMMARY

The main points to be aware of are….

  • Covers the 3 months 1st Feb 2021 to 30th April 2021.
  • Claim amount based on 80% of 3 months’ average trading profits.
  • Deadline for claiming 4th SEISS grant is 31st May 2021

 

THE QUALIFYING CRITERIA

For the self-employed to legitimately make a claim then ALL SIX of the following eligibility criteria must be met:-

  1. Have submitted the 2019/20 Self-Assessment Tax Return before 2/3/2021.
  2. Have traded in the tax years 2019/20 AND 2020/21.
  3. Are currently trading BUT have been impacted by reduced demand OR would have been trading BUT are temporarily unable to do so due to Covid19.
  4. Intend to continue to trade.
  5. The self-employed trading profits must also be less than £50,000 AND more than half of the taxpayer’s income must come from self-employment.
  6. Reasonably believe there will be a significant reduction in trading profit due to Covid19 in the 3 months from 1st Feb to 30th April 2021.

 

THE 6th CRITERIA – THE PITFALLS

With it being new the 6th criteria has 2 pitfalls which you need to be mindful of in order to avoid making a mistake….

Pitfall 1 – Reasonable Belief

You must reasonably believe that you’ll suffer a significant reduction in trading profits, due to reduced business activity, capacity, demand or inability to trade due to Covid19 between 1st Feb 2021 and 30th April 2021.

HMRC expects you to make an honest assessment about whether you reasonably believe your business will have a significant reduction in profits.

Pitfall 2 – Significant Reduction

You must decide if the impact on your business between 1st Feb 2021 and 30th April 2021 will cause a significant reduction in your trading profits for the tax year you report them in.

HMRC can’t make this decision for you as your individual and wider business circumstances must be considered when deciding whether the reduction is significant.

AND FINALLY……

You MUST keep EVIDENCE that shows how your business has been impacted by Covid19 resulting in less business activity than otherwise expected.

This is SO IMPORTANT….

Without that evidence you’re unlikely to satisfy HMRC if they come calling (which they could do any time in the next 6 years).

That could result in you repaying the 4th SEISS grant you received…with the amount being doubled by a very painful 100% penalty.

As you look to recover after Covid19 a whopper HMRC tax demand is the last thing you need. 

 

 

It is important that you take professional advice before making any decisions based on the information that you learnt here. While every effort has been made to make sure it is accurate it cannot be precisely tailored to your personal circumstances. This article is for general information only and no action should be taken, or refrained from, as a result of this information.  Professional advice should be taken based on specific circumstances in each individual case.  Whilst we endeavour to ensure that the information contained in the article is correct, no liability  will be accepted by KMA Accountancy which is a trading name of Kim Marlor Associates Ltd or damages of any kind arising from the contents of this communication, or for any action, inaction  or decision taken as a result of using any such information.

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