Who can claim the 3rd SEISS Grant?

We have seen this asked a few times across social media and by our clients, so here is a guide on the current guidance issued on who can claim as detailed by HMRC here;

1. Who can claim

To be eligible for the grant extension self-employed individuals, including members of partnerships, must:

  • have been previously eligible for the Self-Employment Income Support Scheme first and second grant (although they do not have to have claimed the previous grants)
  • declare that they intend to continue to trade and either:
      • either be currently trading but are impacted by reduced activity, capacity or demand, or have been previously trading but are temporarily unable to do so due to coronavirus
      • declare that they intend to continue to trade, and that they reasonably believe that the impact on their business will cause a significant reduction in their trading profits
      • only claim if the reduction in profits is caused by reduced business activity, capacity or demand, or inability to trade due to coronavirus – reduction in profits due to increased costs (such as having to buy masks) does not count for this purpose.

When deciding whether the reduction is significant, they will need to consider their wider business circumstances.

HMRC have released guidance to tax agents to state they expect claimants to make an honest assessment about whether they reasonably believe their trading profits will be significantly reduced compared to what they would otherwise expect to achieve during this period.

The business must have been impacted on or after 1 November 2020. You must keep evidence to show the impact and reduction in their business activity across the qualifying period

2. What the grant extension covers

The extension will last for 6 months, from November 2020 to April 2021. Grants will be paid in 2 lump sum instalments each covering a 3 month period.

The third grant will cover a 3 month period from 1 November 2020 until 31 January 2021. The Government will provide a taxable grant calculated at 80% of 3 months average monthly trading profits, paid out in a single instalment and capped at £7,500 in total. This is an increase from the previously announced amount of 55%.

The Government are providing the same level of support for the self-employed as is being provided for employees through the Coronavirus Job Retention Scheme which has also been extended until March 2021.

The Government has already announced that there will be a fourth grant covering February 2021 to April 2021. The Government will set out further details, including the level, of the fourth grant in due course.

The grants are taxable income and also subject to National Insurance contributions.

3. How to claim

The online service for the next grant will be available from 30 November 2020. HMRC will provide full details about claiming and applications in guidance on GOV.UK in due course.

What do we advise?

Keep evidence to backup your reason for claiming the 3rd SEISS grant if you meet the qualification criteria. Some evidence for a claim could be;

  • Accounts showing a decrease in turnover compared to the previous year. If you use Cloud accounting software such as Xero a report on this can be easily run and saved in seconds.
  • Dates that your business had to close due to lockdown restrictions and/or that you or your staff were unable to work due to coronavirus symptoms, shielding or caring responsibilities
  • Examples of contracts or projects being delayed or cancelled

HMRC has released examples on what they class as reduced demand or temporary closure here.

HMRC have previously stated they will be investigating claims (and have done already) and can issue demands for repayment of grants for those who did not qualify and up to 100% of the grant amount in penalties. Full details here.

We are not trying to scaremonger and put off those entitled to claim, those who qualify and need support should claim. We are just warning that you need to be prepared to answer any questions HMRC may ask in the future.

As ever if you do have any questions on claiming SEISS grants please do not hesitate to contact us.