The most exciting trilogy since Godfather, but with the never-ending qualities of a Star Wars franchise – the Self-Employment Income Support Scheme (“SEISS”) is back for its third instalment. Much like a movie series, the story is essentially the same with a few tweaks, but as with any good sequel, the stakes are higher than in previous outings.
I have written already about the first two grants, which you can revisit here and here. The basic rules for those grants were that where your trading profits were less than £50,000 for the tax year ended 5 April 2019 (or an average including the two previous years) you could receive a non-repayable cash payment. This was only if you were “adversely affected due to coronavirus”.
The changes in the details are subtle. “Adversely affected” has been replaced with “significant reduction” in trading/profits. Before, there was no threshold for the amount of income falling or costs increasing to be “adversely affected”, but now HMRC want you to confirm that your profits for the financial year will now be lower as a result of coronavirus. However, one caveat – if your profits have decreased solely due to an increase in costs (say buying PPE and cleaning materials), you are not eligible to the third grant.
HMRC have kindly laid out some examples to help people decide if they do or do not qualify. Of course, this is not exhaustive so you will need to consider your specific circumstances.
The other restrictions are the same as the first two grants. You can only claim if you have been trading during 2018-19 (and filed your tax return for that year before 23 April 2020), trading during 2019-20, you are currently trading (with the significant reductions) or are unable to trade but intend to once you can. The latter two were in the criteria for the first two grants, but now HMRC are being more explicit about it. Also, tough luck if you started trading after 5 April 2019 and, if you operate your trade through a limited company, this grant does not apply (and good luck finding much support elsewhere).
The restrictions might be tighter, but the amounts are back to the 80% of profits as they were in the first grant (after a dip down to 70% for the second). This is much more generous than the 20% grant first planned before coronavirus decided it was not quite finished with us. Again, the grant is worth three months of profits, capped at £7,500 in total.
Despite the change in rules, the way to claim is still as easy as before. You simply need to follow the link from HMRC’s website. And this is slightly worrying – a few clicks and you can make the claim. For those that are not aware of the new rules or would not read the small print, they might erroneously make the claim. The risk is that once the tax returns are filed, which could be nearly two years away, depending on the year end, HMRC could come requesting their grants back, currently up to £22,500. Since they will be looking if your profits have truly decreased (particularly for this latest grant), it will be easy for them to identify those whose grants were incorrectly issued.
The third SEISS grant application opened at the end of last month and you need to make the claim on or before 29 January 2021, so you only have a few weeks to make the claim if you are eligible. (And do not forget your tax return is due a couple of days later.) Plus, make a note to include the grant on your tax return for 2020-21, as it is treated as taxable income.
Finally, as with any great franchise, a fourth SEISS grant has been promised to cover 1 February 2021 to 30 April 2021, but we still do not know the finer details. Whether there will be more grants after that depends on whether the bad guy (coronavirus) still needs to be defeated.
If you want to discuss any of the above, or any other matter, just give us a call on 020 7183 3383 or email info@kma-spotlight.com.
