If you’re self-employed and your business has suffered due to Covid, then from this week (and before 1 June) you can apply for the fourth grant from the Government’s Self-Employment Income Support Scheme.
This time the rules extend the grant to people who were excluded from the previous three because they began their self-employment in 2019–20. In addition, some people who failed the “profits” tests for previous grants will now pass.
To qualify, you must pass all these tests:
1 You filed your 2019–20 tax return by 12 midnight on 2 March 2021.
2 You traded in 2019–20 and 2020–21 and will trade in 2021–22 unless the pandemic prevents you.
3 You expect your trading profits in 2021–22 to suffer a significant reduction due to the pandemic.
4 Your trading profit is at least half your total income.
5 Your trading profit is no more than £50,000.
Tests 4 and 5 (the “profits” tests) can be passed in one of two ways:
(a) The tests are applied first to your profits in the 2019–20 tax year. If you pass both those tests in that year, you qualify.
(b) If you fail either or both of those tests in 2019–20, HMRC will apply the tests to your average trading profits over the four years from 2016–17 to 2019–20. If you weren’t self-employed in 2016–17, it will look back over the three years to 2017–18. And if you didn’t start trading until 2018–19, it will look at the last two years and calculate your average profits over those years.
Your grant will be worked out as 80 per cent of three months’ average profits over the years of trading assessed in part b. That applies even if you qualify under part a – but if you only traded in 2019–20, profits for that year only are used.
The grant, which should be paid by the end of May, is capped at £7,500, but the average paid is below £3,000. It is subject to tax and National Insurance and must be declared via self-assessment.
For more details on how to apply, search gov.uk for “Self-employment Income Support Scheme”.
Paul Lewis presents Money Box on Radio 4