FOURTH AND FIFTH SEISS GRANTS
Self-employed traders will be able claim a fourth SEISS grant from late April and a fifth SEISS grant in late July 2021, but extra conditions will be attached to the fifth grant.
The long awaited fourth grant (SEISS-4) has now been revealed to be set at 80% of the trader’s average trading profits, capped at £2,500 per month. It will be paid in one lump sum for three months, giving self-employed traders a maximum financial boost of £7,500.
The portal to apply for this grant will be open from late April to 31 May 2021.
However, all SEISS grants must be claimed by the taxpayer themselves, tax agents can’t claim it on behalf of clients. This is because the taxpayer must use their own government gateway ID to access the claims portal.
The big difference for the SEISS-4 grant is that the figure of average trading profits will include profits reported for the tax year 2019/20. The average profit calculation will include profits from all four tax years from 2016/17 to 2019/20. HMRC performs this calculation from the tax return records it holds, and the taxpayer does not have to submit any figures to claim the grant.
Tax return condition
The SEISS-4 and SEISS-5 grants will only be available to taxpayers who have filed their 2019/20 SA tax return by midnight on 2 March 2021. This will allow those who became self-employed in 2019/20 to claim a SEISS grant for the first time, if they have already submitted their 2019/20 tax return.
All traders who claim either of these new SEISS grants must still be trading in 2021, or their business must be temporarily closed due to coronavirus restrictions. The taxpayer must declare, as part of the grant application, that they intend to continue trading in 2021.
This is particularly tough for individuals who started their self-employed business in 2019, but who were left with no government support in 2020. They still won’t qualify for SEISS support if their new business could not survive into 2021.
Reduction in profits
To claim the SEISS-4 grant the trader must declare that they have suffered a significant drop in trading profits. This is further defined as being a reasonable belief that profits have reduced due to one or more of:
- reduced activity
- reduced capacity
- inability to trade
HMRC provides a number of examples to illustrate what is meant by reasonable belief and significant reduction in profits.
TAXATION OF SEISS GRANTS Q&A
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