'I'm self-employed but confused about whether I can claim the fourth grant' – Unsure? Here's what you need to know
The Self-Employment Income Support Scheme has been extended with two further grants to run until September. To claim, you must have believed you would have a "significant reduction" in profits for one of two reasons either because of "reduced demand, activity or capacity" OR you're unable to trade. This guide helps you understand if your situation meets the criteria.
Looking for other coronavirus help? This guide has info for self-employed people looking to apply for the fourth grant. Also see:
- Coronavirus self-employed & small limited co help for the latest on SEISS.
- Coronavirus employees' help for the latest on the extended furlough scheme.
- Coronavirus universal credit & benefits for benefits updates.
- Coronavirus finance & bills help for help on mortgages, rent, debts and bills.
- Coronavirus life in lockdown for help with shopping, MOTs etc.
- Coronavirus travel rights for the latest on holidays and refunds.
In this guide
Self-Employment Income Support Scheme: 4th grant now open until 1 June
Our main Self-Employed guide has all the info on how the fourth Self-Employment Income Support Scheme (SEISS) grant works, but in short, here are the basics:
- New. Applications are now open. HMRC initially sent out staggered application dates to avoid its systems being swamped, but applications are now open to all. If you are eligible for SEISS 4, HMRC will have contacted you via text, email or post to give you your personal allocated claim date. (see how to spot fake HMRC messages). This is the date from which you can make your claim.
- You MUST have filed a 2019/20 tax return to be eligible. This is the major difference between the fourth grant and the previous three. The deadline to file this with HMRC was 31 January, but the Chancellor specifically said in his 2021 Budget announcement that the scheme would be open to you if you'd filed by 11.59pm on 2 March.
- You can get as much as £7,500. This is made up of 80% of three months' worth of average monthly trading profits capped at £2,500/month. To calculate this, HM Revenue & Customs (HMRC) looks at your tax returns from 2019/20, 2018/19, 2017/18 and 2016/17.
- You must earn at least 50% of your total income from self-employment. To check this, HMRC will first look at your 2019/20 tax return to see if it was the case then – if you don't qualify based on 2019/20 alone, it will then look at the tax years 2016/17, 2017/18 and 2018/19 to see if the average of your trading profits across the four tax years was more than 50% of your total income.
- Your average trading profit must be £50,000/year or less. This is essentially a 'cliff-edge' requirement – so those whose average annual trading profit is more than £50,000 (to be specific, £50,000.01 or above) won't be able to get any support from this scheme.
- The fourth grant covers the period from 1 February 2021 to 30 April 2021. Like the previous three grants, the fourth is worth three months' trading profits.
- You can claim anytime from your given application date until 1 June. But don't worry if you miss your slot - you'll still be able to claim until 11.59pm on 1 June.
- Everyone can now check their eligibility online. If didn't get a letter, text or email from HMRC saying you are eligible but thing you should have, you can check by signing in to the online claims service found at the ‘make your claim’ section here.
- If aren't eligible but believe it's a mistake get in touch with HMRC. If you believe you should have been eligible but aren't, contact HMRC by calling 0800 024 1222.
- New. HMRC is running a series of free webinars to help answer questions. The webinars take you through the aim of the scheme, who can apply, how much you may be entitled to, how to claim the fourth grant, and what happens after you’ve claimed. You can sign up here.
- There's a fifth grant coming this summer, but details are scarce. A fifth and final self-employed grant will be available from late July. It will be worth three months' of average profits. We don't know how the average profit will be calculated yet. But the period the grant covers is five calendar months - May to September - which means the self employed seem to be two months' short of help compared to those on the furlough scheme (the same thing happened in 2020 too). For more info see our main self-employed help guide.
At the March Budget the Chancellor announced an extension to the SEISS grants. Aside from now including people who had filed 2019/20 tax returns, "all other eligibility criteria remain the same as the third grant".
This includes that your business must continue to be affected by coronavirus, AND you must believe you'll have a "significant reduction" in profits for one of two reasons either because of "reduced demand, activity or capacity" OR you're unable to trade.
Here's what this means in practice:
1. Your business must continue to be affected by Covid in the claim period, or be newly affected in this time
- Your business must be facing an ongoing hit from coronavirus from 1 February to 30 April, or be newly affected in this period. So you cannot apply if your business was struggling in, say, August, September and October, but is now no longer affected.
- Even if your business took a massive last year, you won't qualify UNLESS you can prove it's seen an impact during the claim period. Equally, if you've not been affected up to now but are newly affected in this period, you are eligible, regardless of what your circumstances were previously.
2. You need to believe the impact during this period WILL cause a 'significant reduction' in trading profits
- Before you claim, you must decide if the impact on your business will cause a "significant reduction" in your trading profits.
- For many this will be straightforward, but others might not yet be sure. If this is you, you might need to wait until you have a "reasonable belief" that your trading profits are going to be significantly reduced before you know if you can make a claim.
- Only you can decide what is a "significant reduction" in your trading profits – it very much depends on your business. HMRC says it "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 must keep evidence that shows how your business has been affected by coronavirus resulting in less business activity than usual.
- If your business recovers after you've claimed, don't worry. Your eligibility will not be affected as this is based on your "reasonable belief" that your trading profits would have been significantly reduced at the time you made your claim.
- While increased costs hit your profits, you CANNOT make a claim if you've only had increased costs and no other impact, eg, if you have had to buy face masks and cleaning supplies, but your demand has been unaffected. Not sure if you can claim? See some real-life scenarios below.
3. This 'significant reduction' must be due to 'reduced demand, activity or capacity' OR being temporarily unable to trade
To show you've been hit by "reduced demand, activity or capacity" you need to be able to prove:
- You have fewer customers or clients than normal, resulting in reduced activity due to social distancing or Government restrictions.
- You have one or more contracts that have been cancelled and not replaced.
- You have carried out less work due to supply chain disruptions.
To show you've been temporarily unable to trade you need to prove:
- 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 doesn't count).
- You've tested positive for coronavirus and are unable to work.
- You cannot work due to parental caring responsibilities, eg, as a result of school or childcare facility closures.
It's understandable that you might feel nervous about what does and doesn't count as a legitimate claim. That's why we're listing real-life examples. If there is a particular scenario you'd like us to look into, do let us know via email.
Here's what is and isn't accepted as being a reason to claim for the fourth grant:
|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.||Yes|
|A plasterer cannot get materials due to supply chain issues because of coronavirus. This has reduced the amount of work he can complete and be paid for. He reasonably believes this will significantly reduce his trading profits.||Yes|
|A part-time personal trainer works in a gym that has closed due to Government restrictions. This reduces her business activity on the days that she works. She reasonably believes this will cause a significant reduction in her trading profits.||Yes|
|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.||No|
|A plasterer cannot get materials due to supply chain issues because of coronavirus. This has reduced the amount of work he can complete and be paid for, but he manages to find a new supplier. He doesn't believe that the reduced demand will cause a significant reduction in his trading profits.||No|
|A hairdresser has had to shut his shop due to Government restrictions. He won't have any income due to the closure and reasonably believes the reduction in his trading profits will be significant.||Yes|
|A builder has received a letter from the NHS identifying him as 'clinically extremely vulnerable' and it asks him to stay at home. As he is unable to work from home he has a reasonable belief that there will be a significant reduction in his trading profits.||Yes|
|A hairdresser was unable to work for two days as his hair salon closed to be deep-cleaned due to a positive coronavirus case. He doesn't believe this will significantly reduce his trading profits.||No|
|A builder has developed coronavirus symptoms and self-isolates for five days before receiving a negative test result. During those five days he was unable to work from home but was able to rearrange his contracts. He doesn't believe there'll be a significant reduction in his trading profits.||No|
|An electrician is still trading but has had increased costs due to buying masks, cleaning supplies and screens.||No|
|A dentist returns from a holiday abroad and has to self-isolate due to quarantine rules.||No|
|An accountant reduces his business activity because he wants to retire partially. He reasonably believes this will result in a significant reduction in his trading profits.||No|
|The client of a dog walker cancels a contract due to coronavirus. The dog walker could but chooses not to look for additional work to replace the contract.||No|
|An IT consultant has other income from renting property. He has made losses on renting due to renovation costs.||No|
Criteria for the fourth grant largely follows the same criteria as the third grant. However, for the first two grants, which are now closed, you were only required to have been "adversely affected" by coronavirus.
In its published guidance, HMRC said the following WOULD constitute being "adversely affected":
If you're unable to work because:
- You're shielding.
- You're self-isolating.
- You're on sick leave because of coronavirus.
- You have caring responsibilities because of coronavirus.
You've had to scale down or temporarily stop trading because:
- Your supply chain has been interrupted.
- You have fewer or no customers or clients.
- Your staff are unable to come in to work.
It's also worth noting that as far as the law is concerned – and this will be hard for all those excluded to read – it doesn't actually matter if you need the money or not. While most people who claim will need it, and need it badly, the Treasury Direction makes no mention of needing the money as a rule for accepting it.
For the fourth Self-Employment Income Support Scheme grant you are expected to keep any evidence that your business has been hit by reduced demand or has been temporarily unable to trade. This means you must have kept a copy of all records in line with normal self-employment record-keeping requirements, including:
- Business accounts showing a reduction in turnover.
- Dates your business had to close due to lockdown restrictions.
- Shielding or caring responsibilities due to school closures.
- Records of reduced or cancelled contracts or appointments.
- Fewer invoices.
- A record of dates where you had reduced demand or capacity due to Government restrictions.
- NHS Test and Trace communications (if you've been abroad and have to self-isolate, this doesn't count).
- Test results if you've been diagnosed with coronavirus.
Remember, as we mentioned above, if your business recovers after you've claimed, your eligibility will not be affected as this is based on your reasonable belief that your trading profits would have been significantly reduced at the time you made your claim.
HMRC's on the lookout for fraudulent claims
Let's make it clear here: HMRC has told us it's "not looking to trip people up", so any "eligible people who believe they are affected should claim with confidence".
However, HMRC will come down hard on fraudulent claims. It says it will check claims using a "risk-based" approach and take "appropriate action" to withhold or recover payments found to be dishonest or inaccurate. It says there is "no doubt" it will take action in cases of suspected fraud or an organised criminal attack.
The guidance says: "If you know you've been overpaid or are not eligible for the grant and do not tell us, you may have to pay a penalty."
The draft Treasury legislation provides HMRC with compliance and enforcement powers in relation to the SEISS. These include powers to check and recover any amount of a grant payment that the recipient is not entitled to. Recovery would apply in all cases where the grant has been overpaid, whether the error was fraudulent, careless or a mistake. In cases where HMRC can demonstrate there has been deliberate non-compliance, HMRC may issue a penalty.
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