From Monday 30th November 2020, further financial support is available for the self-employed, including partners of partnerships or LLP’s.
The third 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 from 1st November 2020 to 29th January 2021.
Self-employed people who are eligible and in need of support will be able to claim the third grant at any time from 30th November 2020 to 29th January 2021. 
Please be aware that the eligibility criteria have changed slightly this time.
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 1st November to 29th January 2021.
You must keep evidence that shows how your business has been impacted by coronavirus resulting in less business activity than otherwise expected.

HMRC have given some examples, see the “who can claim” section below.

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?

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

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

Examples of significant reduction

HMRC have set out some examples of significant reduction, such as:

Example 1

A cafe owner has fewer customers due to government restrictions on households mixing, which reduces her takings. She reasonably believes this will significantly reduce her trading profits. She is eligible to claim.

Example 2

A plasterer cannot get materials due to supply chain issues due to coronavirus. This has reduced the amount of work he can complete and be paid for. He reasonably believes this will significantly reduce his trading profits. He is eligible to claim the third grant.

Example 3

A hairdresser has had to shut his shop due to government restrictions. He will not have any income due to the closure and reasonably believes the reduction in his trading profits will be significant. He is eligible to claim the third grant.

There are further examples on the HMRC website here.

Are you eligible?

HMRC will first look at your 2018 to 2019 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 the 2018 to 2019 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? 

If HMRC have confirmed you are eligible for the 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:

Average trading profit = £42,000
Divide by 12  = £3,500
Multiply by 3  = £10,500
80% (of £10,500)

 

= £8,400

You will receive

£7,500 due to the cap

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

Average trading profit = £24,000
Divide by 12  = £2,000
Multiply by 3  = £6,000
80% (of £6,000) = £4,800

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

Contact me today!

Josh Curties

BA (Hons) ACA

Partner & Principal Adviser

01474 853856

Send me a message

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