HMRC have now announced the criteria for the third grant of the Self Employed Income Support Scheme (SEISS). To make a claim, your business must have had a new or continuing impact from COVID-19 between 1 November 2020 and 29 January 2021. HMRC guidance indicates that it expects taxpayers to make “an honest assessment” about whether they reasonably believe that their business will have a significant reduction in profits. The grant covers 80% of your average monthly trading profit paid in a single instalment covering 3 months’ worth of profits, capped at £7,500 in total. A claim for the grant can be made from 30 November and must be made by 29 January 2021, when it will close.
The significant reduction in trading profits test is to be applied to your trading profits in the accounting period as a whole. If you have a March year end or 5 April, the significant reduction in trading profits will be expected to appear in the tax return you file for the tax year ending 5 April 2021. Where the accounting year for example is 30 April the results of the trading year falls into the tax year 5 April 2022, you will need to forecast your trading profits to establish your eligibility for the grant.
The business needs to be adversely affected by COVID-19, be currently trading but impacted by reduced demand or have been trading but temporarily unable to do so due to COVID-19. You will need to intend to continue to trade and reasonably believe there will be a significant reduction in your trading profits due to reduced activity, capacity, demand or inability to trade due to COVID-19. HMRC have specifically said that a reduction in profits due to increased costs such as buying masks and cleaning supplies does not count for this purpose. If your trading profits will be reduced due to you being temporarily unable to carry out your business activities because your business had to close due to Government restrictions, you have been classified as clinically extremely vulnerable or have to self-isolate in line with NHS guidelines and are unable to work from home, you should be eligible.
Please click here for our step by step guide to check your eligibility.
For more information, or to discuss your personal circumstances further, please contact the tax team.