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Self-Employed Income Support Scheme (SEISS) grant extension (updated 27 November)

Update 27 November

The final legislation for the extended SEISS has now been issued and this contains a new condition that hadn't been referred to before. This is extremely important and seems to be a definite attempt to reduce the numbers claiming the grant. However the condition itself is open to interpretation and introduces another grey area.

The new rule is that the claimant must reasonably believe there will be a significant reduction in trading profits due to reduced demand or inability to trade, due to coronavirus. However elsewhere in the guidance there are references to reduced activity or capacity as well as reduced demand.

So the goalposts have shifted from just 'reduced demand' to 'significant profit reduction from reduced demand/capacity/activity'. Where there is an inability to trade, for example due to a lockdown, this should be much easier to justify, but where trading continues this introduces more uncertainty.

The grant covers November to January but is claimable from 30 November. You can claim it at any time up to 29 January 2021 so it seems that claimants must wait until they feel they have met this condition at some stage in this period before claiming. The word 'significant' however is not defined so is open to interpretation.

In terms of what period to compare against, this could be against the same period in the prior year, or against expectations/budgets.

HMRC have provided some simple examples which can be found HERE. Note that they make the distinction between decisions made by traders that are specific to coronavirus and those that are not - if profits suffer due to the latter then this would not provide grounds for an SEISS claim. The point regarding increased costs not being a reason is repeated here, so the loss of profits must be led by reduced income, whether from reduced demand (e.g. fewer customers), reduced capacity (e.g. shorter opening hours, longer manufacturing times due to health measures), reduced activity (e.g. caused by lack of materials), or a combination of the three.

If you are in doubt as to where you stand regarding this please let us know.

Our original post on the SEISS extension from 12 November is set out below - the conditions referred to here are still valid but the new condition noted above now needs to be taken into account as well.

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Similarly to the furlough scheme (CJRS), the SEISS has recently been extended. Two grants were available in May and August this year and a third was announced a few weeks ago. This has changed in value a number of times but here we'll just set out the final result on grant 3 and also what we know of the newly announced 4th grant.

Eligibility

As indicated by the name, the SEISS is for the self-employed, although there can sometimes be confusion as to who is officially self-employed. If you trade in your own name (or using a business name but without using a limited company), or in a partnership or LLP, then you are self-employed. Note that this doesn't include activities such as property letting - there has to be an actual trade. If you trade through a limited company, even if you are the only employee, then you are not classed as self-employed for tax purposes.

As with the earlier grants, being eligible to claim is a two-stage process:

  1. You have to have met a number of tests based on your 2016/17 to 2018/19 trading results as reported on your tax returns. These rules are fairly detailed and haven't changed since the summer - see our earlier article on the SEISS for more information HERE.
  2. You must be able to declare, at the time of claiming the new grants, that you intend to continue to trade and that either: a) you are currently actively trading but are impacted by reduced demand due to coronavirus, or b) that you were previously trading but are temporarily unable to do so due to coronavirus.

Note that you don't need to have claimed either or both of grants 1 and 2 but you do have to have been eligible to do so under stage 1 above.

Note also that unlike the CJRS, the eligibility criteria in stage 1 have not changed, so this scheme will still not cover those who started self-employment from April 2019 onwards. There are a number of other groups not covered, some due to anomalies in the eligibility calculations, but these issues have not been addressed at all. Among our client base we estimate that less than 70% of self-employed clients were eligible rather than the 95% figure often quoted by the Chancellor.

The Claims

Grant #3 will be back up to the same levels as grant number 1, being 80% of average profits as calculated based on earlier years, capped at £7,500. Claims for this grant will open on 30 November and HMRC will be in touch directly with those it considers eligible under stage 1 set out above. As before, taxpayers must claim the grant and make the declarations under stage 2 above themselves; the system will not allow agents such as ourselves to do this on your behalf.

The % grant and date of claim for grant #4 has not yet been announced. We will update this page when we know more.

Finally in this area, please watch out for scams. We are aware of various fake emails, texts and calls being made. Please ignore these and only submit a claim (which includes your bank details) using your own login to the gov.uk website and your personal tax account.

November 12, 2020

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