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How to claim the fourth self-employed grant

Written by: Emma Lunn
HMRC has emailed thousands of freelancers to explain how the fourth Self-Employment Income Support Scheme (SEISS) grant will work, and how to apply.

Chancellor Rishi Sunak announced details of the grant in yesterday’s Budget.

The tax office is contacting workers who may be eligible for the fourth SEISS grant from mid-April to tell them how they can claim.

A fifth grant will be available from July.

The fourth and fifth grants will take into account 2019 to 2020 tax returns and will also be open to those who became self-employed in the 2019 to 2020 tax year.

This means that some self-employed workers may be able to claim, even if they were not eligible for previous grants.

To qualify, you must have filed your 2019-20 self assessment tax return by 2 March 2021.

Fourth SEISS grant

The government will pay a taxable grant which is calculated based on 80% of three months’ average trading profits, paid out in a single payment and capped at £7,500 in total.

The value of the grant is based on an average of your trading profits for up to four tax years between 2016 to 2020, where available.

The grant will be available to claim by late April – the exact date is yet to be confirmed.

As with previous grants, trading profits must be no more than £50,000 and at least equal to non-trading income to be eligible.

Eligibility for the fourth SEISS grant will depend on whether you experienced a significant financial impact from coronavirus between February 2021 and April 2021.

HMRC will take into account your 2019-20 return when assessing your eligibility for the scheme. This means the fourth grant could be higher or lower than previous grants you have received.

HMRC says workers must “make an honest assessment that there has been a significant reduction in trading profits due to reduced demand or your inability to trade”.

If you make a claim, you will need to keep appropriate records as evidence.

Newly self-employed workers

Unlike previous SEISS grants, the fourth and fifth grants are open to people who became self-employed for the first time between 6 April 2019 and 5 April 2020.

However, some newly self-employed workers may still fall through the cracks of the scheme.

Jeremy Coker, president of the Association of Taxation Technicians, said: “In particular, to be eligible for future grants under the SEISS, individuals will need to have filed their self-assessment tax return by midnight on 2 March 2021. Anyone who has not yet filed their return is therefore prevented from making a claim.

“Those who moved from employment to self-employment part way through tax year 2019/20 may also struggle to meet the requirement of having trading profits which are at least equal to their non-trading income. For example, an individual who left a job in December 2019 and then started a self-employed business in January 2020 could easily find that their salary in the tax year exceeded their trading profits, meaning they are not entitled to a SEISS grant.”

When you can claim the fourth grant

HMRC will contact self-employed workers it believes are eligible for the grant from mid-April.

Those eligible will be provided with a personal claim date, which will be the earliest date you can submit a claim.

All claims for the fourth SEISS grant must be made by 31‌‌ ‌May 2021.

The fifth SEISS grant

In the Budget yesterday, Sunak also announced that there will be a fifth and final SEISS grant, covering the period between May and September.

Claims for this grant will be open from July.

The amount of the fifth grant will be determined by how much your turnover has been reduced. The grant will be worth 80% of three months’ average trading profits, capped at £7,500, for those with a reduction in turnover or 30% or more.

For those with a lower reduction in turnover, of less than 30%, the grant will be worth 30% of three months’ average trading profits.

Further details will be provided on the fifth grant in due course.

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