Self-Employment Income Support Scheme (SEISS) fourth grant
The Self-Employment Income Support Scheme (SEISS) supports self-employed people including members of business partnerships whose business has been adversely affected by Coronavirus (Covid-19). In this video we'll be looking at an overview of the scheme, who can claim examples of reduced demand or businesses unable to trade, how much you may be entitled to how to claim the fourth grant what happens after you've claimed and what other support is available we'll also look at a few examples to give you a better understanding of how the scheme works. Overview of the scheme The SEISS scheme support self-employed individuals, including members of business partnerships whose income has been affected by Covid-19 (coronavirus). The scheme has been extended providing a fourth and fifth grant to cover the period 1 February 2021 to September 2021. The scheme provides support to eligible self-employed individuals who are currently trading. The fourth and fifth SEISS grants are based on the most recent data available. This is the 2019-20 Self Assessment tax return, along with the previous years' tax returns.
So if your tax return for 2019-20 shows an increase or decrease in your average trading profits, compared to the return used to calculate previous grants, your fourth SEISS grant will be higher or lower than the previous grants. If you're eligible and want to claim then you must make your claim for the fourth grant by 23:59 on Tuesday 1 June 2021. if you think you're eligible but we haven't contacted you with a personal claim date, you can check by signing in to the online claim service on GOV.UK.
The fourth grant will provide a taxable grant worth 80% of 3 months' average trading profits paid in a single installment and capped at £7,500. To make a claim for the fourth grant you must have reasonable belief that you'll suffer a significant reduction in trading profits due to reduced business activity, capacity, demand or inability to trade due to coronavirus. Between 1 February 2021 and 30 April 2021 and intend to continue to trade as well. HMRC expects you to make an honest assessment about whether your business has been impacted by coronavirus. You can make a claim even if you didn't claim for a previous grant. If an amendment to your tax return on or after 3 March 2021 lowers how much you're eligible for, you'll need to tell us within 90 days. You may need to pay back some or all of the grant. The grant will be subject to Income Tax and self-employed National Insurance. If
you receive the fourth grant you must report this on your Self Assessment tax return for 2021-22. These grants are not counted as access to public funds and you can claim the grant on all categories of work visa. If you're eligible for the fifth grant you'll be able to claim from late July. The amount of the fifth grant will be determined by how much your turnover has been reduced in the tax year 2020-21.
The fifth grant will be worth 80% of three months' average trading profits capped at £7,500 for those with a turnover reduction of 30% or more or 30% of 3 months' average trading profits capped at £2,850 for those with a turnover reduction of less than 30%. Further details will be provided on the fifth grant in due course. Who can claim? The eligibility criteria are mostly unchanged from the third grant with the notable exceptions that you must have been trading both in the tax year 2019-20 and submitted your Self Assessment tax return by 2 March 2021 and in the tax year 2020-21 (or would have been if not affected by coronavirus). If the information in your Self Assessment returns show that you may be eligible, then you can claim the fourth grant If: you're a self-employed individual or a member of a business partnership, your business has been impacted by coronavirus between 1 February 2021 and 30 April 2021, you meet the eligibility conditions - including any new ones. We'll tell you more about the specific impact your business must have experienced to be eligible later in the webinar. You can't claim the grant if you trade through a limited company or a trust. (If you claim Maternity Allowance this will not affect your eligibility for the grant.) As with the previous three grants HMRC will assess if you're eligible for the fourth grant based on your trading profits and non-trading income on your Self Assessment tax returns.
Firstly we'll look at your Self Assessment tax return for 2019-20. Your trading profits must be no more than £50,000 and at least equal to your non-trading income. If you're not eligible based on the 2019-20 tax return we'll look at up to 4 tax years depending on which of the following years you traded in: 2016-17; 2017-18; 2018-19 and 2019-20. If you have a gap in the years you've traded we'll only use your most recent tax years. After the gap to work out your eligibility you must tell us if you make an amendment to any of your tax returns on and after 3 March 2021 which either lowers the amount you're eligible for or causes you to no longer be eligible.
This is because any amendments made on or after 3 March 2021 won't have been considered when looking at your eligibility or the amount of the grant you're entitled to. You may therefore need to pay back some or all of the grant if an amendment lowers the amount you're eligible for or causes you to no longer be eligible. If you amend your return before claiming your grant you must tell us within 90 days of receiving your grant. If you amend your return after receiving your grant you must tell us within 90 days of making the amendment. If you don't tell us you may also need to pay a penalty. You don't need to tell us if either the amount you're eligible for is lowered by £100 or less, or you're no longer eligible and the grant you received was £100 or less.
If you're not sure if the amount of your grant has lowered you should contact us for further help. You can also tell us if you want to voluntarily pay back some of the grant you received and you can do this at any time. Please visit GOV.UK for more information. Who can claim? As mentioned before you must have been trading in both the 2019-20 and 2020-21 tax years (or would have been if not affected by coronavirus). You must also have trading profits (not a trading loss) based on either your 2019-20 tax return or an average over the four tax years 2016-17 to 2019-20. As with the third grant you must also either be currently trading - but be impacted by reduced capacity demand or activity due to coronavirus or have been previously trading but be temporarily unable to do so due to coronavirus.
And you must declare that you both intend to continue to trade and reasonably believe that you will suffer a significant reduction in your trading profits due to reduced activity, capacity / demand or inability to trade due to coronavirus. We'll see more about reasonable belief in a few moments. In this example Kevin is a chiropractor. He usually makes a steady income from his practice but made a loss in the tax year 2019-20. He also has some income from letting out a holiday cottage.
As you can see from the table Kevin made a profit for 3 years and a loss for one. As he traded over the 4 years we had the profits for 2016-17 to 2018-19 together giving us £140,000 pounds. We then reduce this figure by £10,000 (which is the loss for 2019-20) to give us a total profit over the four years of £130 000 pounds. Dividing this figure by four will give us his average trading profits over the 4 years of £32,500.
Kevin's non-trading profits over the four years equals £50,000. If he experiences reduced capacity demand or activity due to coronavirus that he reasonably believes will affect his trading profits, Kevin would be eligible because his average trading profit for the four years is £32,500 which is less than £50,000. The sum of his trading profits for the four tax years is £130,000 which is at least equal to the sum of his non-trading income of £50,000 for those years. How do we work out partnership eligibility. If a partnership started trading in 2019-20 made £100,000 trading profits in that tax year and distributed its profits as follows: Partner A £25,000 , Partner B £75,000, Partner A would be eligible for the grant if he experiences reduced capacity demand or activity due to Coronavirus that he reasonably believes will affect his trading profits as the trading profits are no more than £50,000. Partner B would not be eligible for the grant as the trading profits received are more than £50,000. If partnership rules require Partner A to pay the grant into the partnership pot, the partnership should give the full grant back to Partner A.
What is meant by reasonable belief? In order to claim you must have reasonable belief that you'll suffer a significant reduction in trading profits because between 1 February 2021 and 30 April 2021 you have either reduced business activity capacity or demand due to Coronavirus or an inability to trade due to Coronavirus. We'll look at some examples of what this could mean shortly. Examples are also available in the full guidance. Before you make a claim you must decide if the impact on your business will cause a significant reduction in your trading profits for the tax year you report them in. For the fourth grant this could be either tax year 2020-21 or 2021-22. HMRC can't make this decision for you because your individual and wider business circumstances will need to be considered when deciding whether the reduction is significant.
You shouldn't take into account previous SEISS grants or other Coronavirus scheme support payments you've already received. When deciding whether you reasonably believe that you will suffer a significant reduction in trading profits for SEISS purposes we expect you to do the right thing and make an honest assessment that your business has been sufficiently affected to claim and to keep appropriate records as evidence for the fourth grant. This applies to your business if it has been impacted by reduced demand activity or capacity due to Coronavirus between 1 February and 30 April 2021. For example, you have fewer customers or clients than you'd normally expect resulting in reduced activity due to social distancing or government restrictions or you have one or more contracts that have been cancelled and not replaced or you 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've had to purchase face masks and cleaning supplies, this would not be considered reduced demand. Businesses previously trading but temporarily unable to do so. 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 shielding or self-isolating in line with NHS guidelines and are unable to work from home, if you've been abroad and have to self-isolate, this doesn't count. You've tested positive for Coronavirus and are unable to work or you can't work due to caring responsibilities, for example, as a result of school closure or child care facility closures. If you had to close before 1 February 2021 and continue to be closed for a period of time between 1 February 2021 and 30 April 2021 you can still claim if you're eligible. Let's see what this looks like in practice. A cafe owner has fewer customers due to government restrictions which reduces her takings, as her cafe was open for takeaway only. She reasonably believes this will significantly reduce her trading profits
so we'll be eligible to claim the fourth grant. A plasterer can't get materials due to supply chain issues because of 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 doesn't believe that the reduced activity will cause a significant reduction in his trading profits, so won't be eligible for the fourth grant. A builder has received a letter from the NHS, identifying him as clinically extremely vulnerable asking him to stay at home. As he's 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 fourth grant.
A builder has developed Coronavirus symptoms and self-isolates for five days before receiving a negative test result. During those five days he was unable to work from home but was able to rearrange his contracts. He doesn't believe there will be a significant reduction in his trading profits so won't be able to claim the fourth 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 fourth grant because increased costs were the only impact on her business and she hasn't lost customers. A dentist returns from a holiday abroad and must self-isolate for 14 days due to quarantine rules. As this is the only impact on her business she isn't eligible to claim the fourth grant. This is because reduced demand due to self-isolation after foreign travel is not included in the eligibility criteria.
The client of a dog walker cancels a contract due to Coronavirus. The dog walker chooses not to look for additional work to replace the contract. This means her business activity and her trading profits are reduced through choice and not because of Coronavirus so she isn't eligible for the fourth grant. An I.T. consultant has other income from renting property from which he has made losses due to renovation costs.
This isn't related to his trading profits from his I.T. consultancy service. As his consultancy business hasn't been affected due to Coronavirus he is intelligible for the fourth grant. There are some circumstances that can affect your eligibility such as: If your return is late, amended or under inquiry. If you're a member of a partnership. If having a new child affected the trading profits you reported for the tax year 2019-20 or means you didn't submit a tax return for that year. If you have loans covered by the loan charge and haven't agreed a settlement with
HMRC before 20 December 2019. If you claim averaging relief. If you're a military reservist or if you're non-resident or choose the remittance basis. See fuel guidance on gov.uk for more information on how your circumstances affect your eligibility.
Now we'll have a look at how much you might be entitled to. If you meet the eligibility criteria you'll get a grant based on your average monthly trading profit over a period of up to four years from 2016-17 to 2019-20 depending on which years you traded in. Earlier SEISS grants were based on average trading profits for up to three tax years from 2016-17 to 2018-19. As the grant is now based on average profits over four years including 2019-20. If your 2019-20 tax return shows an increase or decrease in your average trading profits compared to the last three years and you previously claimed a SEISS grant the fourth SEISS grant will be a different amount to what you've previously received. The fourth grant is based on
80% of your average monthly trading profits and paid out in a single instalment. Like the previous grants the fourth grant is based on three months worth of trading profits capped at a maximum of £7,500 in total and is subject to Income Tax and self-employed National Insurance. Trading profits: Trading profits is shown on your tax calculation as either profits from self-employment and or partnerships. We'll work out your total trading profit after deducting any allowable expenses, flat rate expenses, capital allowances and so on, If your annual gross trading income from one or more trades or businesses is more than one £1,000 you may have used the tax-free allowances instead of deducting any expenses or other allowances.
We'll work out your trading profit after deducting any tax-free allowances. We won't deduct from your trading profits any losses brought forward from previous years or your personal allowance. For profits from self-employment we'll add losses brought forward from previous years to the amount shown on your tax return as total taxable profits from this business. That is the amount
after expenses have been deducted and not the trading profits before expenses have been deducted. For profits from partnerships your share of the partnership's trading profits is worked out by taking all partnership income and deducting anything that is non-trading income such as investment income. Again any losses brought forward from previous years will be added to the amount shown as your share of total taxable profits from the partnerships business.
Your trading profit after reliable expenses is shown on your tax return as profit. Here's an example of trading profit if you've claimed the trading allowance. For 2016-17 the trading income is £21,000. No trading allowances have been claimed meaning the trading profit is also £21,000.
For the following three years the trading allowance of £1,000 has been claimed. This means the total profit for each of these years is reduced by £1,000. If you have more than one trade in the same tax year we'll add together all profits and deduct any losses for all trades when working out your trading profit. So if the trading profit for trade one is £60,000 and you make a loss of £20,000 in trade two, the total profit is £40,000. If you've traded for all four tax years: To work out your average trading profit we add together all profits and deduct losses for all four tax years where you've had continuous trade and then divide by four. For example in 2016-17 to 2018-19 your trading profit was £60,000 for each
of the three years equalling £80,000. In 2019 you suffered a loss of £30,000 which means the total trading profit for the four years is £180,000 minus £30,000, giving us £150,000. To arrive at the average profit for the four years you need to divide £150,000 by four to give us £37,500. If you didn't trade in the tax year 2016-17: To work out your average trading profit we add together all profits and deduct losses for the three years 2017-18 to 2019-20 then divide by three. In this example the profits over the three years are added together which equals £105,000 and then divided by three to give us an average of £35,000. If you didn't trade in the tax year 2017 to 2018, we'll work out your average based on tax years 2018-19 and 2019-20 only. Even if you traded in
the 2016-17 tax year. In this example we don't consider the profits made in 2016-17. To work out the average we divide £80,000 by two to give us an average of £40,000. Non-trading income: this is the amount recorded as total income received on your online or paper tax calculation less your trading income. This figure does not include losses.
It is important to note that the grant is also recognised as income for the purposes of claiming Benefits and Credits including Tax Credit, Universal Credit and council tax reduction. If you claim any of these it may affect the amount you're entitled to. You'll need to report the grant as self-employed income for any Universal Credit claims, self-employed income, trading profits, for any Tax Credit claims.
We'll now talk through some examples to help explain how the fourth grant will be calculated. The purpose of these examples is to show you how average trading profits are calculated, you don't need to calculate anything yourself, HMRC will work out the amount of the fourth grant for you. Marie is a full-time self-employed mobile hairdresser who has been trading every year for the past five years. She has a group of regular customers including some in care homes and her income fluctuates very little. She's been unable to work as a lot of our customers are vulnerable and current restrictions are making it hard to get any new business. In 2019-20 Marie had trading profits of £15,000 and no other source of income.
Marie is eligible for the scheme because: her trading profits are at least equal to her non-trading income in this case her only income is from self-employment. She has average annual trading profits of no more than £50,000 and her business is experiencing reduced demand due to Coronavirus and she reasonably believes this will have a significant impact on her trading profits. Having established Marie's eligibility we now need to work out her average trading profits in the four years from 2016-17 to 2019-20. Her self-assessment returns show
profits over the four years of £17,500, £18,750, £17,750 and £15,000. Marie's total trading profit for the four years is £69,000. To arrive at the average for this period we divide this total by four which equals £17,250.
We now need to work out eighty percent of our average annual trading profits by multiplying £17,250 by 0.8 to give us £13,800. To give us a monthly figure we divide this figure by twelve which equals £1,150. We'll then work out what that would be for three months by multiplying the monthly figure by three to give us £3,450.
Marie will be eligible for the fourth grant equal to the lower of either £3,450 that is 80% of our average monthly profits for three months or £7,500 which is the maximum amount for fourth grant. Marie is therefore eligible for a fourth grant of £3,450. Example two: Ali is an actor who's been working for years and had a big break a couple of years ago when he landed a role as a main character on a popular tv show. He made an investment with his first payment and received some dividends. However, he's been written
out of the show last April and the pandemic has meant very few opportunities for new work since. First we need to work out his average trading profits in the four years from 2016-17 to 2019-20. His trading profits over the four years are as follows. £17,000, £8,600, £49,000 and £69,500. This means Ali's total trading profit for the four years is £144,100. He also received £3,500 of dividend income in 2018-19 and £2,800 pounds in 2019-20. In 2019-20 Ali's trading profit
is more than £50,000 so he wouldn't meet the criteria if he'd been trading for only 2019-20. However, his average annual trading profits for this period are £36,025. Ali's circumstances mean he is eligible for the scheme. Having established his eligibility we now need to work out 80% of his average annual trading profits which is £28,820. We then divide this by 12 to give us a monthly figure of £2,402.
Eighty percent of his profits for a three month period will therefore be £7,206. Ali will be eligible for a fourth grant equal to the lower of either £7,206 which is 80% of his average monthly profits for three months or £7,500 which is the maximum amount of the fourth grant. Ali is therefore entitled to a fourth grant of £7,206. Sophia is in partnership with her spouse selling goods from fairs and trade shows as well as online. They've been trading for over ten years and have a loyal customer base.
However, most of the trading income comes from the shows which have all been cancelled this year. First we need to work out the average trading profits from her share of the partnership in the four years from 2016-17 to 2019-20. Her self-assessment tax returns show profits over the four years of £38,000, £45,000, £49,000 and £48,000.
The total trading profit for Sofia's share of the partnership for the four years is £180,000. She also received £3,000 of savings income in 2018-19. Her average annual partnership profits over the period is £45,000. Sophia's circumstances means she's eligible for the scheme. Having established Sophia's eligibility we now need to work out 80% of her average annual trading profits which is £36,000. We'll divide this by 12 to give us a monthly figure of £3,000. 80% of Sophia's profits for a three month period will therefore be £9,000. Sophia will be eligible for a fourth grant equal to the lower of either
£9,000 which is 80% of her average monthly profits for the three months or £7,500 which is the maximum amount for the fourth grant. Sophia is therefore entitled to a fourth grant of £7,500 . We're now going to go through how to claim the fourth SEISS grant. You'll be able to claim the fourth grant until midnight on Tuesday 1 June 2021.
If you're eligible you should receive the letter text or email from us with your personal claim date. If we haven't contacted you about the fourth grant you'll be able to see if you're eligible as part of the claim process when you access SEISS claim service. You must make the claim yourself. You must not ask a tax agent or advisor to claim on your behalf as this will trigger a fraud alert and will delay your payment. Claiming online is quick and easy
using your government gateway account, you can do it on a smartphone and it only takes five minutes. This will help keep our advisors free to help customers who need it most. Search for Self-Employment Income Support Scheme on gov.uk. Information needed to make the claim: To avoid delays, please check that you can log in to the government gateway before your personal claim date. Please also check your contact details are correct in your government gateway account. If you don't have an account or have forgotten your details follow the instructions on gov.uk by searching HMRC Services sign in or register. To access the claim tool you'll need your self-assessment unique taxpayer reference that's your UTR number, your national insurance number, your government gateway user ID and password.
These will be the same as those you used for your previous SEISS claims if you made any. If this is your first time claiming a SEISS grant you may be asked additional questions to prove your identity. These could relate to any of the following your UK passport your driving licence, information held on your credit file such as loans credit cards or mortgages, your self-assessment tax return within the last three years. It could also relate to your Tax Credit claim, your P60 or one
of your three most recent payslips. Please have this information ready when making your claim. Your claim may be delayed if you cannot answer the identity verification questions. You'll be asked to select whether you'd like your grant paid into a personal or business bank account. This must be a UK bank account. Only provide bank account details where
a bank's payment can be accepted. You'll need to provide details including the name on the account, the sort code, the bank account number and your address link to your bank account. If you use an accountant or tax agent they must not make the claim on your behalf.
If your accountant or tax agent tries to claim on your behalf this will trigger a fraud alert that will delay your payment and you'll need to call HMRC to resolve the issue yourself. However, they can support you to get ready to make a claim yourself and suggest other forms of support you may be eligible for in addition to or instead of SEISS. It's really important that you protect yourself from fraud. We're aware of an increase in scam emails, calls and texts. If someone gets in touch claiming to be from HMRC saying that financial help can be claimed or that a tax refund is owed and asks you to click on a link or to give information such as your name credit card or bank details, please do not respond, it is a scam. You can check details of genuine HMRC contacts on gov.uk. You can also forward suspicious
emails claiming to be from HMRC to phishing at hmrc.gov.uk and you can report text to 60599. So what happens after you've claimed. If your claim is approved it will be paid directly into your bank account within six working days, paid in a single instalment. The online system will let you know how much you will be paid
and how HMRC calculated that amount based on your previous tax returns. You must keep a copy of all records in line with normal self-employment record-keeping requirements including the amount claimed and the grant claim reference number. If your business recovers after you've claimed, this won't affect your eligibility for the grant. Eligibility is based on your reasonable belief at the time you made your claim that your trading profits would be significantly reduced. You must keep evidence to support your claim.
You must keep evidence that your business has had reduced demand due to Coronavirus at the time you made your claim. This includes 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. You must keep evidence if your business has been unable to trade due to Coronavirus. This includes a record of dates where you had to close due to government restrictions, track and trace emails 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 had to self-isolate this does not count. A letter or email from the NHS
asking you to shield or test results if you've been diagnosed with Coronavirus. You must report any SEISS grant received on your Self Assessment tax return as shown on this table. As you can see you have until midnight on 31January 2022 to report the first, second and third grant on your online self-assessment tax return and until midnight on 31 January 2023 for the fourth and fifth grants. Other support available: You may be able to claim for Universal Credit. If you make a claim for Universal Credit this payment may be reduced or stopped if you claim the cease grant other tax credits and benefits may be affected too. You should check how tax credits and other benefits affect each other and find out what to do if you're already getting benefits. The government is also providing the
following help for the self-employed. Grants for businesses that pay little or no business rates, business interruption loan scheme, the bounce back loan and test and trace support payments. The VAT deferral new payment scheme If you deferred VAT due from 20 March to 30 June 2020 and have been unable to pay in full by 31 March 2021 you can join the VAT deferral new payment scheme online by 21 June 2021 to pay in monthly interest-free instalments. If you need extra help to pay contact HMRC by 30 June 2021 and for more information go to gov.uk and search VAT deferral. Customers unable to pay their tax bill on time can find more information about financial support on gov.uk.
We're almost at the end of the webinar now, so let's just have a quick summary of what we've covered today. We looked at an overview of the scheme, who can claim, we had examples of reduced demand or business unable to trade, how much you may be entitled to, how to claim the fourth grant, what happens after you've claimed and what other support is available. Our full range of help and guidance can be viewed online from your mobile, tablet or PC at any time. If you have a disability a mental health issue or don't speak English you can find extra support on the gov.uk website. Please only call us if you can't find what you need on gov.uk and wherever possible leave the phone lines open for those who need us most.
You should contact HMRC if you need additional support for instance, if you find it difficult to use the internet for example, because you have a disability or you can't easily access a computer. You can speak to an advisor on our web chat or call us on 0800 024 1222 Thank you for listening stay safe and stay well.