To assist self-employed businesses in a similar way to the furlough scheme for employees, the SEISS government grant has been extended to October. From 17th August, eligible business owners can now make a claim. What is the criteria for this round?
This does not constitute advice and advice should be sought in all instances before acting on it.
Who qualifies?
If you qualified for the first round and received your lump-sum payout, it doesn’t automatically qualify you for round two. You will need to reapply and qualify under the new criteria.
To qualify for the second round of SEISS financial support, your business needs to have been “adversely affected” by the coronavirus pandemic, on or after 14th July 2020.
The term “adversely affected” holds different meanings for different people. Therefore, HMRC have outlined five possible causes, at least one of which needs to apply to your situation.
- Reduction in customers / clients, or none at all
- Supply chain interruption
- Staff unavailable to work
- Cancellation of contracts
- Additional costs. This may be associated with purchasing necessary personal protective equipment (PPE), additional cleaning requirements, or from a result of enforcing social distancing rules.
You can use HMRC’s eligibility tool in order to help you determine whether or not you qualify.
It is also worth keeping a record of how and when your business has been affected by COVID-19 to support any claims you are making.
Claims need to be made before 19 October, when the scheme will close.
Round two: 70% of 3 year average profits
In the initial round, the claim was calculated as 80% of the average of your three year profit – up to a maximum of £7,500.
For the second round, the percentage has been reduced to 70% – up to a maximum of £6,750.
It is important to note, that this claim is taxable and it needs to be reported in your next tax return. It is always wise to put aside a proportion of this grant payment to cover the tax bill, in the same way you would if earning income, even though you will pay tax on this grant in January 2022.
Has the SEISS scheme been a success?
Whilst the furlough scheme has been viewed as a success, the SEISS has some winners and losers.
On average, self-employed business owners that claimed, have benefited by approx. £1,500 per month, over a six month period. This takes into account that not everyone was eligible for the full claim.
There are a few cracks in the SEISS system, that you may have fallen into:
- Trading profits of over 50,000 last year, or on 3-year average.
- More income from other sources than self-employment in the qualifying period.
- Directors of limited companies that take most of their income in dividends.
In these cases, there will have been little help available other than wider initiatives likes mortgage holidays, or universal credit. You may well have been eating into your savings and investments.
Financial planning is crucial now
The SEISS grant may have helped you through a tough financial time, or you may be one of the unfortunate ones that didn’t meet the criteria.
If you have been finding yourself stressed and overwhelmed, you are not alone. We are here if you want to take a look at your finances, your outlook and piece together a new financial plan, to help you get back on track.
Financial planning post Covid-19
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