Empowering the Freelance Economy

Third self-employed grant: deadline and how to apply, fourth grant to become available says HMRC

The UK's third self-employed grant to cover eligible businesses between February 2021 to April 2021 must be claimed on or before the deadline of 29 January 2021
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The UK’s third self-employed grant to cover eligible businesses between February 2021 to April 2021 must be claimed on or before the deadline of 29 January 2021.

The Freelance Informer has outlined how to apply below. The HMRC has said a fourth grant will also become available but will provide details in due course.

Now that the online service to claim the third grant is open, make your claim from the date HMRC gave you either by email, letter or within the service. If you haven’t received correspondence from the HMRC get in contact with them immediately to start your application process.

What you’ll need at hand:

  • Self-assessment unique taxpayer reference
  • National insurance number
  • Government Gateway user ID and password
  • Bank details.
  • To help HMRC systems cope with the third self-employed grant applications, you’ll be given a slot between Monday November 30 and Friday December 4 to apply, but if you miss it you still have until January 29, 2021 to claim.

The grant does not need to be repaid if you’re eligible, but will be subject to Income Tax and self-employed National Insurance and must be reported on your 2020 to 2021 Self Assessment tax return.

You must keep evidence to support your claim.

Grants under the Self-Employment Income Support Scheme are not counted as ‘access to public funds’, and you can claim the grant on all categories of work visa.

You can follow these steps to help you understand what you can do now.

  1. Find out who can claim.*
  2. Check that your business has been impacted by coronavirus.
  3. Find out how HMRC works out your grant.
  4. Make your claim.
  5. Find out what happens after you’ve claimed.

Rule #1: Self-employed grant Eligibility*

If you were not eligible for the first and second grant based on the information in your Self Assessment tax returns, you will not be eligible for the third grant.

To be eligible for the third grant you must be a self-employed individual or a member of a partnership. You cannot claim the grant if you trade through a limited company or a trust.

If you claim Maternity Allowance this will not affect your eligibility for the grant.

You must have traded in both tax years:

  • 2018 to 2019 and submitted your Self Assessment tax return on or before 23 April 2020 for that year
  • 2019 to 2020

HMRC expects you to make an honest assessment about whether you reasonably believe your business will have a significant reduction in profits.

  • To make a claim for the third grant your business must have had a new or continuing impact from coronavirus between 1 November 2020 and 29 January 2021, which you reasonably believe will have a significant reduction in your profits.
  • The third taxable grant is worth 80% of your average monthly trading profits, paid out in a single instalment covering 3 months’ worth of profits, and capped at £7,500 in total.

You should wait until you have a reasonable belief that your trading profits are going to be significantly reduced, before you make your claim.

There are some examples that can help you decide.

Rule #2: How HMRC works out your eligibility based on your tax returns

To work out your eligibility we will first look at your 2018 to 2019 Self Assessment tax return. Your trading profits must be no more than £50,000 and at least equal to your non-trading income.

If you’re not eligible based on the 2018 to 2019 Self Assessment tax return, we will then look at the tax years 2016 to 2017, 2017 to 2018, and 2018 to 2019.

Rule #3: How different circumstances affect the scheme

There are some circumstances that can affect your eligibility such as if:

  • your return is late, amended or under enquiry
  • you’re a member of a partnership
  • you had a new child
  • you have loans covered by the loan charge
  • you claim averaging relief
  • you’re a military reservist
  • you’re non-resident or chose the remittance basis
  • state aid

Find out more information on how your circumstances affect your eligibility.

Rule #4: How HMRC works out the amount of the third grant

This is an example of how we will work out how much grant you’ll get if your average trading profits were £42,000 over the last 3 tax years.

If you’re eligible, you’ll receive a grant worth of 80% paid out in a single instalment covering 3 months’ worth of profits, and capped at £7,500 in total.

Example

  1. Start with your average trading profit (£42,000).
  2. Divide by 12 = £3,500.
  3. Multiply by 3 = £10,500.
  4. Work out 80% of £10,500 = £8,400. You will only receive £7,500 due to the cap.

Get other financial support

You may be able to claim Universal Credit, but even if the claim is not approved it will affect any tax credits you claim, and may affect other benefits. So you should:

If you make a claim for Universal Credit the grant may affect the amount you get, but will not affect Universal Credit claims for earlier periods.

The government is also providing the following help for the self-employed:

If you have other employment as a director or employee paid through PAYE your employer may be able to get support using the Coronavirus Job Retention Scheme.

Get help online

You can watch videos and register for free webinars according to the HMRC to learn more about the support available to help you deal with the economic impacts of coronavirus.

Use HMRC’s digital assistant to find more information about the coronavirus support schemes.

Find coronavirus financial support for your business.

  • Self-assessment unique taxpayer reference
  • National insurance number
  • Government Gateway user ID and password
  • Bank details.

To help its systems cope, you’ll be given a slot between Monday November 30 and Friday December 4 to apply, but if you miss it you’ll have until January 29, 2021 to claim.

SOURCE: HMRC

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