SEISS 4 and 5 – all you need to know
As part of the budget announcement on the 3rd March, Chancellor Rishi Sunak announced plans for fourth and fifth phases of the Self-Employed Income Support Scheme (SEISS).
It means the grants available to sole traders and freelancers whose business have “incurred an economic downturn” because of the pandemic will take us through to September 2021.
The good news is that anyone who filed their 2019/2020 tax return by midnight on 2nd March 2021 is now eligible for the SEISS 4 grant.
The 5th SEISS grant (SEISS 5) will look specifically at loss of earnings between April 2020 and April 2021. For this reason, it’s a good idea to get your income and expenses sorted for the financial year 2020/21 sooner rather than later (if you haven’t done so already). This will give you a much clearer view of your finances, helping you to build an accurate picture of how much you might be entitled to.
Here’s what else you need to know about the two grants:
- You can claim for SEISS phase 4 from late April 2021: If your self-employed income has been affected negatively by the pandemic between February and April 2021, you’ll be able to claim for the SEISS 4 grant from late April until 31 May 2021.
- SEISS 4 will give you 80% of your earnings up to £2,500/month for three months: This will be worked out by looking at your income over the course of a year.
- When applications open, HMRC will contact you in mid-April to let you know if you’re eligible for the scheme.
- SEISS 5 applications are expected to open from late July (exact date to be confirmed): Your self-employed income will have had to be negatively impacted by the pandemic for the three months prior to this.
- SEISS 5 grants are for those who had reduced earnings in the year 2020/2021: The amount of SEISS 5 grants will be based on the amount earnings have been reduced between April 2020-April 2021.
- How much your income has fallen will determine how much you get: If your income has fallen by 30% or more, you’ll still get the 80% of your monthly income (capped at £2,500/month). If your income has fallen less than 30%, you’ll get a reduced grant of 30% of your monthly income.
- You’ll get three month’s worth of income (at 80% or 30%).
SEISS criteria and how to apply
You can read about the criteria for the SEISS grants in detail here. But here are some important things to know:
- When you apply, you’ll need to declare that you intend to continue trading. Or that you were trading but can’t anymore because of the pandemic.
- To qualify you need to be a self-employed individual or a member of a partnership. You can’t claim the grant if you trade through a limited company or a trust.
- You have to “reasonably believe there will be a significant reduction in your trading profits due to reduced business activity, capacity, demand or inability to trade due to coronavirus”. (Find out more here).
There are bound to be further details coming out about the SEISS grants – we’ll keep this article updated to keep you in the loop with any developments.
Don’t forget the grants are taxable
Even though you don’t have to pay SEISS grants back, they do count as taxable income. That means you need to declare the amount you got for the grant/s on your Self Assessment. This figure will be added to your total taxable income for the year.
You can read about SEISS phase 2 and SEISS phase 3 in our articles: