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Self-employed: How to claim the latest self-assessment grant

Lydia Smith
·Writer, Yahoo Finance UK
·4-min read
Self assessment deadline was extended this year due to the pandemic. Photo: Matthew Lloyd/Getty Images
Self assessment deadline was extended this year due to the pandemic. Photo: Matthew Lloyd/Getty Images

We may be turning a corner in the pandemic with the continued rollout of vaccines, but the crisis has already hit many people hard. Millions of people have been left out of work, facing a reduced income and businesses have shuttered. And it has been disproportionately difficult for those who are self-employed.

The self-employed are continuing to be hit hard by the crisis, according to research by the London School of Economics. In January, under the third national lockdown, the economic position of some self-employed people was as bad as it was under the first lockdown of April 2020. Recent Office for National Statistics data showed a 700,000 drop in the number of freelancers in January compared to the same time the previous year – equivalent to a fall of 14%.

If you’re self-employed and have been affected by the pandemic, you may be eligible to claim a grant through the Self-Employment Income Support Scheme (SEISS). The scheme was launched in May 2020 and was originally worth 80% of your past average monthly trading profits.

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Since then, a second grant worth 70% was opened in August and a third SEISS grant, worth 80%, was opened to claim on or before 29 January. The fourth grant will cover the three-month period from the start of February until the end of April but the application process and eligibility requirements have now changed compared to previous SEISS payments.

How to apply for the fourth SEISS grant

HMRC is contacting those eligible for the grant by email, letter or within the GOV.UK online service. Once you have been told when you can apply, you have until 1 June to complete the claim.

To be considered eligible for the fourth grant, you must have filed a 2019/20 tax return before the 2 March, earned most of your income through trading and have average trading profits of less than £50,000. The grant will provide 80% cover of three months’ average trading profits. It will be paid as a single, taxable instalment and capped at a total of £7,500.

HMRC will establish eligibility on the 2019/20 self-assessment tax return. They will also look at the tax years 2016-2017, 2017-2018 and 2018-2019 if necessary.

For the fourth grant, there will now be an extra 600,000 newly self-employed people who may be eligible to claim government support. This is because the government is now allowing workers to submit their 2018-2019 and 2019-2020 self-assessment tax returns as evidence of their earnings.

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Chancellor Rishi Sunak said: “When the scheme was launched, the newly self-employed couldn’t qualify because they hadn’t all filed a 2019/20 tax return.

“But as the tax return deadline has now passed, I can announce today that, provided they filed a tax return by midnight last night, over 600,000 more people, many of whom only became self-employed last year, can now claim the fourth and fifth grants.”

Applicants must also be able to prove that they plan to continue trading, or providing a service beyond the end of the support, which is expected to end in April.

What does ‘reduced demand’ in business mean?

To submit a claim, you must show that the coronavirus pandemic and lockdown has had a negative impact on your business. This involves declaring that your business has been affected by reduced demand due to COVID-19 between February and April 2021.

It’s worth keeping some evidence that you have been impacted by COVID-19 financially. HMRC states: “In order to claim the fourth grant, you must reasonably believe that you’ll suffer a significant reduction in trading profits, due to reduced business activity, capacity, demand or inability to trade due to coronavirus between 1 February 2021 and 30 April 2021.

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“You must keep evidence that shows how your business has been impacted by coronavirus resulting in less business activity than otherwise expected.”

Examples of evidence include business accounts showing reduction in activity compared to previous years, a record of cancelled appointments, emails showing cancelled contracts and fewer invoices. If your business is temporarily unable to trade, you should keep any evidence such as a record of dates where you had to close due to government restrictions. For more information, visit the Gov.uk website.

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