Are you self-employed, working as a sole trader in the construction industry? Chances are you are eligible for the Self-Employed Income Support Scheme grants that were announced in the recent budget.
But are they any different to the three similar grants given in the last year? And if you didn’t qualify for one then, is there a chance you could get one now?
A new financial year, a new qualifying period
The SEISS grants are calculated based on your tax returns. For a lot of self-employed contractors, this meant the grants available during 2020 were of little use – anyone who had started a business in recent years simply didn’t have the sort of tax records to guarantee them any sort of decent financial support.
If you started your business in the 2018/19 tax year, then HMRC will have calculated your average earnings based on that very first tax return, and in those early days, its likely that your tax return barely showed a profit, let alone properly represented the work that you had actually built up to during 2020 before coronavirus hit. The level of financial aid from each grant received was no-doubt useful, but not enough to support a family through three months of no earnings as it was supposed to.
It’s worse if you hadn’t registered as self-employed until April of 2019. For those people, there were no tax returns for the government to use to determine earnings, and thus no grants were awarded at all. In the first year of life, so many self-employed businesses simply died, unable to cope with multiple lockdowns and the loss of custom.
So, how does this announcement of more grants calculated in a similar way help? The answer lies with the recent tax return. With the new figures that all self-employed sole traders will have submitted during the beginning of this year, HMRC has a far better understanding of the work you were doing before the pandemic hit.
And that means a far higher level of eligibility than before.
Getting the fourth and fifth SEISS grants
Obtaining the grants is easy, and you don’t need an accountant to do it for you. Simply sign in on the government website once the application period goes live, and fill in a few details about your identity. The grant payment is paid to you automatically a few days later.
In order to be eligible, however, your business must have been adversely affected by COVID. In the construction industry, sadly, this is the case for almost all of us.
Grant four, available from late April 2021, is up to £7,500, and is calculated as 80% of your three months’ average trading profits as shown on your 2019/20 tax return. As an example, if you posted a total profit of £30,000 during this time, the grant should equal £6,000, calculated as follows:
- £30,000 / 12 = £2,500 per month
- £2,500 x 3 = £7,000 for three months
- 80% of £7,000 = £6,000 grant value
Grant five, in late July 2021, will be subject to a ‘turnover test’, measuring how much your business has lost between April 2020 and April 2021. If your turnover has reduced by 30% or more, then the grant will be of a similar amount as grant four. Should you show a turnover reduction less than 30% however, then it is capped at £2,850.
For full details of SEISS grants four and five, follow this link to the .gov.uk site.
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