Applications for the second instalment of grants under the Self-Employed Income Support Scheme (SEISS) have opened today.
An initial grant was available to traders whose business had been adversely affected by Covid-19, which saw 2.7 million claims worth up to £7.8 billion.
Applications for the initial grant have now closed, however, if your business has been adversely affected by Covid-19 on or after 14 July 2020 you may be eligible to claim the second and final SEISS grant. You are not required to have claimed the first grant in order to claim the second grant.
The grant will be calculated based on 70% of the average monthly trading profits for a period of three months, up to a maximum of £6,570, and paid out in a single instalment.
If you meet the eligibility conditions for the second grant, you will be able to make an application using HM Revenue & Customs (HMRC) Online Service up to 19 October 2020, from which point the scheme closes. The application process will be similar to claims made under the first instalment of grants.
When completing your application it is a good idea to print a copy of HMRC’s calculation and provide this to your accountant, if you have one.
The grant will be subject to income tax and National Insurance (NI), but is outside the scope of VAT, and is required to be reported in full on your 2020/21 tax return. The tax and NI will be payable 31 January 2022, therefore, it is important for traders to factor this into their cash flow projections. We expect there will be a designated box on next year’s return in which to enter the total amount received under the scheme.
It’s important to point out that this scheme is aimed at those who have been “adversely affected” by Covid-19 and you will be asked to confirm this at the time you make the claim. HMRC are not asking for proof at this stage, but they might do so in the future, so you should keep any evidence supporting this.
It is worth noting that if you have been trading as normal from 14 July 2020 and you have not been adversely affected by Covid-19, you should not apply for the second grant. You can however make a claim if your business is adversely affected on or before 19 October 2020 (eg you are trading normally now, however, your business is interrupted by Covid-19 thereafter). You should then make a claim on or after the point your business is adversely affected.
If you have incorrectly claimed a grant or have received more than you are entitled to, whether this is the first or second instalment, you should contact HMRC to pay this back. HMRC will be making compliance checks and if you have claimed the grant(s) incorrectly they can claim this back, along with charging penalties and interest in the process. Further information on repaying the grant can be found on the HMRC website .
With many businesses returning to trade under the new normal, I do not expect the level of claims to be in the same region as the initial grants, however, they will surely provide a vital cash flow injection for those traders that do qualify.
If you would like further information, please do contact us.
