When claiming the first two SEISS grants the self-employed individual had to confirm that their trade had been “adversely affected” by the coronavirus. This condition has been replaced with a more precise “impact on demand” test, but it’s not quite that simple.
To qualify for any SEISS grant the self-employed person must have traded in both 2018/19 and 2019/20, and submitted their 2018/19 SA tax return by 23 April 2020. In addition, the trading profits must make up at least half of their annual income, but if those profits exceed £50,000 for 2018/19 or on average for the three years to 2018/19, no SEISS grant is payable.
Where the taxpayer is eligible the third SEISS grant will be paid at 80% of their average profits for 2016/17 to 2018/19, for three months, but the individual must confirm that they are:
- currently trading and are “impacted by reduced demand”; or
- have been trading but are temporarily closed due to coronavirus.
The trader must also confirm that they are:
- intending to continue to trade; and
- reasonably believe that the impact on their business will cause a significant reduction in their trading profits due to reduced business activity, capacity or demand, or inability to trade due to coronavirus during the period 1 November to 29 January 2021.
The previous “adversely affected” test was met if the business turnover had remained constant or increased but business costs had increased due to coronavirus, leading to a reduction in profits.
The reduced demand test means the level of sales for the current accounting period (taxed in 2020/21) must have reduced, or the capacity for sales must have reduced due to fewer customers, fewer contracts, or disruptions in the supply chain. It is advisable to retain evidence of the reason behind your claim.
Where the accounting period aligns to the tax year, this is fairly straight-forward, but a 30 April 2021 year end will be taxed in 2021/22, as reported on the SA return submitted by 31 January 2023. You may need help from your accountant or advisor to forecast turnover for the full tax year to 5 April 2021.
The SEISS grant must be claimed by the individual, advisors and accountants cannot claim it on behalf of their clients, so you need to understand the terms and conditions of receiving that government money.
There is a checking tool available on the government website to see if you qualify for the scheme