Since the coronavirus pandemic took hold, many self-employed people have struggled. Lockdowns and restrictions have made it difficult or impossible for some people to work. Many of those who can still work have seen demand plummet. As a result, millions have turned to the government’s Self-Employment Income Support Scheme (SEISS) for help. Applications for the 3rd grant are currently open until 29th January. This grant pays 80% of average monthly profits for the three-month period covering November to January (to a maximum of £7,500). As February creeps up on us, it’s little wonder that many people wonder when the 4th SEISS grant will be announced – and how much it will be.
When will the 4th SEISS grant be announced?
According to Moneysavingexpert.com’s Martin Lewis, he has had Treasury confirmation about the 4th SEISS grant. It will be announced during the Budget on 3rd March.
In a video recorded last Friday, he says that leaving the announcement that late is ‘cruel’.
Why? Because the grant will cover the period from the beginning of February until the end of April. Not knowing the amount until March will prevent people from planning or budgeting accurately.
That said, Martin Lewis speculates that there may be positive, mitigating factors for the delay. These will be of particular interest to self-employed people who, so far, have not qualified for the first grant.
Will more self-employed people be eligible for SEISS?
One of the key eligibility criteria for the first three SEISS grants was a completed tax return for 2018/19. In fairness to the Treasury, when SEISS was first announced, it gave people extra time to submit any late tax returns for that financial year.
However, the requirement to submit this tax return left many self-employed people out in the cold. Anyone who had started trading after the 2018/19 tax year couldn’t – for obvious reasons – submit a tax return for that year. As a result, the Treasury had no way of calculating the proven, average monthly trading profits for these people. So, rather than risk widespread fraud, the scheme didn’t cover these people.
This group of self-employed people have had a particularly tough year. Shut out from SEISS, many have had to rely on benefits such as Universal Credit. However, if Martin Lewis’s suggestion proves to be correct, the 4th SEISS grant may be open to them – based on their 2019/20 tax return, which is due by the end of this month. We certainly hope this is the case.
What about self-employed people with limited companies?
Self-employed people who trade via limited companies were also shut out of the SEISS scheme. This is because many people use their company to pay themselves only a small salary (usually for their annual tax-free allowance) and then take dividends as their main income. For the purposes of the SEISS scheme, neither the salary nor the dividends qualify as self-employed income. This meant that many people in this situation had to furlough themselves using the Coronavirus Job Protection Scheme to claim 80% of their small salary. Others have had to rely on Universal Credit.
Martin Lewis suggests that one reason for the delay in announcing the amount of the 4th SEISS grant may be because of substantial changes to the scheme. It’s possible that the Chancellor may look at ways of including self-employed people who trade via limited companies. Fingers crossed this will happen.
How much will the 4th SEISS grant be?
Here we can only speculate. In the past, when the coronavirus infection rates were lower and restrictions were looser, the Treasury has announced lower levels of support. For example, the 3rd SEISS grant was originally going to pay out 20% of average monthly profits. Then infection levels soared and we had to cope with tougher restrictions again. As a result, the amount went back up to 80%.
Bearing that in mind, if the current lockdown – combined with the vaccination programme – succeeds in bringing COVID-19 infection rates down, then restrictions may begin to ease. If government feels the pandemic is more under control, it may announce a small SEISS grant than the current 80% of trading profits.
That said, there are too many ‘ifs’, ‘buts’ and unknowns to accurately predict where we will be by the Budget announcement in March. Hopefully there will be lower infection rates, fewer restrictions and a decent SEISS grant for which more self-employed people are eligible. We’ll certainly let you know of any news as soon as we have it.
About Ben Locker
Ben Locker is a copywriter who specialises in business-to-business marketing, writing about everything from software and accountancy to construction and power tools. He co-founded the Professional Copywriters’ Network, the UK’s association for commercial writers, and is named in Direct Marketing Association research as ‘one of the copywriters who copywriters rate’.