Are you eligible?
To make a claim for the third grant your business must have had a new or continuing impact from coronavirus between 1 November 2020 and 29 January 2021, which you reasonably believe will have a significant reduction in your profits.
The third taxable grant is worth 80% of your average monthly trading profits, paid out in a single instalment covering 3 months’ worth of profits, and capped at £7,500 in total.
The online service to claim the third grant is open. You should make your claim from the date HMRC has given you either by email, letter or within the service. If you’re eligible, you must make your claim for the third grant on or before 29 January 2021.
The grant does not need to be repaid if you’re eligible, but will be subject to Income Tax and self-employed National Insurance and must be reported on your 2020 to 2021 Self Assessment tax return.
You must keep evidence to support your claim.
Grants under the Self-Employment Income Support Scheme are not counted as ‘access to public funds’, and you can claim the grant on all categories of work visa.
You can follow these steps to help you understand what you can do now.
- Find out who can claim.
- Check that your business has been impacted by coronavirus.
- Find out how HMRC works out your grant.
- Make your claim.
- Find out what happens after you’ve claimed.
1 Who can claim
To be eligible for the third grant you must be a self-employed individual or a member of a partnership. You cannot claim the grant if you trade through a limited company or a trust.
If you claim Maternity Allowance this will not affect your eligibility for the grant.
You must have traded in both tax years:
- 2018 to 2019 and submitted your Self Assessment tax return on or before 23 April 2020 for that year
- 2019 to 2020
You must either:
- be currently trading but are impacted by reduced demand due to coronavirus
- have been trading but are temporarily unable to do so due to coronavirus
You must also declare that:
- you intend to continue to trade
- you reasonably believe there will be a significant reduction in your trading profits
2 Reasonable belief
In order to claim, you must reasonably believe that you will suffer a significant reduction in trading profits due to reduced business activity, capacity or demand or inability to trade due to coronavirus during the period 1 November to 29 January 2021. You must keep evidence that shows how your business has been impacted by coronavirus resulting in less business activity than otherwise expected.
Before you make a claim, you must decide if the impact on your business will cause a significant reduction in your trading profits for the tax year you report them in.
HMRC 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 should wait until you have a reasonable belief that your trading profits are going to be significantly reduced, before you make your claim.
3 How HMRC works out your eligibility based on your tax returns
To work out your eligibility HMRC will first look at your 2018 to 2019 Self Assessment tax return. Your trading profits must be no more than £50,000 and at least equal to your non-trading income.
If you’re not eligible based on the 2018 to 2019 Self Assessment tax return, HMRC will then look at the tax years 2016 to 2017, 2017 to 2018, and 2018 to 2019.
How different circumstances affect the scheme
There are some circumstances that can affect your eligibility such as if:
- your return is late, amended or under enquiry
- you’re a member of a partnership
- you had a new child
- you have loans covered by the loan charge
- you claim averaging relief
- you’re a military reservist
- you’re non-resident or chose the remittance basis
- state aid
Find out more information on how your circumstances affect your eligibility.
4 How to claim
The online service for the third grant is available HERE
You must make your claim on or before 29 January 2021.
You should contact HMRC if you receive any suspicious texts, calls or emails claiming to be from HMRC as this may be a scam.
How HMRC work out the amount of the third grant
This is an example of how we will work out how much grant you’ll get if your average trading profits were £42,000 over the last 3 tax years.
If you’re eligible, you’ll receive a grant worth of 80% paid out in a single instalment covering 3 months’ worth of profits, and capped at £7,500 in total.
- Start with your average trading profit (£42,000).
- Divide by 12 = £3,500.
- Multiply by 3 = £10,500.
- Work out 80% of £10,500 = £8,400. You will only receive £7,500 due to the cap.
There will be a fourth grant covering February 2021 to April 2021. HMRC will set out further details, including the level of the fourth grant in due course.
Other help you can get
Get other financial support
You may be able to claim Universal Credit, but even if the claim is not approved it will affect any tax credits you claim, and may affect other benefits. So you should:
- check how tax credits and other benefits affect each other
- find out what to do if you’re already getting benefits
If you make a claim for Universal Credit the grant may affect the amount you get, but will not affect Universal Credit claims for earlier periods.
The government is also providing the following help for the self-employed:
- grants for businesses that pay little or no business rates
- Business Interruption Loan Scheme
- Bounce Back Loan
- Test and Trace support payments
If you have other employment as a director or employee paid through PAYE your employer may be able to get support using the Coronavirus Job Retention Scheme.
Please get in touch with WBV to discuss any of the above.