Additional SEISS grants come with extra conditions
28 September 2020: The Self-Employment Income Support Scheme (SEISS) is being extended, but the scope of the scheme will be narrower and the third and fourth grants less generous. ICAEW’s Tax Faculty explains what is known at this stage.
Following the Chancellor’s announcement that the UK’s coronavirus support scheme for the self-employed is being extended, further details have emerged confirming that the eligibility criteria are changing for the next phase.
HMRC’s factsheet explains that to be eligible for the further grants, taxpayers must meet the following criteria:
- Be currently eligible for the SEISS (although it is not necessary to have claimed the previous grants).
- Be actively trading at the time the grant is claimed and intend to continue to trade.
- Be impacted by reduced demand due to COVID-19 in the qualifying period.
The qualifying period for the third grant runs from 1 November to the date of claim and the qualifying period for the fourth grant is expected to run from 1 February 2021 to the date of that claim.
The requirements to be “actively trading” and to be “impacted by reduced demand” are new and HMRC is expected to publish further guidance to clarify the meaning of these terms.
The requirement to be actively trading will mean that businesses that have had to close during the pandemic will not be able to claim if they have not restarted during the qualifying period.
The Tax Faculty understands that this policy decision is designed to ensure that only viable businesses are supported and to align the scheme with the Job Support Scheme which will require employees to be working at least of a third of their usual hours.
Eligibility for previous grants was conditional on the business being “adversely affected”; the Tax Faculty understands that “impacted by reduced demand” is likely to be defined more narrowly.
The grants will be based on the same tax years as the previous grants, which means information on 2019/20 self-assessment tax returns that have been filed will not be considered.
The third SEISS grant will provide a taxable sum calculated as 20% of average monthly trading profits paid out in a single instalment covering three months’ worth of profits and capped at £1,875. This level has been set so as to offer broadly the same level of government support that is being provided to employees through the Job Support Scheme.
The level of the fourth SEISS grant is to be kept under review and will be set in due course.
HMRC will provide full details about how to claim on gov.uk and the Tax Faculty will publish more information as it becomes available.