If you work for yourself and your business has been negatively affected by COVID-19, then you will be keen to learn how and when you can claim the 5th self-employment grant. Officially titled the Self-employed Income Support Scheme (SEISS), this round of government funding has the most complex rules to date. In this post, we’ll cover how the scheme works, when you can apply and the help we can offer you.
When can I claim the 5th self-employment grant?
If you are likely to be eligible, HMRC will contact you in the middle of this month (July 2021). You’ll be given a date from which you can claim the 5th grant via the Gov.uk website.
The grant will cover the period May 2021 to September 2021 inclusive. You will have until 30th September to make your claim.
How much will the grant be?
There are two levels of grant – a higher grant and a lower grant. The higher grant gives you 80% of three months’ average trading profits, or £7,500 (whichever is lower). The lower grant gives you 20%, up to a maximum of £2,850.
I’ll explain eligibility for the lower and higher grants later in this post. However, if you’re wondering whether it’s accurate that grants based on 3 months’ profits are supposed to support you over 5 months, I’m afraid the answer is ‘yes’.
Am I eligible for this round of SEISS?
These are the eligibility criteria for the 5th self-employment grant. You must:
- Have been self-employed during the tax years 2019/20 and 2020/21.
- Have submitted your 2019/20 tax return by 2nd March 2021.
- Be trading (but affected by reduced demand) or be temporarily unable to trade because of the pandemic
- Have self-employed profits of no more than £50,000 for the tax year 2019/20 and those profits must comprise at least 50% of your income. If this fails, the average is taken over the tax years 2016/17 to 2019/20 inclusive. If you began self-employment after the 2016/17 tax year, the average is calculated from the period you began trading up to and including 2019/20.
- You must reasonably believe there will be a significant reduction in your trading profits due to reduced business activity, capacity, demand or inability to trade during the pandemic.
What is meant by ‘reasonably believe’ and ‘significant reduction’?
In essence, you need to have experienced reduced demand or have been temporarily unable to trade during the period 1st May to 30th September 2021. However, you must also reasonably believe there will be a reduction in trading profits for the relevant accounting period as a whole – not just those five months. However, you can disregard any COVID-19 grants you have already received when making your calculations.
Will I get a higher grant or lower grant?
You will need to calculate your turnover figures for the period April 2020 and April 2021. You then need to compare the turnover figure from your 2019/20 tax return. If the turnover for the most recent period is down 30% or more, the higher grant applies. If it is down less than 30%, the lower grant applies.
However, if you believe the 2019/20 tax year was not a ‘normal’ one, you can instead provide details from your 2018/29 tax return. A year might be considered ‘not normal’ if you were on long-term sick leave, you lost a large contract or you were carrying out reservist duties. Certain other reasons will also be acceptable – ask us for advice if you are unsure.
Can you help me claim the 5th self-employment grant?
As you can see, the 5th self-employment grant is complex. If you make miscalculations, there is a danger that HMRC will claw back any overpayment. While THP cannot submit your claim for you, if you are a client we can help you put together an accurate claim based on your accounts. If you would like any help, please get in touch with your account manager.
About Jon Pryse-Jones
Since joining THP in 1978, Jon Pryse-Jones has been hands on with every area of the business. Now specialising in strategy, business planning, and marketing, Jon remains at the forefront of the growth and development at THP.
An ideas man, Jon enjoys getting the most out of all situations, “I act as a catalyst for creative people and encourage them to think outside the box,” he says, “and I’m not afraid of being confrontational. It often leads to a better result for THP and its clients.”
Jon’s appreciation for THP extends to his fellow team members and the board. “They really know how to run a successful business,” he says. He’s keen on IT and systems development as critical to success, and he continues to guide THP to be at the cutting edge and effective.