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SEISS: How is the fourth crucial Self-Employment Income Support Scheme grant paid and calculated?

Image credit: HM Treasury

For taxi drivers and other eligible self-employed workers throughout the UK, the Government's financial SEISS package has been a lifeline for both individual workers and their families. So what do we know about how the fourth grant will be calculated and paid?

The fourth Self Employment Income Support Scheme (SEISS) grant will provide a taxable grant calculated at 80% of 3 months’ average trading profits. The grant will be paid out in a single instalment and capped at £7,500 in total.

Applications for the much anticipated fourth SEISS grant will be open from late April until 31 May 2021. Those eligible for the grant will be contacted directly by HMRC in mid-April and provided with a personal claim date. Eligible workers will then be able to submit their claims for the fourth grant from the date provided by HMRC.

In previous application rounds, HMRC has been able to turn around SEISS claims within just six working days from a claim being successfully submitted.

To be eligible for the fourth SEISS grant, a self-employed individual must meet all of the eligibility criteria. The eligibility criteria are:

  • The claimant must be a self-employed individual or a member of a partnership

  • The claimant’s trading profits must be no more than £50,000 and at least equal to your non-trading income for the 2019 to 2020 tax year

  • If the claimant is not eligible based on their 2019 to 2020 Self Assessment tax return, HMRC will also look at the tax years 2016 to 2017, 2017 to 2018, 2018 to 2019 as well as 2019 to 2020.

  • The claimant must have traded in both tax years – 2019 to 2020 (and submitted your tax return by 2 March 2021), and 2020 to 2021

  • The claimant must either be currently trading but is impacted by reduced demand due to coronavirus, or have been trading but is temporarily unable to do so due to coronavirus

  • The claimant must also declare that they intend to continue to trade, and that they reasonably believe there will be a significant reduction in their trading profits due to reduced business activity, capacity, demand or inability to trade due to coronavirus.

If a claimant’s contract for services has been replaced by a contract of employment, this may affect their eligibility for the fourth and fifth SEISS grants if:

  • the change means they have permanently ceased trading

  • in the relevant tax years (2016 to 2017, 2017 to 2018, 2018 to 2019 and 2019 to 2020, their trading profits were not at least equal to their non-trading income.

According to a HMRC spokesperson talking to TaxiPoint, there is also good news for Uber drivers. Individuals that have already claimed one (or more) of the first three SEISS grants - and met the eligibility criteria at the time they made their claim - can keep the grant(s). This is irrespective of whether their employment status retrospectively changes for those periods as per the recent landmark workers’ rights win experienced by Uber drivers.

HMRC do however state that it is up to the claimant to consider whether they meet the eligibility criteria for SEISS. Whether they are self-employed for tax purposes will depend on the terms of their contract of engagement.

The Chancellor Rishi Sunak also announced a fifth and final SEISS grant will be made available to help those struggling. The UK Government said the final grant will cover May to September.

Eligible self-employed workers will be able to claim from late July and the amount of the fifth grant will be determined by how much the claimant's turnover has been reduced in the year April 2020 to April 2021.

The fifth grant will be worth:

  • 80% of 3 months’ average trading profits, capped at £7,500, for those with a turnover reduction of 30% or more

  • 30% of 3 months’ average trading profits, capped at £2,850, for those with a turnover reduction of less than 30%.

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

Derek Cribb, CEO of IPSE (the Association of Independent Professionals and the Self-Employed), said: “It is very welcome the government has announced it will launch a fifth round of the Self-Employment Income Support Scheme. It is fair and right for self-employed support to match that available for employees – and to extend until September 2021.”

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