All unincorporated businesses, including sole traders, the self-employed and trading partnerships, will be taxed on…
As part of the Government’s plan to extend the Self-Employment Income Support Scheme (SEISS) for a further six months, HM Revenue & Customs (HMRC) has announced new conditions that must be met.
The scope of the extended scheme will now be much narrower, with the third and fourth grants being less generous for the self-employed.
For example, the third grant will provide a taxable grant covering 20 per cent of average monthly trading profits, paid out in a single instalment covering three months’ worth of profits – capped at £1,875 in total.
Since being announced in the Chancellor’s Winter Economy Plan, further details have now emerged about the SEISS grant extension in an HMRC factsheet.
These explain that to qualify for the additional grants in the coming months, applicants must meet these additional criteria:
- Be currently eligible for the SEISS (although it is not necessary to have claimed the previous grants);
- Declare that they are currently actively trading and intend to continue to trade;
- Declare that they are impacted by reduced demand due to COVID-19 in the qualifying period.
These measures will seek to amend or work alongside the existing SEISS eligibility requirements, which state that a taxpayer will be eligible where they:
- Submitted their Self-Assessment tax return for the tax year 2018/19 by 23 April 2020;
- Traded in the tax year 2019/20;
- Intend to continue to trade in the tax year 2020/21;
- Carry on a trade which has been adversely affected by Coronavirus.
An applicant’s trading profits must still also be no more than £50,000 and more than half of their total income for either:
- The tax year 2018/19; or
- The average of the tax years 2016/17, 2017/18, and 2018/19.
The main additions to the new qualifying criteria are that the taxpayer is “actively trading” and has been “impacted by reduced demand”.
The requirement to be actively trading will most likely 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.
HMRC has confirmed that the qualifying period for the third grant runs from 1 November to the date of a claim and the qualifying period for the fourth grant is also expected to run from 1 February 2021 to the date of that claim.
HMRC is expected to publish further guidance to clarify the meaning of the new terms included within the eligibility criteria soon. We will aim to keep you updated when this information is released.