Self Employed Income Support Scheme – Fourth Grant

The fourth self employed grant

What period is the fourth grant for?

The fourth grant is for the three months from 1 February 2021 to 30 April 2021. The grant will be paid in one lump sum instalment.

How much is the grant?

The level of the grant will be reviewed and set in due course.

Who qualifies for the fourth grant?

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

  • have been previously eligible for the SEISS.
  • declare that they intend to continue to trade and either:
  • are currently actively trading but are impacted by reduced demand due to coronavirus
  • were previously trading but are temporarily unable to do so due to coronavirus.

Can I claim the fourth grant if I didn’t claim the first, second or third ones?

Yes, you don’t need to have claimed the first, second or third payments to claim the fourth grant.  You do however need to meet the same eligability criteria for the first grant, so if you did not qualify for the first you will not qualify for the fourth.

When can I make my claim?

HMRC will provide full details about claiming and applications in guidance on GOV.UK in due course.

How do I make my claim?

HMRC will provide full details about claiming and applications in guidance on GOV.UK in due course.

Self Employed Income Support Scheme – Third Grant

The third self employed grant

 

What period is the grant for?

The third grant is for the three months from 1 November 2020 to 31 January 2021. The grant will be paid in one lump sum instalment.

How much is the grant?

The grant has been increased from the previously announced level of 40% of trading profits to 80% for November 2020. This increases the total grant from 40% to 55% of trading profits for the period 1 November 2020 to 31 January 2020.

The grant is capped at £5,160 in total.

The Government are providing broadly the same level of support for the self-employed as is being provided for employees through the Coronavirus Job Retention Scheme in November due to its extension. And then the reduced Job Support scheme in December and January.

Who qualifies for the third grant?

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

  • have been previously eligible for the SEISS.
  • declare that they intend to continue to trade and either:
  • are currently actively trading but are impacted by reduced demand due to coronavirus
  • were previously trading but are temporarily unable to do so due to coronavirus.

Can I claim the third grant if I didn’t claim the first or second ones?

Yes, you don’t need to have claimed the first or second payments to claim the third grant.  You do however need to meet the same eligability criteria for the first grant, so if you did not qualify for the first you will not qualify for the third.

When can I make my claim?

The online service for the third grant has been brought forward from 14 December to the 30 November.

How do I make my claim?

HMRC will provide full details about claiming and applications in guidance on GOV.UK in due course.

I am self-employed and work from my home are there any expenses that I can claim?

apple-blogging-coder-36990 (2)

If you are self-employed and run your business from home, you can claim a proportion of your household expenses such as council tax, water rates, lighting and heating, rent or mortgage interest and certain repairs.  If for example your house has six rooms, excluding the kitchen and bathroom, and you use one room partly for business, you may be able to claim up to one sixth of your household expenses against your business income.

There are various ways in which home running costs can be apportioned, depending on how you run your business.  HMRC have several examples in their business income manual to illustrate how you could calculate this.

Is there an easier way to calculate the business element of my household expenses?

In a word yes.  You can use the HMRC simplified expenses which allow you to claim a flat rate based on the number of hours that you work at home, instead of doing the calculations above.

You can only use the simplified expenses if you work at least 25 hours per month from home, so it may not be the right option for everyone.  If you want to use the HMRC simplified expenses flat rates the amount that you can claim are as follows:

 

Hours business use per month Flat rate
25 to 50 £10
51 to 100 £18
101 or more £26

 

The flat rate allowances are relatively modest and may result in a smaller claim than if you apportioned your actual household expenses.  However, the flat rates above are easier to calculate and do not require you to keep detailed receipts of your household expenses.

What business expenses can I claim against my tax?

book-collection-education-159751

Not all business expenses that you incur running your business can be deducted against your income for tax purposes.  ‘Allowable’ expenses are those which you can deduct against your trading income to calculate the profits on which you will pay tax.

Which business expenses are allowable?

For a business expense to be allowable, it must have been incurred ‘wholly and exclusively’ for the purposes of your business.  If you pay for something that is partly for business and partly for a private purpose, then the expense should be apportioned between the two.  For example, if you pay for a telephone bill where you have made both business and personal calls on one bill, then you need to apportion the total cost between the business element and the private element.  The business part will be an allowable expense and can be claimed against your trading income.

What is a disallowable business expense?

Not all business expenses are allowable for tax purposes.  Any expense that is incurred wholly for a private purpose is a disallowable expense and cannot be deducted against your trading income when calculating your taxable profits.

Some business expenses that you incur may be allowable, but are a capital rather than revenue for tax purposes.  Capital expenses cannot be deducted against your trading income, but may qualify for Capital Allowances instead.

What is the difference between a capital and revenue expense for tax purposes?

A capital expense is usually, but not always, a larger item of expenditure on something that you would expect to last for a reasonable amount of time, perhaps a year or more.

A revenue expense is something that lasts for a shorter period of time and is usually used up in your day to day business activities.  For example, paper or ink for your printer.  Most of your regular business expenses are likely to the revenue expenses and allowable for tax purposes.

This sounds complicated how will I know which expenses are allowable?

HMRC have produced a helpful guide (Help sheet HS222) called How to calculate your taxable profits.  This help sheet contains a useful table of some of the more common allowable and disallowable expenses.

If you’re not sure and need help completing your tax return, we would be happy to help.

Tax doesn’t have to be taxing and our simple fixed fee packages take the stress out of Self-Assessment.

Self Employed Income Support Scheme – your questions answered

achievement-adult-book-1043514

We have been asked a lot of questions recently about how the Self Employed Income Support Scheme will impact our clients.  Here are some of the questions and answers:-

  • Are ‘trading profits’ pre or post farmers’ averaging relief?

We understand that HMRC will use the profit before farmers’ averaging relief to work out whether a person is eligible to claim the grant and how much grant they will receive.

  • Do property letting businesses qualify for the grant?

Property lettings businesses are not regarded as a trade so landlords will not qualify for the grant.

  • What is the position regarding Furnished Holiday Letting businesses, do they qualify?

For certain taxes Furnished Holiday Letting (FHL) businesses are considered a 'trade'.  However for the purposes of SEISS, we understand that FHL's will not qualify.

  • How will HMRC determine if trading profits have been lost as a result of the COVID-19 crisis?

You will need to sign a declaration to confirm that your business has been adversly affected by the coronavirus outbreak.  We undertand that HMRC will use a 'risk based' approach to check compliance with the scheme.  This is likely to involve checking turnover and/or the profits reported on previous tax returns and comparing them with those reported in 2020/21.

  • How are losses dealt with under the scheme?

In-year losses will be taken into account as well as profits when calculating your eligibility for the grant and the amount of the grant that you will receive.

2016-17 2017-18 2018-19 Total 3 year average
Trade profit          50,000          50,000 (10,000)            90,000                  30,000
Other Income -e.g. employment, pension, rental income etc          15,000          15,000          15,000            45,000                  15,000
Total Income          65,000          65,000            5,000          135,000                  45,000
Trade profit more than 50% of total income? Yes Yes No Yes

Even if you made a loss in 2018/19, you would still qualify for the grant as your average trading profits for the 3 years are:-

  • £30,000 - which is less than £50,000
  • More than 50% of your TOTAL income, which is £45,000

Brought forward losses from an earlier year are not included in the calculation of profits for the puropses of the grant.

  • What about Capital Allowances?

Capital expenditure, on which capital allowances have been claimed in the year will reduce your taxable profits for the purposes of calculating the amount that you will receive under the grant.

  • Can I amend my return to disclaim Capital Allowances and claim the grant?

No, if an amended return is submitted after 26th March 2020, any changes will be ignored when looking at eligability and working out the amount of the grant.

  • What if I had more than one business in 2018/19?

If you had two separate businesses that traded in 2018/19, one made a profit of £80,000 and the other made a loss of £40,000, the two will be added together to give a profit of £40,000 for the year and you will qualify for the grant.

  • Can I continue to work and claim the grant?

Yes you can continue to work or take on other employment or voluntary work and still claim the grant.  HMRC will ask you to confirm that you traded in 2019/20 are trading when you apply, or would be except for coronavirus and intending to continue to trade in 2020/21.

  • Can I claim Universal Credit and still get the grant?

Yes you can make a claim for Universal Credit while you wait for the grant.  Any grant that you receive will be treated as part of your self-emplyed income and may affect the amount of Universal Credit that you get in the month in which it is paid.  Any Universal Credit for earlier months will not be affected.

If you have more questions regarding the SEISS then please do get in touch.

4
Jun, 2019

Do you struggle to know what to budget for your self employed tax?

If you struggle to know how much to save regularly to cover your year end tax bill, try this handy HMRC tool.

Just enter your net weekly or monthly profit (i.e income after taking off your expenses) and the tool will calculate how much you should put away in a savings account to budget for your tax and NIC.

It will not be a perfect solution as profits may vary week by week or month by month.  However you will be surprised just how much you can save by putting a little money aside, in a separate savings account, each week or month.  The year end tax bill will not seem so daunting and who knows you may even have some left over to reward yourself!