15 January 2021: Claims for the third SEISS grant must be submitted by 29 January. ICAEW’s Tax Faculty offers guidance and reminders on making claims and tax returns.

The timing of the deadline for claims for the third Self Employment Income Support Scheme (SEISS) grant is unfortunate, clashing as it does with the self assessment filing deadline.

The window to apply for the third SEISS grant closes on 29 January and ICAEW’s Tax Faculty reminds claimants that it is not usually possible to make a late claim under the scheme.

The additional conditions for the third grant have caused some confusion and the faculty can now address some areas of uncertainty.

• When deciding whether a taxpayer meets the “significant reduction in trading profits” test for the third SEISS grant, the taxpayer does not need to take into account the first and second SEISS grants, nor any other COVID-19 government support payments received. 
• If the 1 November 2020 to 31 January 2021 eligibility period for the third grant straddles two basis periods, it is sufficient to be able to show a significant reduction in trading profits for one of the basis periods. The taxpayer does not need to show a significant reduction in both basis periods to be eligible for the third grant.
• When assessing whether there has been a significant reduction in trading profits, the comparison period is not specified in HMRC’s guidance. The taxpayer can use the previous year or an average of say the last three years trading profits, but a reduction against an earlier forecast for the relevant basis period would also be valid. 
• Where a taxpayer has more than one trade it is sufficient to show that one of the trades has suffered reduced activity, capacity, or demand, or has been temporarily unable to operate since 1 November 2020, and that the taxpayer reasonably believes that this will cause a significant reduction in the profits compared with what they would otherwise have expected for that trade. The taxpayer does not have to consider the two trades together.
• In some cases, the reduction in activity, capacity, or demand may be only partly due to COVID-19 restrictions. For example, a taxpayer might decide to take on a part-time job or college course alongside their reduced self-employment. So long as least some of the reduced activity, capacity or demand is due to COVID-19 restrictions the taxpayer would be eligible for the third grant.

Reporting SEISS grants on tax returns

SEISS grants are all taxable in the 2020/21 tax year, whatever date the taxpayer prepares their accounts to. No element of the SEISS grants should be reported in the 2019/20 self assessment tax returns that are due to be filed by 31 January 2021.

Fourth grant

The government has announced that there will be a fourth grant, covering the period February to April 2021. The conditions for the fourth grant, and the amount, have not yet been released . Pending a further announcement  it would be advisable to ensure that 2019/20 tax returns are filed by the 31 January deadline.

The faculty does not yet know whether information from 2019/20 tax returns will be taken into account for the fourth grant, but suggests it would be wise to ensure that they are filed on time in case that does happen.

• ICAEW support on SEISS at icaew.com/seiss.
• Watch the Tax Faculty webinar COVID 19: SEISS version 3, broadcast on 27 November.