The fourth SEISS (Self-Employed Income Support Scheme) grant is now open for applications. The latest instalment of the scheme was announced by the Chancellor of the Exchequer, Rishi Sunak, in the UK Budget on Wednesday 3rd March 2021. The scheme is aimed at financially helping out the millions of self-employed workers whose income has been affected by the pandemic through loss of earnings.
The scheme is calculated by totalling up the previous two years (2019/2019, 2019/2020) of earnings. From this, HMRC will work out 80% of your average monthly profits and will generate a single sum that will be paid to you within days of your completed application. The fourth SEISS grant will cover the period of 1st February 2021 to 30 April 2021. Due to this grant taking into account earnings for the tax year of 2019/2020, a further 600,000 new self-employed people are reported to be eligible for the grant.
As well as the fourth grant, the Chancellor also announced that there will be a scheduled fifth SEISS grant, which will cover the period of May-September 2021 and will be available for applications in late July.
You will need to meet the criteria in order to successfully apply for any of the SEISS grants, with the deadline for the fourth SEISS grant on 1st June 2021.
What Is The Fourth SEISS Grant?
The fourth SEISS grant is a grant scheme that is designed to help the self-employed in the midst of the pandemic and the subsequent detrimental effect on many businesses. The self-employed is estimate to make up 15% (5 million) of the UK workforce.
According to an Enterprise Research Center (ERC) report, COVID-19 and self-employment in the UK (April 2020), the self-employed were identified as a ‘particularly vulnerable group’. The report concluded that 22% of the self-employed, or 1.1 million, are in sectors most at risk of loss of livelihood in the current crisis.
The SEISS grant will cover the loss of earnings for the period of 1st February 2021 to 30th April 2021, calculated at 80% of 3-month average earning profits, with a cap of £7500.
Who Is Eligible For The SEISS Grants?
In order to be eligible for the fourth, and fifth, SEISS grant you will need to be:
- Self-employed or a member of a partnership
- Have a trading profits of no more than £50,000 and at least equal to your non-trading income.
- Must have traded in both tax years: 2019 to 2020 (and submitted your tax return by 2nd March 2021) as well as 2020 to 2021.
- Be currently trading but are impacted by reduced demand due to COVID or have been trading but are temporarily unable to do so due to COVID.
To apply, you will also need your:
- Self-Assessment Unique Taxpayer Reference (UTR)
- National Insurance number
- Government Gateway user ID and password
- UK bank details including account number, sort code, name on the account and address linked to the account
- Only provide bank account details where a BACS payment can be accepted.
It is possible that you may be required to answer questions regarding your passport, driving licence or information held on your credit file. It’s important that you must make the claim yourself, meaning a tax agent or adviser cannot claim on your behalf as this will potentially trigger a fraud alert, which could delay your payment. All applications must be completed on or before 1st June 2021 in order to be taken into consideration.
Why Have The Government Introduced The Fourth & Fifth SEISS Grants?
The government introduced the SEISS grants, as well as the furlough scheme, to counteract the gross misfortune on businesses that the pandemic has caused. The Institute of Fiscal Studies highlighted the sectors most directly affected by the pandemic and its restrictions are accommodation and food, arts and leisure, childcare, domestic services, non-food and non-pharmaceutical retail, passenger transport and personal care. Many of these sectors have a large proportion of self-employed workers and have therefore experienced a significant downturn in earnings.
A report from the Centre for Economic Performance, COVID-19 and the self-employed: Six months into the Crisis, discovered that between April and August 2020 the self-employed experienced little economic recovery, with hours and incomes remaining significantly lower than the same time last year. As well as this, it was recorded that 20% of workers think it is likely that they will leave self-employment.
This huge proportion of people is almost certainly going to have a huge negative effect to the overall economy. The numerous grants, schemes and loans announced are to aid the economic recovery of COVID-19 and soften the inevitable blow that the pandemic has had on GDP and the national deficit, which is estimated to have grown to around £355 billion according to the Office for Budget Responsibility (OBR) forecasts.
How To Apply For The Fourth SEISS Grant?
You can now begin an application to claim the fourth SEISS grant through the dedicated government portal page here. The release date and further information relating to the fifth SEISS grant (covering the period of May 2021 to September 2021) will be announced in the coming future.
We hope this has outlined to you exactly what the fourth SEISS grant is and whether you are eligible. If you require any more information on any government COVID-19 loans, grants and schemes, or anything accounting related for that matter, please don’t hesitate to get in contact with us at Nordens where one of our trusted advisors would be happy talking you through your query.