Business West encourages all unincorporated businesses and self-employed traders in the South West region to check eligibility for and, when applications open, claim under Round 3 of the latest SEISS grant support. Whilst help for self-employment is still limited, take-up of the scheme in the two earlier rounds has been lower than expected.
Unincorporated businesses entitled to help need to make a claim for this support, rather than it being automatic, and the claim under Round 3 is separate to earlier successful claims under the same scheme.
Even if a claim wasn’t made earlier this year, this doesn’t prevent sole traders and partners within partnerships accessing the grant if they meet the eligibility conditions.
Who can qualify?
The same conditions which had to be met for the earlier rounds of grants (same reference periods for filed tax returns being 2016/17 through to 2018/19, exclusions for those whose trading income exceeded £50,000 and those whose trading income was exceeded by other forms of taxable income e.g. employment income).
However, there are new conditions which will have to be met in the relevant qualifying period (1 November 2020 to the date of the claim) for Round 3:
• claimants are actively trading but are impacted by reduced demand due to coronavirus or
• were previously trading but are temporarily unable to do so due to coronavirus
• you don’t actually have to have made a claim under Round 1 (April to June) or Round 2 (July to September) to claim under Round 3
The relevant qualifying period, and level of grant for Round 4 (scheduled to begin 1 February 2021) has not yet been confirmed.
Implications of the new conditions
‘…actively trading…(or)…were previously trading but are temporarily unable to do so due to coronavirus’
This appears to mean that if a trader has ceased trading for any reason other than ‘due to’ coronavirus they will not be eligible to claim the Round 3 grant (and may also be excluded from Round 4 next year too).
It is substantially the same position as under Rounds 1 and 2, where a SEISS claim required a trader to declare that they had temporarily ceased to trade due to the coronavirus.
‘the trade is impacted by reduced demand…’
This materially differs from the previous SEISS requirement for the trade to be adversely affected by the coronavirus. Although it isn’t yet clear how HMRC will interpret this requirement, it does seem possible that it is more restrictive than the previous statement.
Reduced demand implies a reference to turnover and sales, rather than any additional costs or investments that the pandemic has required businesses to incur. Examples of costs that would make self-employment less profitable than before, but not necessarily linked to reduced demand is if the trader has had to reduce the opening hours of their premises to comply with local or national restrictions, pay more sick pay for any employees they may have, or purchase PPE and/or other protective measures to meet the needs of being a COVID-secure business. All these examples adversely impact the business, meaning they could claim under Rounds 1 and 2, but could plausibly fail the ‘reduced demand’ test.
Generosity of Round 3 SEISS grant
The generosity of the Round 3 grant has been revised (upwards) in recent weeks and Business West is concerned that eligible self-employed individuals may not claim Round 3’s grant on the basis that the level when originally announced was just 20% of reference profits.
The Government has now revised the Round 3 grant to 80% of profits (i.e. except the eligibility issues mentioned above) up to a cap of £7,500 - the grant is largely as generous as it was in Round 1. Business West encourages all eligible self-employed individuals in our region to apply, even if it is their first time under the scheme.
However, take up of the grant in the South West was quite low even for Round 1’s support, which was the same level at Round 3 has been set at. Statistics published by the ONS show that take up was only 74%, and the average claim for the 3 months to the end of June was £2,900. Take up fell for Round 2’s claims for our region to 56%, maybe reflecting the reduced generosity of the scheme (based on 70% of reference profits), with the average claim being £2,600.
How to apply
HMRC are to publish further guidance in due course but applications will be (like in earlier rounds) via an online portal, due to open on 30 November 2020.
The link to the Government’s current SEISS guidance is here: https://www.gov.uk/government/publications/self-employment-income-suppor...