BUDGET 2021: Financial support for the self-employed

In his Budget announcement 2021, Chancellor Rishi Sunak revealed an extension of the UK-wide Self Employment Income Support Scheme (SEISS) to September 2021, with 600,000 more people who filed a tax return in 2019-20 now able to claim for the first time.

Government documentation reads: “The UK government recognises the continued impact that coronavirus (COVID-19) has had on the self-employed. At the Budget it was confirmed that the fourth SEISS grant will be set at 80% of 3 months’ average trading profits, paid out in a single instalment, capped at £7,500. The fourth grant will take into account 2019 to 2020 tax returns and will be open to those who became self-employed in tax year 2019 to 2020 [and filed their tax return by midnight 2 March 2021]. The rest of the eligibility criteria remain unchanged.”

This means that over 600,000 individuals may be newly eligible for SEISS, including many new to self-employment in 2019- 20.

Eligibility

To be eligible for the fourth grant you must be a self-employed individual or a member of a partnership. To work out your eligibility, the government  will first look at your 2019 to 2020 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 your 2019 to 2020 Self Assessment tax return, govt will also look at the tax years 2016 to 2017, 2017 to 2018, 2018 to 2019 as well as 2019 to 2020.

You must also have traded in both tax years:

• 2019 to 2020 and submitted your tax return by 2 March 2021
• 2020 to 2021

You must either:

• be currently trading but are impacted by reduced demand due to coronavirus
• have been trading but are temporarily unable to do so due to coronavirus

You must also declare that:

• you intend to continue to trade
• you reasonably believe there will be a significant reduction in your trading profits due to reduced business activity, capacity, demand or inability to trade due to coronavirus

If you are eligible, and have submitted the 2019 to 2020 self assessment tax return, HMRC will contact you in mid-April to give you your personal claim date. This will be the date that you can make your claim from.

The government has also announced a SEISS fifth grant covering May to September. The value of the grant will be determined by a turnover test, to ensure that support is targeted at those who need it the most as the economy reopens.

You will be able to claim from late July if you are eligible for the fifth grant. The amount of the fifth grant will be determined by how much your turnover has been reduced in the year April 2020 to April 2021.

The fifth grant will be worth:

• 80% of 3 months’ average trading profits, capped at £7,500, for those with a turnover reduction of 30% or more
• 30% of 3 months’ average trading profits, capped at £2,850, for those with a turnover reduction of less than 30%

Further details will be provided on the fifth grant in due course.

Richard Lambert, chief executive of National Hair & Beauty Federation

Richard Lambert, chief executive, National Hair & Beauty Federation says: “We welcome this Budget. We’ve worked hard to inform and educate the government about our sector, particularly through our recent report, An Industry at The Sharp End.  Their improved understanding is reflected in the whole package – above all, in securing the higher grants for Personal Care.

“We were worried that the most vulnerable in our sector would find it hard to survive to re-open, but both the Restart Grant and further funding for the self-employed have thrown a lifeline to struggling businesses and professionals.

“We will continue to press the case for a short-term reduction in VAT to help the hardest-hit hair & beauty businesses to recover.”