Fourth and fifth grant for Self-Employed

In the Budget on March 3rd, a fourth and fifth grant was made available to the Self-Employed until September 2021. Here’s what you need to know….

The fourth grant

The fourth grant, which offers 80% of three months’ average trading profits, paid out in a single taxable instalment capped at £7,500, will be available covering the period 1 February to 30 April 2021.

The fifth grant

The fifth grant will be worth 80% of average trading profits for people who have seen their turnover decrease by 30% or above.

For people whose turnover hasn’t decreased by 30% or above, they may be eligible for a fifth grant worth 30% of average trading profits

Those who filed their tax return within the deadline will eligible for this fifth and final grant

Preparing to submit your claim

As with the previous grants, we are not able to apply on your behalf but, as always, we are still here to help you.

We have detailed further information below about who can claim, eligibility and how it works but the action we suggest you take in preparation for submitting a claim for this grant is as follows:

1. Use the HMRC online tool to check if you are eligible:

1. Go to the HMRC online tool
2. Enter your UTR and select ‘continue’ (You can find these on your 2018/19 tax return by logging into the A4G client portal)
3. Enter your National Insurance Number and select ‘continue’
4. Review the HMRC message stating whether you are eligible or not. If it says you are not eligible and you think this is incorrect, there is an option to ask HMRC to conduct a review.

Should you wish for us to review your eligibility, please contact us.

2. If you already have a Government Gateway login, please ensure your contact details are correct: 

1. Select ‘continue’
2. Select ‘sign in and add your contact details’
3. Enter your Government Gateway user ID and Password and select ‘Sign in’
4. Enter the access code received to your mobile or email address and select ‘Continue’
5. If you are asked to verify your identify, follow the instructions on screen
6. Update your contact details – Enter your email address and telephone number and select ‘Continue’
7. Check your contact details are correct and select ‘Submit’
8. A message will appear saying ‘What happens next’ – take note of the date from which you can make a claim

3. Or, if you do not have a Government Gateway login, follow the instructions on screen to create one: 

1. Select ‘create them now’
2. You will then need to enter your email address to which you will receive a code
3. Enter the code and follow the onscreen instructions to create your account – ensure you keep your Government Gateway ID is a safe place
4. Once signed in, enter your contact details including email address and telephone number
5. Check your details are correct and select ‘Submit’
6. A message will appear saying ‘What happens next’ – take note of the date from which you can make a claim

Submitting your claim

To submit your claim, you should log in to the Government Gateway on the date advised by HMRC (as identified in your preparation above). They will use the contact details you provided to remind you. To submit the claim, you will need:

1. Your UTR and National Insurance Number (Again, you can find these on your 2018/19 tax return by logging into the A4G client portal)
2. Your Government Gateway ID and password
3. Your bank account number and sort code you want HMRC to pay the grant into
4. You will need to complete the declaration

Once you’ve submitted your claim, you will be told straight away if your grant is approved. HMRC will pay the grant into your bank account within 6 working days.

You must keep in your records:

1. The amount claimed
2. The claim reference number
3. Evidence that your business has suffered from reduced demand or is temporarily unable to trade

You will need to report the grant:

• On your Self Assessment tax return
• As self-employed income for any Universal Credit claims
• As self-employed income and that you’re working 16 hours a week for any tax credits claims

Who can claim?

Fourth grant

You can claim for the fourth if you’re a self-employed individual or a member of a partnership and:

1. You traded in the tax year 6^thApril 2018 to 5^thApril 2019 and submitted your Self Assessment tax return on or before 23^rd April 2020 for that year;
2. You traded in the tax year 6^thApril 2019 to 5^thApril 2020;
3. You intend to continue to trade in the tax year 6^th2020 to 5^thApril 2021; and
4. You must either:

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

You must also declare that:

• you intend to continue to trade; and
• you reasonably believe there will be a significant reduction in your trading profits

Fifth grant

You can claim for the fifth and final if you’re a self-employed individual or a member of a partnership and filed your tax return within the deadline.

Are you eligible?

HMRC will first look at your Self Assessment tax return. Your trading profits/partnership profit shares must be:

1. No more than £50,000; and
2. make up at least 50% of your income

If you are not eligible based on your Self Assessment tax return, HMRC will then also look at your 2016 to 2017 and 2017 to 2018 Self Assessment tax returns.

How much can you claim? 

Fourth grant

If HMRC have confirmed you are eligible for the fourth grant, the amount you can claim will be 80% of 3 months of your average trading profits over the 3 tax years (2018 to 2019, 2017 to 2018 and 2016 to 2017) up to a maximum total of £7,500.

For example, if your average trading profit was £42,000:

Alternatively, if your average profit was £24,000, the calculation would be as follows:

Please remember that this grant is taxable income and will be assessed on your tax return for 6^th April 2020 to 5^th April 2021.

Fifth and final grant

You will receive 80% of average trading profits if your turnover has decreased by 30% or more. For those hasn’t decreased by 30% or above, you may be eligible for 30% of average trading profits.