When do I need to claim by?
The fourth SEISS grant can be claimed up to 1 June 2021.
How do I claim?
The claim process remains unchanged – the taxpayer needs to make the claim via the HMRC portal. Agents are unable to assist with this.
Basic eligibility conditions
Two notable changes are the potential inclusion of those newly self employed in 2019/20 and the additional conditions for claiming introduced.
You need to check that you meet all of the eligibility conditions. Normally, this means all of the following:
- you must carry on a trade which has been adversely affected due to coronavirus;
- you must have submitted your 2019/20 tax return on or before 2 March 2021;
- you must have carried on a trade in 2019/20 and 2020/21;
- you must intend to continue to carry on a trade in 2021/22;
- you must meet the profits condition for the fourth grant (broadly self employed profits for 2019/20 or the previous three years’ average are below £50k and self employed profits are more than half of your total income)
- your trade must have suffered reduced activity, capacity or demand in the period 1 February 2021 to 30 April 2021;
- you must reasonably believe that you will suffer a significant reduction in trading profits for a ‘relevant basis period’ (see below) compared to what you would have reasonably expected if you had not suffered that reduced activity, capacity or demand.
These last two conditions warrant some further explanation.
What does adversely affected mean?
It means that you have suffered reduced activity, capacity or demand due to the adverse effect of the coronavirus disease on the business; AND as a result of this reduced activity, capacity or demand you will suffer a significant reduction in trading profits for the relevant basis period(s).
What period am I comparing to?
A basis period is normally 12 months. The basis period in question here is the 12 months ending at some point between 1 February 2021 and 30 April 2021.
If, as for many self employed businesses, your year end falls on the 31 March, then you have two “basis periods”. The first period is the period ending 31 March 2021 and the second period is the period beginning 1 April 2021.
In this case, you need to have a reasonable belief that you will have a significant reduction of trading profits in either one of the two periods, so either for the year ending 31 March 2021, or the year ending 30 April 2022.
What does reduced activity, capacity or demand mean?
This means, for example, that:
- you carried out less work due to supply chain disruptions (reduced activity); or
- you are temporarily unable to trade – for example, because your business has had to close, you’ve tested positive for coronavirus and you are unable to work, or you cannot work because of parental caring responsibilities (reduced capacity); or you had fewer customers or clients than you would normally expect (reduced demand).
However, you can not make a claim for the fourth grant if your reduced activity, capacity or demand was solely as a result of having to quarantine after travelling to the United Kingdom from overseas.
What does a significant reduction in trading profits mean?
You need to consider whether or not you had or are likely to have a significant reduction in trading profits over the whole of at least one basis period, excluding other grants received.
Significant is not defined. This means that there is no requirement for trading profits to be reduced by a certain fixed amount or percentage, but the reduction must be ‘significant’. HMRC says you need to consider your individual and wider business circumstances when making this assessment.
Another important point to note is that the significant reduction must be a result of reduced activity, capacity or demand. Having increased costs – for example, the purchase of personal protective equipment (PPE) – does not, by itself, mean that you had reduced activity, capacity or demand. There must have been some impact on the amount of work you had, or on your ability to carry out that work, in order to qualify.
Any words of wisdom?
Record keeping is key here. You might be in a slightly easier position if you have a March year end and your March 2021 accounts evidence the conditions listed. But if you are relying on the year commencing on 1 April 2021 to suffer a significant reduction in trading profits as a result of reduced activity, capacity, or demand, please take some time now to put in writing why you believe this is going to be the case. Should you experience an upturn in later months, this might well be the crucial piece of evidence to prove your intentions.