HMRC have extended the Self-Employment Income Support Scheme (SEISS) scheme so that eligible individuals are able to claim a third grant from 30 November 2020 relating to the period 1 November 2020 to 29 January 2021. They will work out your eligibility the same way as the first and second grant however the applicant must meet new tougher requirements to prove their business has been impacted by Covid-19. HMRC have removed ‘adversely affected’ which applied for the first two grants, and now require you to declare that you must either:
- be currently trading but are impacted by reduced demand due to coronavirus
- have been trading but are temporarily unable to do so due to coronavirus
And you must also meet both of the following:
- intend to continue to trade
- reasonably believe there will be a significant reduction in your trading profits due to reduced demand or your inability to trade
Applicants are expected to make an honest assessment about whether or not the business will suffer a significant reduction in trading profits due to reduced business activity, capacity or demand or inability to trade due to coronavirus during the period 1 November to 29 January 2021, and will be expected to keep evidence to support this.
You should wait until you have a reasonable belief that your trading profits are going to be significantly reduced before you make your claim. You can make your claim for the third grant from 30 November 2020. You must make your claim on or before 29 January 2021. It can be claimed in the same way as before.
The third taxable grant is worth 80% of your average monthly trading profits, paid out in a single instalment covering 3 months’ worth of profits, and capped at £7,500 in total.
HMRC detailed guidance on reduction in trading profits due to reduced demand
This applies to your business if it has been impacted by reduced demand, activity or capacity due to coronavirus.
For example, you:
- have fewer customers or clients than you’d normally expect, resulting in reduced activity due to social distancing or government restrictions
- have one or more contracts that have been cancelled and not replaced
- carried out less work due to supply chain disruptions
You must not claim if the only impact on your business is increased costs. For example, if you have had to purchase face masks and cleaning supplies. This would not be considered as reduced demand.
HMRC detailed guidance on reduction in trading profits where you are temporarily unable to carry out your business activities
This applies to you if you’re temporarily unable to carry out your business activities due to coronavirus, because for example:
- your business has had to close due to government restrictions
- you’ve been instructed to shield or self-isolate in-line with NHS guidelines and are unable to work from home (if you’ve been abroad and have to self-isolate, this does not count)
- you’ve tested positive for coronavirus and are unable to work
- you cannot work due to parental caring responsibilities, for example as a result of school or childcare facility closures
If you had to close before 1 November 2020 and continued to be closed for a period of time up to 29 January 2021, you can still claim as long as you are eligible.
These are examples of people who have been impacted by coronavirus between 1 November 2020 and 29 January 2021.
Reduced demand and reasonable belief:
A cafe owner has fewer customers due to government restrictions on households mixing, which reduces her takings. She reasonably believes this will significantly reduce her trading profits. She is eligible to claim.
A plasterer cannot get materials due to supply chain issues due to coronavirus. This has reduced the amount of work he can complete and be paid for. He reasonably believes this will significantly reduce his trading profits. He is eligible to claim the third grant.
A part-time personal trainer works in a gym that has closed due to government restrictions. This reduces her business activity on the days that she works. She reasonably believes this will have a significant reduction on her trading profits. She is eligible for third grant.
Reduced demand and no reasonable belief:
A cafe owner has fewer customers due to government restrictions on households mixing, which initially reduces her takings. She increases her prices and believes her trading profits will not reduce significantly, so she is not eligible to claim the third grant.
A plasterer cannot get materials due to supply chain issues due to coronavirus. This has reduced the amount of work he can complete and be paid for, but he manages to quickly find a new supplier. He does not believe that the reduced demand will cause a significant reduction in his trading profits. He is not eligible to claim the third grant.
Unable to trade and reasonable belief:
A hairdresser has had to shut his shop due to government restrictions. He will not have any income due to the closure and reasonably believes the reduction in his trading profits will be significant. He is eligible to claim the third grant.
A builder has received a letter from the NHS identifying him as clinically extremely vulnerable and it asks him to stay at home. As he is unable to work from home he has a reasonable belief that there will be a significant reduction in his trading profits. He is eligible to claim the third grant.
Unable to trade and no reasonable belief:
A hairdresser was unable to work for 2 days as his hair salon closed to be deep-cleaned due to a positive coronavirus case. He does not believe this will significantly reduce his trading profits. He is not eligible to claim the third grant.
A builder has developed coronavirus symptoms and self isolates for 5 days before receiving a negative test result. During those 5 days he was unable to work from home but was able to rearrange his contracts. He does not believe there will be a significant reduction in his trading profits. He is not eligible to claim the third grant.
An electrician is still trading but has had increased costs due to buying masks, cleaning supplies and screens. She is not eligible for the third grant because increased costs were the only impact on her business and she has not lost customers.
A dentist returns from a holiday abroad and has to self-isolate for 14 days due to quarantine rules. As this is the only impact on her business, she is not eligible to claim the third grant. This is because reduced demand due to self-isolation after foreign travel is not included in the eligibility criteria.
An accountant reduces his business activity because he wants to partially retire. He reasonably believes this will have a significant reduction on his trading profits. He is not eligible for third grant because the reduced business activity was not caused by coronavirus.
The client of a dog walker cancels a contract due to coronavirus. The dog walker could but chooses not to look for additional work to replace the contract. This means her business activity and her trading profits are reduced because she chooses not to replace the contract and not because of coronavirus. She is not eligible for the third grant.
An IT consultant has other income from renting property. He has made losses on renting due to renovation costs. This is not related to his trading profits from his IT consultancy service. As his consultancy business has not been affected due to coronavirus, he is not eligible for the third grant.
Records you need to keep
You must keep a copy of all records in line with normal self-employment record keeping requirements, including the:
- SEISS amount claimed
- grant claim reference
If you’re currently trading but have reduced demand you must keep any evidence that your business has had reduced activity, capacity or demand due to coronavirus at the time you made your claim, such as:
- business accounts showing reduction in activity compared to previous years
- records of reduced or cancelled contracts or appointments
- fewer invoices
- a record of dates where you had reduced demand or capacity due to government restrictions
If your business is temporarily unable to trade you must keep evidence if your business has been unable to trade due to coronavirus, such as:
- a record of dates where you had to close due to government restrictions
- NHS Test and Trace communications – if you’ve been instructed to self-isolate in-line with NHS guidelines and are unable to work from home (if you’ve been abroad and have to self-isolate, this does not count)
- a letter or email from the NHS asking you to shield
- test results if you’ve been diagnosed with coronavirus
- letters or emails from your child’s school if you have had parental caring responsibilities
Who is eligible?
A self-employed individual and member of a partnership are eligible if the conditions are met:
- you traded in the tax year 2018 to 2019 and submitted your Self Assessment tax return on or before 23 April 2020 for that year
- you traded in the tax year 2019 to 2020
- you intend to continue to trade in the tax year 2020 to 2021
- your trading profits must be no more than £50,000 and at least equal to your non-trading income (this test may be subject to a three year average depending on when the trade commenced)
- you carry on a trade which has a significant reduction in your trading profits due to reduced demand or your inablity to trade between 1 November 2020 and 29 January 2021.
Who will not qualify for SEISS?
- Trusts operating a trade
- Individuals who started trading in 2019/20
- Furnished holiday lettings
- Individuals who do not derive more than 50% of their income from self employment
Following the announcement of the new tier system which will come into effect next week we have made the decision to keep the vast majority of staff working from home until at least the Christmas break. We have decided to reopen the office reception from Wednesday, 9.00 – 5.00 daily for client drop offs and collection only.
The phone will continue to be diverted to the mobile for the time being.