Claims for the third self-employment income support scheme grant can be made between 30 November 2020 and 29 January 2021. Are you eligible, and if so how much can you claim?
Read on to find out:
Eligible individuals
- You must have been eligible for the first and second grant (see below), although you don’t have to have made a claim previously.
- You will have to declare that you intend to continue to trade and either:
- You are actively trading but affected by reduced demand due to coronavirus, or
- You were trading but are temporarily unable to do so due to coronavirus.
- You will also have to declare that you reasonably believe there will be a significant reduction in your trading profits.
These declarations are not the same as were required for the first two grants so you cannot assume that you will automatically qualify for the third if you qualified for the first two. The eligibility criteria for the first two grants are set out below.
Grants are not available if the impact on your business is due to additional costs – there has to be a reduced demand for your goods or services.
What is a significant reduction in profits?
Rather unhelpfully, this is not defined by HMRC.
It’s up to you to decide whether the reduction is significant based on your own circumstances.
HMRC do have some examples of what might and might not be considered significant which could help you make a decision. These examples can be found at this link.
Am I eligible?
The eligibility criteria for the first and second grant were as follows:
You must
- Have submitted a self-assessment Tax Return for 2018/19 before 23 April 2020
- Have traded in the 2019/20 tax year
- Be intending to trade in the 2020/21 tax year
- Have trading profits of less than £50,000 and more than half your total income for 2018/19 OR on average for the three tax years 2016/17, 2017/18 and 2018/19.
What can be claimed now?
The third claim covers the three months from 1 November 2020 to 31 January 2021.
The claim will be for 80% of average profits for three months, paid in a single instalment, capped at £7,500.
The link to make a claim can be found here.
How do I calculate average profits?
The profits used will be taxable profits, after deducting allowable expenses and capital allowances but before deducting claims for losses brought forwards, for the tax years 2016/17, 2017/18 and 2018/19.
If you have made losses in those years then they will be included when calculating average profits, for example:
If you made losses of £10,000 in 2016/17 and profits of £20,000 in each of 2017/18 and 2018/19 then:
- Total profits over three years are £30,000 (£20,000 plus £20,000 less £10,000)
- Average yearly profits over three years are £10,000 (£30,000 divided by three)
- Average monthly profits are £833.33
- The three-month claim, at 80% of average profits, will be for £2,000.
Further information
There are a number of blogs on my website about the first and second self-employment grants, with links as follows:
Coronavirus: Second Self-employment grant
Coronavirus: Calculating the second self-employment grant
Coronavirus: Self employment grant
Coronavirus: Calculating the self-employment grant
If you have any queries at all or would like any help quantifying or making a claim please contact me.
