If you're self-employed, the latest U-turn in government policy could well benefit you. Instead of ending on the 1 October 2020, the Self-Employment Income Support Scheme (SEISS) has been extended until April 2021.
This extension is taking the form of two grants: one covering the period between November 2020 to January 2021, and the other from February 2021 to April 2021. By extending the support, the government is acknowledging the contribution that sole traders make to the UK economy and how important it is to keep them afloat.
So, to help you get the most out of SEISS and ensure the success of your business, we've asked Mike Parkes from GoSimpleTax to explain the extension and how you can claim it.
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What is the SEISS?
The SEISS is a series of taxable government grants for self-employed individuals. It was set up to support self-employed workers whose earnings have been adversely affected by COVID-19.
The scheme opened for applications for the first grant on 13 May 2020. Successful applicants could get either £7,500 or 80% of their average monthly profits over the 2016/17, 2017/18 and 2018/19 tax years (whichever was the lower amount).
The second phase involved a grant worth 70% of average monthly trading profits. It was paid out in a single instalment covering three months' worth of profits and capped at £6,750.
What's the value of the latest grant?
The third grant covering the period from 1 November 2020 to 31 January 2021 will provide 80% of three months' average monthly profits up to a total of £7,500. This makes it the same value as the first grant.
How do I know if I'm eligible for SEISS?
The majority of the conditions for the latest grant are the same as the previous two grants. However, this round of grants see the addition of one further requirement regarding reduced demand.
To make your application easier, I've listed each one below:
- You must declare that you've been impacted by reduced demand due to COVID-19. This is the new term and it means that you can make a claim on the basis that you were previously trading but are temporarily unable to do so due to coronavirus.
- You must have filed a tax return for 2018/19. In other words, you need to have been self-employed prior to 6th April 2019.
- You were eligible for the first and second SEISS grants. However, it is not a requirement that you have to have made a claim for these earlier grants.
- You must earn more than 50% of your total income from self-employment. HMRC will check this on your 2018/19 tax return. If you're not eligible based on the 2018/19 tax year alone, they'll review tax years 2016/17, 2017/18 and 2018/19 to see if your average profit across three years was more than 50% of your total income.
- You must be actively trading. You need to declare this to HMRC when you apply and must intend to continue trading post-pandemic.
- Your average trading profit must be less than £50,000. Applicants earning more than this won't be eligible.
Remember, you are still able to apply even if you didn't apply for the previous two grants. Likewise, you can continue working after claiming the grant. You just need to prove that you were impacted by reduced demand during the pandemic.
How do I claim the SEISS grant?
It's simple. All you need to do is visit the official government claims portal. Applications for the third grant open on the 30th November, but you can create a Government Gateway account in the meantime. This will streamline the process once applications open.
This grant is arguably the best opportunity for sole traders to keep their businesses going through the uncertain times ahead. It's unclear at this point whether the fourth grant will be as generous, especially if lockdown has eased by the time applications open.
Bear in mind that the 31 January is also your tax return deadline. It's important that all your finances are in order or you may risk losing your eligibility in future months. Software like GoSimpleTax can help you with this by enabling you to update your tax return in real time.
You should also note that these grants are subject to tax and national insurance. This means that need to be included as part of your self-employed income on your 2020/21 tax return.
Sponsored post. Copyright © 2020 Mike Parkes, GoSimpleTax - tax return software that can help you manage your self-assessment.