Now closed to new applicants
The final details in relation to the fifth grant were published on 28th July 2021 and we have set out below an outline of how the scheme works for the fifth grant.
Please note the scheme in relation to the first four stages of the grants are now closed; however, you do not have to have claimed under the earlier stages to be eligible for the fifth grant.
Who will qualify for the Scheme
In order to qualify for the scheme, you must be a self-employed individual or a partner in a trading partnership and you must:
- have submitted a Tax Return for the tax year ended 5 April 2020 before 2 March 2021.
- have traded during the tax year ended 5 April 2020 and 5 April 2021
- To be able to claim the fifth third grant 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 be able to declare the following:
- that you intend to continue to trade in the 2022 tax year
- that 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 from 1st May 2021 to 30th September 2021. HMRC expect you to make an honest assessment about whether you reasonably believe your business will have a significant reduction in profits. Please see below for further details in relation to this assessment.
In addition, if you have traded during the tax years 2016/17 to date then you will need to meet the following criteria to be eligible to make a claim:
- your trading/partnership profit in the year to 5 April 2020 is less than £50,000 and these profits are more than or equal to your non-trading income or
- your average trading/partnership profits for the years ended 5 April 2017, 2018, 2019 and 2020 are less than £50,000 and the total trading profits over the four years are more than or equal to non-trading income over the same period.
If you have made a loss in a year this will be included in the average calculation, but the use of losses which arose on your 2016 and earlier tax returns will not be included.
If you are a farmer the profits used will be prior to any claim for farmers averaging relief.
There are variations on the rules if you have not traded for the entire three-year period, please see HMRC’s detailed guidance at How HMRC works out trading profits and non-trading income for the Self-Employment Income Support Scheme
HMRC have stated the following in respect of reasonable belief and significant reduction:
In order to claim, you must reasonably believe that you will suffer a significant reduction in trading profits due to reduced business activity, capacity or demand or inability to trade due to coronavirus during the period May to September 2021. You must keep evidence that shows how your business has been impacted by coronavirus resulting in less business activity than otherwise expected.
You must keep evidence that shows how your business has been impacted by coronavirus resulting in less business activity than otherwise expected.
Before you make a claim, you must decide if the impact on your business will cause a significant reduction in your trading profits for the tax year you report them in.
HMRC cannot make this decision for you because your individual and wider business circumstances will need to be considered when deciding whether the reduction is significant.
You should wait until you have a reasonable belief that your trading profits are going to be significantly reduced, before you make your claim.
See the HMRC guidance and examples, in relation how your trading conditions affect your eligibility for the grant.
You can check if you are eligible using HMRC online checker at https://www.tax.service.gov.uk/self-employment-support/enter-unique-taxpayer-reference.
HMRC have stated that they will as usual use a risk based approach to compliance. We do not know what form of compliance checks this will take, but we would expect you would need to demonstrate your sales and profits were adversely affected during this period; however, the scheme still allows you to work. They have announced a penalty regime and if you have received a grant to which you are not entitled and do not repay it to HMRC, then you will have to repay the grant, together with penalties and interest.
HMRC will use the data from your Tax Returns already submitted to identify if you are eligible and contact you to inform you of the date you will be able to make a claim and when the online service will be available.
What level of grant will I receive?
For the fifth grant HMRC will either pay you 80% of your average monthly profits over the tax years stated above up to a maximum of £7,500 covering 3 months’ profits or 30% of your average monthly profits up to a maximum of £2,850.
In order to assess the level of grant you are eligible for you will need to compare your turnover (takings, sales or money earned or received by your business) for the year to 31 March or 5 April 2021 to the year to 31 March or 5 April 2020*.
If your turnover for 2021 has reduced by 30% or more then you will qualify for the higher grant, if it has only reduced by less than 30% you will qualify for the lower grant.
*If the year to 31 March/5 April 2020 is not a normal year, the turnover for the year to 31 March/5 April 2019 can be used instead. In addition, if you only started trading after 6 April 2019 your turnover will not be considered.
You do not need to have claimed for a prior grant in order to claim the fifth grant.
HMRC have issued guidance and examples of how they will work out your trading and total income at https://www.gov.uk/guidance/how-hmrc-works-out-total-income-and-trading-profits-for-the-self-employment-income-support-scheme
This grant will form part of your taxable profits for the 2021-22 tax year, it will also count as income for tax\universal credit purposes and will be paid directly into your bank account in one instalment.
How to apply
The portal for the fifth grant is open and you will need to make a claim on or before 30 September 2021 via the portal.
In order to claim you will need your:
- Self-Assessment UTR – You can normally find this on your Self-Assessment Tax Return or communications from HMRC.
- National Insurance number
- Government Gateway user ID and password – please note this is your personal ID and not necessarily the one you use for business purposes. If you do not have a personal account, you will need to set one up and we recommend that you do this as soon as possible in order to access the claim process.
- Bank account and sort code for the payment to be made to.
- Confirm to HMRC that your business has been adversely affected by coronavirus.
The payment of the grant will count as State Aid and will need to be included, if you apply for any other funding classed as State Aid.
What other Support is available
Other support available to the Self-Employed is as follows:
- Agreeing a time to pay arrangement with HMRC in respect of any taxes still outstanding
- You are able to apply for Universal Credit