Self-employed workers who have lost income due to the Covid-19 pandemic have been waiting for months for the criteria for SEISS grant four to be revealed. Many people, particularly those who have recently become self-employed, have yet to benefit from previous SEISS grants to date.
So what was revealed in the recent Budget announcement? Our experts at UHY have been ploughing through the paperwork to understand who can claim for the next grant.
Who is eligible for SEISS grant four?
SEISS claimants must be currently trading and be able to show they have seen reduced demand due to the coronavirus pandemic, or have been trading but are temporarily unable to do so. When making a claim for the SEISS grant, the applicant must declare they intend to continue trading.
The good news is that SEISS now covers anyone who submitted their tax returns for 2019-20 up to 2 March 2020. It is estimated that around 600,000 newly self-employed workers will now be able to make a claim.
Although the full details have yet to be released, the grant is only open to those with trading profits below £50,000 and who receive at least half their income from self-employment. If you meet the conditions below, you can apply for a grant. Please note that payments are subject to income tax and Class 4 National Insurance contributions.
SEISS grant four will open in late April, and will be worth:
- up to 80% of average monthly trading profits
- for a period of three months
- capped at a limit of £7,500.
How do I claim?
To prevent fraud, HMRC is writing to up to 100,000 taxpayers to request they complete pre-verification checks to confirm their identity and provide evidence of trade. You should receive a letter by mid-April 2021, saying you will get a phone call from HMRC within 10 working days.
During the call, HMRC will ask you to confirm your email address and agree to receive a link to a secure Dropbox folder. You will then have two days to upload proof of identity and financial information on your business activity.
HMRC will make three attempts to call you, so if you receive a letter check that HMRC has your current telephone number. If HMRC cannot reach you, they will write a further letter. Anyone who receives a letter but does not complete the checks will be unable to claim a grant.
Once the checks are complete, you will be directed to claim online. You don’t need to do the sums yourself as HMRC calculates how much you receive, but you will need to submit a claim to receive any money.
You should be informed immediately if your claim is approved, with information on the amount and the HMRC calculation. Payment should follow within six working days.
Although SEISS is a UK-wide scheme, the devolved administrations in Scotland, Wales and Northern Ireland have also established their own business support initiatives for eligible businesses.
Who isn’t eligible for SEISS grant four?
The HMRC factsheets states that self-employed workers will not be eligible for an SEISS grant if any of the following conditions apply:
- You began trading after 5 April 2020
- You did not submit your 2019-20 tax return by 2 March 2021
- Trading income was less than half of your total income
- You are a director of a limited company
- You operate a furnished holiday letting business
- You are operating through a trust.
It is also worth noting that if you are taking a break from work due to having a baby or adoption, you may still be eligible as claiming maternity allowance does not affect eligibility.
Furthermore, SEISS is open to non-residents, but they need to prove that their trading profits are at least equal to their other worldwide income for each tax year. As grants are not classified as ‘access to public funds’ they can be claimed under work visas.
What paperwork do I need?
Not surprisingly, you need to have your financial paperwork in order before you submit a claim. Ensure you have the following information:
- Self-assessment Unique Taxpayer Reference (UTR)
- National Insurance number
- Government Gateway user ID and password
- Bank account details for receiving the grant.
Your accountant can assist you to check eligibility, but they cannot make the claim on your behalf. If they do, this will trigger a fraud alert which will delay any payments due.
Will there be further rounds?
Yes - the Chancellor also announced that there will be a fifth round of SEISS covering May to September 2021, with grant applications due to open in late July.
The important thing to remember is that the amount you receive will depend upon how much your turnover has fallen from April 2020 to April 2021. For example:
- If turnover has dropped by 30% or more, your grant is 80% of three months’ average trading profits, capped at £7,500.
- If your turnover has dropped less than 30%, the grant is 30% of three months’ average trading profits, capped at £2,850.
Can I dispute the amount awarded?
If you feel that the HMRC calculation is wrong, you need to complete your claim before you can request a review direct from the HMRC. Please remember to retain a record of the amount you claimed, plus your claim reference number and any supporting evidence that your business has been affected by Covid-19 pandemic.
If you have any queries or concerns in relation to applying for the SEISS or would like support and guidance with your application, please speak to your usual UHY contact or get in touch with us centrally through our Contact Us section.
