What we know about the fourth and fifth SEISS grants
- 05 Mar 2021
- Joshua Toovey
With the unprecedented backdrop of a rampant pandemic and impending recession, the Budget statement proved to be a widely-anticipated event – especially for the millions of self-employed businesses and individuals so far unable to access government support.
Company directors (and other excluded groups) were left bitterly disappointed. They are still unable to access meaningful support and the Budget came as a further devastating blow to so many that have been left to struggle since the start of the pandemic.
On the newly self-employed, we had some good news. At last, we were given what we and many others had been calling for repeatedly over the last twelve months – they will be eligible for the next round of the Self-Employed Income Support Scheme (SEISS). Good news too that the SEISS grants will be extended until September, alongside the Furlough scheme which we know many company directors have made use of, despite its acute limitations.
With speculation rife around who can claim, the deadlines, and the terms of the support, we examine how the fourth and fifth SEISS grants will work in practice and who is eligible.
Fourth SEISS grant: Who can claim and under what terms?
Those who filed a 2019/20 tax return before the 2nd March, earned most of their income through trading, and have average trading profits of less than £50,000 will now be able to access the fourth SEISS grant.
The grant will cover the three-month period from the start of February until the end of April.
HMRC has reiterated to us that they will first base eligibility on the 2019/20 Self-Assessment tax return and then, if not eligible, look at the tax years 2016/17, 2017/18, 2018/19 as well as 2019/20, where applicable.
The SEISS 4 grant payment will not be available to claim until late April. This came as a considerable disappointment to many of us and will cause serious cashflow issues for many. Such a late deadline on claims is particularly odd given that it doesn’t follow previous deadlines and will not immediately benefit the newly self-employed. Nevertheless, the window for claims will be available between late April 2021 until 31 May 2021. We will be urging government to bring this forward as much as possible.
SEISS 4 will provide 80% cover of 3 months’ average trading profits for those eligible, paid as a single, taxable installment and capped at £7,500 in total.
Fifth (and final) SEISS grant: How will this differ?
The Chancellor has reiterated that the fifth SEISS grant will be the final one and will cover the period of May to September. Although we are still waiting for full details on the fifth grant, we know that the window for claims will be available from late July for those eligible.
Yet, it has also been announced that there will be significant differences in how this grant works. Eligible applicants for this fifth grant will be subject to a turnover test which will assess how much turnover has been reduced by the pandemic in the past year.
For those whose turnover has suffered a reduction of 30% or more, the full 80% payment will be made, as before. The cap will remain at £7,500 despite SEISS covering a longer, five-month period, making it significantly less generous on a ‘per month’ basis.
Those with a turnover reduction of less than 30% will receive just 30% of their 3 months average trading profits, capped at £2,850 – a considerable reduction.
The announcement of changes to the SEISS grants to extend support till September and include the newly self-employed should be welcomed, however, with many still struggling and without access to any government support, IPSE will continue campaigning to fill the support gaps.
Meet the author
Policy and research officerJoshua Toovey is the policy and research officer at IPSE.