TC Group: Government issues further guidance on the fifth Self-Employed Income Support Scheme

The fifth Self-Employed Income Support Scheme (SEISS) grant, which covers the period from May to September 2021, is available to be claimed from late July. If you are potentially eligible, then HMRC will contact you in mid-July.

The qualifying criteria under the fifth tranche of SEISS are very similar to those for the fourth tranche. You must also declare that you intend to continue to trade and reasonably believe that there will be a significant reduction in your trading profits due to COVID from 1st May 2021 to 30th September 2021.

The level of the fifth SEISS grant to be paid will depend on the reduction in your turnover between 2020 and 2021. If the reduction in turnover is 30% or higher, then the grant is 80% of the three-month average profits capped at £7,500, but if the turnover reduction is less than 30%, then the grant is 30% of the three-month average profits capped at £2,850.

The turnover calculation can be complicated; therefore, we suggest you contact your usual TC adviser on 0330 088 7111 to establish these numbers.

Further details on COVID support measures announced in the Budget

In the Budget, the Chancellor announced a range of COVID support measures for business. The measures include extending the Furlough Scheme and the Self Employed Income Support Scheme, and industry-specific support.

Furlough Scheme
The Chancellor confirmed the Furlough Scheme would be extended until 30th September 2021. The payment to employees is maintained at 80% of wages up to £2,500 per month for furloughed hours. The Government will continue to pay a grant of 80% of wages for May and June, 70% of wages for July and 60% of wages for August and September.

Therefore, the employer continues to cover the costs of employer National Insurance and pensions contributions throughout and 10% of the wage costs in July up to £312.50 and 20% of the wage costs in August and September up to £625 per month.

Self Employed Income Support Scheme (SEISS)
SEISS has also been extended to 30th September 2021 and comprises tranche 4 and 5.

Tranche 4 covers the three months to 30th April 2021 and is based on 80% of three-month average profits and can be claimed from late April. However, if you are eligible, HMRC will contact you in mid-April and advise you of your claim date.

Under tranche 5, the grant is capped at 80% of three months average trading profits where the business’ turnover has reduced by 30% or more from April 2020 to April 2021. Where the reduction in business turnover is less than 30%, then the grant is capped at 30% of 3 months average trading profits.

To qualify for tranche 4 and 5 of SEISS, the individual must have submitted their income tax return for 2019/20 by 2nd March 2021 and still be trading in 2020/21. Their profits in 2019/20 should also be less than £50,000, or an average for the three years ending 2019/20 and trading income exceeds non-trading income. In addition, they will need to declare that their business has been adversely affected by COVID and there will be a significant reduction in their trading profits due to reduced business activity, capacity, demand or inability to trade due to COVID.

Therefore, businesses established in 2019/20 can now qualify for tranche 4 and 5 of SEISS, although they did not qualify for the earlier tranches.

Sector-Specific Support
The 100% business rates holiday for businesses in the hospitality, retail and leisure industries for 2020/21 is to be extended to 30th June, and then there will be a discount of up to 67% until March 2022.

When it has been permitted to open, the hospitality sector has benefited from a reduced rate of VAT of 5%, and this will continue until 30th September 2021. The VAT rate then increases to 12 ½% until 31st March 2022 and then returns to the full rate of 20%.

Recovery Loan Scheme
The existing Coronavirus loan schemes close at the end of March, and from 6th April, a new Recovery loan Scheme is available and closes on 31st December 2021. The loan can be used for any business purpose, and loans are available from £25,001 to £10,000,000.

To qualify for the loan, the business must be trading in the UK and show that it is viable or viable were it not for the pandemic, has been impacted by the COVID pandemic and is not in collective insolvency proceedings.

Businesses that have received support under the existing COVID-19 guaranteed loan schemes will still be eligible to access finance under this scheme if they meet all other eligibility criteria.

Further details will be provided in due course on these matters, and we will update you as appropriate.

If you require guidance on any of the above, please contact your TC partner on 0330 088 7111 or via www.tc-group.com.

Patron: Further guidance and legislation announced on the Self-Employed Income Support Scheme

The self-employed can make a claim under the third tranche of the Self-Employed Income Support Scheme (SEISS) from 30th November.

As previously announced, self-employed businesses can claim an SEISS grant for the three months to 31st January 2021 for 80% of average business profits with the grant capped at £7,500 in total.

In order to qualify the sole trader or partner must:

  • have traded in both 2018/19 and 2019/20;
  • be trading currently and intend to continue to trade;
  • have had trading demand adversely impacted by COVID or COVID restrictions;
  • have a reasonable belief that trading profits for the trading year will be significantly reduced due to the impact of COVID or COVID restrictions on activity, capacity or demand.

The qualifying criteria have been tightened, and businesses will need to consider them carefully. The main restriction is the claimant must have a reasonable belief that trading profits for the year will be significantly reduced due to the impact of COVID, and they will need to keep records to demonstrate this.

Therefore, before making a claim, businesses need to consider whether the trading profits that they would have achieved in the current period have been adversely impacted by reduced activity due to COVID and that this can be demonstrated.

As with previous tranches, the claim for the grant has to be made by the sole trader or partner and cannot be made by their adviser.

If you would like to discuss whether you qualify for the third tranche of SEISS, please contact your local partner on 0330 088 7111.