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HM Revenue & Customs (HMRC) is now contacting self-employed individuals who could be eligible for the fourth round of the Government’s Self-Employment Income Support Scheme (SEISS).
The fourth round of the scheme covers the period from 1 February 2021 to 30 April 2021 and is worth 80 per cent of three months’ average trading profits, paid in a single instalment capped at £7,500.
HMRC is contacting self-employed individuals whose 2019-20 Self-Assessment tax returns show trading profits of no more than £50,000 and which are equal to or greater than income from other sources.
Where someone is not eligible based on their 2019-20 Self-Assessment tax return, HMRC will then assess their eligibility based on their average trading profits for 2016-17, 2017-18, 2018-19 and 2019-20.
However, not all self-employed individuals who meet these trading profit requirements and are contacted by HMRC will be eligible for the fourth grant. They must also have traded in both the 2019-20 and 2020-21 tax years, be currently trading but impacted by reduced demand or unable to trade because of the pandemic, declare their intention to continue trading and ‘reasonably believe’ there will be a ‘significant reduction’ in trading profits between 1 February and 30 April 2021.
Self-employed individuals applying for the fourth round of grants will need to keep evidence of the impact of Coronavirus on their business activity. They must also decide if they consider a reduction in trading profits to be ‘significant’, a decision HMRC says it cannot make because “individual and wider business circumstances will need to be considered when deciding whether the reduction is significant”. Previous grants from the SEISS do not need to be taken into account in this decision.
The application portal for the fourth grant will open in ‘late April 2021’.
A fifth grant will cover the period from May 2021 to September 2021. Unlike the first four rounds of the scheme, it will be paid at two different rates, depending on the reduction in trading profits a self-employed individual has seen. Those whose turnover has fallen by 30 per cent or more in the year to April 2021 will once again be eligible (subject to other conditions) for a grant worth 80 per cent of three months’ average trading profits capped at £7,500. Meanwhile, those whose turnover has fallen by less than 30 per cent during this period will be eligible (again subject to other conditions) for a grant worth 30 per cent of average trading profits, capped at £2,850.
Applications for the fifth round will open in late July.