The claims portal for the third SEISS grant opened on the 30th of November. However, there have been changes to the eligibility criteria and taxpayers must declare that their trade has been impacted by reduced demand before they claim the third grant.
“HMRC expects you to make an honest assessment about whether you reasonably believe your business will have a significant reduction in profits.”
To make a claim for the third SEISS grant, your business must have had a “new or continuing impact from coronavirus between the 1st of November 2020 and the 29th of January 2021, which you reasonably believe will have a significant reduction in your profits.”
The third SEISS is a (taxable) grant of up to 80% of your average monthly trading profits. This will be paid out in a single instalment covering all 3 months’ worth of profits capped at £7,500 in total.
If you are eligible, you must make your claim for the third SEISS grant on or before the 29th of January 2021.
Changes To Eligibility For The Third SEISS Grant
When making a claim for the first two self-employed income support (SEISS) grants taxpayers had to confirm that their business had been adversely affected by the coronavirus pandemic. This was a somewhat ambiguous term which was difficult to pin down.
The test to see if a taxpayer was “adversely affected” was met if business turnover had decreased, or costs had increased, due to the pandemic.
Most importantly there was no minimum threshold for the adverse effect, so even a small increase in costs or drop in sales meant the business would qualify.
For the third SEISS grant, however, the rules have changed, and claimants need to consider them carefully before claiming for this third grant.
The previous qualifying criteria of “adversely affected” has been replaced with a more precise “impacted by reduced demand”.
HMRC requires the trader to suffer a significant reduction in trading profits.
To make things clearer, HMRC has outlined examples of a business which has been impacted by reduced demand.
Impacted By Reduced Demand
HMRC deem your business to have been impacted by reduced activity, capacity or demand due to coronavirus, if for example:
- you have fewer customers or clients than you’d normally expect, resulting in reduced activity due to social distancing or government restrictions
- have one or more contracts that have been cancelled and not replaced
- carried out less work due to supply chain disruptions
You must not claim if the only impact on your business is increased costs.
For example, purchases of face masks or cleaning supplies will not be considered as reduced activity, capacity or demand.
Businesses which have been forced to temporarily cease trading are also eligible for the grant.
Previously Trading But Temporarily Unable To Do So
This applies to any taxpayers who are temporarily unable to carry out their business activities due to coronavirus. For example:
- your business has had to close due to government restrictions
- you’ve been instructed to shield or self-isolate in-line with NHS guidelines and are unable to work from home (if you’ve been abroad and have to self-isolate, this does not count)
- you have tested positive for coronavirus and are unable to work
- you’re unable to work due to caring responsibilities, for example as a result of school or childcare facility closures
If you had to close before the 1st of November 2020 and continued to be closed for a period of time up to the 29th of January 2021, you can still claim as long as you are eligible.
Who can claim?
To claim the third SEISS grant you must be self-employed or a member of a partnership. You cannot claim the grant if you trade through a limited company or a trust.
If you claim Maternity Allowance this will not affect your eligibility for the grant.
You must have traded in both tax years:
- 2018 to 2019 and submitted your Self Assessment tax return on or before 23 April 2020 for that year
- 2019 to 2020
New ‘Significantly Reduced Profits’ Test For The Third SEISS Grant
Before you make a claim, you must decide if the impact on your business will cause a “significant reduction in your trading profits” for the tax year you report them in.
HMRC advise that they “cannot make this decision for you because your individual and wider business circumstances will need to be considered when deciding whether the reduction is significant. You should wait until you have a reasonable belief that your trading profits are going to be significantly reduced before you make your claim.”
The guidance provided by HMRC on checking whether a taxpayer can claim the third SEISS grant states that the individual must be:
- currently trading and be “impacted by reduced demand”; or
- has been trading but the business is temporarily closed due to coronavirus.
The trader must also confirm they are:
- intending to continue to trade; and
- they reasonably believe that the impact on their business will cause a significant reduction in their trading profits due to; reduced business activity, capacity or demand, or inability to trade due to coronavirus during the period 1 November 2020 to 31 January 2021.
Examples Of Eligibility
“A cafe owner has fewer customers due to government restrictions on households mixing, which reduces her takings. She reasonably believes this will significantly reduce her trading profits. She is eligible to claim.”
“A cafe owner has fewer customers due to government restrictions on households mixing, which initially reduces her takings. She increases her prices and believes her trading profits will not reduce significantly, so she is not eligible to claim the third grant.“
Those Who Are Not Eligible
If you were not eligible for the first and second SEISS grant based on the information in your Self Assessment tax returns, you will not be eligible for the third.
The reduction in your sales can be due to a number of factors, however, it must also lead to a reduction in profits.
If the volume of your sales has decreased but the value of each sale has increased meaning that your profits are constant, you do not qualify
Additionally, any reduction in sales activity which is solely due to the taxpayer having to self-isolate because they, or someone they care for, has travelled into the UK, does not qualify for the third SEISS grant.
However, a reduction in sales as a result of self-isolation due to Covid-19 symptoms, testing or on instruction due to medical vulnerability is accepted as a cause of reduced sales.
Making A Claim
If you believe that you are eligible and wish to make a claim, you will need your:
- Self Assessment Unique Taxpayer Reference (UTR)
- National Insurance number
- Government Gateway user ID and password
- UK bank details including account number, sort code, name on the account and address linked to the account
Claims for the third SEISS grant can be made between the 30th of November 2020 and the 29th of January 2021 here.
You must make the claim yourself and cannot ask your tax agent or adviser to claim on your behalf as this will trigger a fraud alert, which will delay your payment.
How We Can Help
Whilst we are unable to make claims for the third self-employed income support scheme on behalf of our clients we are still here to support you.
You can also find more information about support for businesses affected by Coronavirus here.