Yesterday the Chancellor gave us his budget. Key for many is the detail of the fourth SEISS grant. A bit of a double-edged sword: the good news is the addition of the newly self-employed who started trading during 2019/20. The inclusion of 2019/20 as a fourth year in the calculation, however will create some gainers and some losers. The wait till late April to claim may be agonising but the silver lining is that it won’t be taxable until 2021/22.  This fourth grant is to cover the three months February to April.  A fifth SEISS grant has been announced although the Chancellor has said that will be the final one.

Eligibility criteria for the fourth grant are:

  • Self-employed or a member of a partnership
  • Your profit makes up at least half of your overall income
  • Your 2019/20 profit will be looked at first to be no more than £50,000
  • If 2019/20 profit more than £50,000 then the average over the four years 2016/17, 2017/18, 2018/19 and 2019/20 will be assessed if no more than £50,000
  • You must have traded in 2019/20 and have submitted your tax return by 2 March 2021
  • You must have traded in 2020/21 and intend to continue to trade
  • You must either be currently trading but affected by reduced demand due to Coronavirus or you have been trading but are temporarily unable to do so due to Coronavirus

What you’ll get for the fourth SEISS grant:

  • 80% of 3 months’ trading profits calculated based on the eligibility criteria above, capped at £7,500, if you experienced a significant financial impact from coronavirus between February 2021 and April 2021.
  • Paid in a single instalment available from late April until 31 May
  • HMRC will contact you if you’re eligible in mid-April with a date for you to apply from

There will be a fifth and “final” SEISS grant available from late July.  It is likely to have the same eligibility criteria as the fourth SEISS grant.  There will be a significant difference to the fifth grant, however which is, the amount receivable will be determined by how much 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%

More details will be provided by government in due course, however, this criteria will provide motivation for early preparation of 2020/21 accounts and tax return especially for borderline cases.

Other budget announcements include:

  • Rates of income tax and NI the same; thresholds for 2021/22 are: Personal Allowance of £12,570 (2020/21: £12,500), and top of the basic rate band is £50,270 (2020/21: £50,000), and frozen for 5 years
  • Corporation tax rate to increase for companies with profit over £50,000 but only from April 2023
  • Furlough scheme extended to the end of September 2021
  • National Living Wage to increase to £8.91 from April 2021
  • Universal credit uplift continued for a further 6 months
  • New recovery loan scheme available
  • SDLT holiday extended
  • Alcohol duty frozen
  • Fuel duty frozen

Useful link: Self-Employment Income Support Scheme fourth grant – GOV.UK (www.gov.uk)