Deadline approaches for claiming third SEISS grant
The deadline to apply for the third Self Employment Income Support Scheme (SEISS) grant closes on 29 January 2021.
Please note the additional condition for the third grant:When deciding whether a taxpayer meets the “significant reduction in trading profits” test for the third SEISS grant, the taxpayer does not need to take into account the first and second SEISS grants, nor any other COVID-19 government support payments received.
If the 1 November 2020 to 31 January 2021 eligibility period for the third grant straddles two basis periods, it is sufficient to be able to show a significant reduction in trading profits for one of the basis periods. The taxpayer does not need to show a significant reduction in both basis periods to be eligible for the third grant.
When assessing whether there has been a significant reduction in trading profits, the comparison period is not specified in HMRC’s guidance. The taxpayer can use the previous year or an average of say the last three years trading profits, but a reduction against an earlier forecast for the relevant basis period would also be valid.
Where a taxpayer has more than one trade it is sufficient to show that one of the trades has suffered reduced activity, capacity, or demand, or has been temporarily unable to operate since 1 November 2020, and that the taxpayer reasonably believes that this will cause a significant reduction in the profits compared with what they would otherwise have expected for that trade. The taxpayer does not have to consider the two trades together.
In some cases, the reduction in activity, capacity, or demand may be only partly due to COVID-19 restrictions. For example, a taxpayer might decide to take on a part-time job or college course alongside their reduced self-employment. So long as least some of the reduced activity, capacity or demand is due to COVID-19 restrictions the taxpayer would be eligible for the third grant.
Reporting SEISS grants on tax returns
SEISS grants are all taxable in the 2020/21 tax year, whatever date the taxpayer prepares their accounts to. No element of the SEISS grants should be reported in the 2019/20 self assessment tax returns that are due to be filed by 31 January 2021.
The government has announced that there will be a fourth grant, covering the period February to April 2021. The conditions for the fourth grant, and the amount, have not yet been released. Pending a further announcement it would be advisable to ensure that 2019/20 tax returns are filed by the 31 January deadline.
We are ourselves issuing regular updates via our website and e-mail cannons. If you are not receiving these and would like to be added to the list please e-mail [email protected] with the subject “Add me to your COVID-19 e-mails”