SEISS fourth grant cruelly delayed
The delay of the next self-employed income support grant was revealed to Martin Lewis of MoneySavingExpert.com, who is apparently now the de-facto shadow Chancellor.
Self-employed traders who desperately need support will be left hanging, unable to plan or pay their bills as Chancellor Rishi Sunak will delay payment of the next self employed income support (SEISS) grant until after 3 March.
Lewis tweeted on Friday 22 January that he had received confirmation from HM Treasury that the conditions and the amount of the fourth SEISS grant will be announced as part of Rishi Sunak’s Budget statement on 3 March 2021.
EXCLUSIVE I’ve just had Treasury confirmation that no official announcement on Self Employ grant 4 will come until 3 Mar Budget, cruelly a month after grant period starts
— Martin Lewis (@MartinSLewis) January 22, 2021
This fourth grant is supposed to help self-employed traders, whose businesses have been hit by coronavirus, survive the three months from February to April 2021. Opening the SEISS application portal in March potentially leaves those taxpayers with no income at all in February, just after they have paid a large income tax bill on 31 January.
Answers needed now
Sunak has been promising to provide a fourth grant to support the self employed since at least October 2020, but there has been no indication of how much that grant will be, what profits it will be based on, and crucially when the money will arrive.
Taxpayers who were expecting to apply for this SEISS grant need answers to those questions now. They need to apply to HMRC for time to pay the income tax due for 2019/20, which was partly deferred from July 2020, and the first payment on account for 2020/21.
HMRC has built an online payment plan service to process applications to defer income tax where the amount outstanding is no more than £30,000. However, some applicants are getting rejected by the computer system in spite of meeting all the criteria.
When asking HMRC for time to pay tax (online or by phone) the taxpayer needs to suggest their own payment plan. They can’t do that if they don’t know how much government grant they will receive over the next few months, or whether they will need to pay the first instalment of their 2021/22 business rates due in April 2021.
Conditions may change
Lewis also said he has information from a number of sources indicating that HMRC is making operational changes to the basis for calculating the next SEISS grant.
It seems quite likely that self-employed profits reported on the 2019/20 tax returns will be taken into account for SEISS-4. This may mean that the base figure for the grant will be three months of the average annual profits reported in the three years: 2017/18 to 2019/20.
Such a shift in the profit basis would allow people who launched their own business after 5 April 2019 to qualify for an SEISS grant for the first time.
What about directors?
Always the optimist, Lewis is also hopeful that other business owners who have been left out of the government’s coronavirus support schemes will receive good news in the Budget. This could include directors of small companies who haven’t qualified for the furlough scheme as they take remuneration from their companies in the form of dividends instead of salary.
A pressure group: Forgotten Limited together with the FSB and ACCA presented proposals for a directors income support scheme to a cross-party group of MPs and are optimistic that it will be accepted in some form by the Treasury.
Lewis says his sources are indicating that the principled objections to supporting such directors have fallen away and the only hurdle is how to get money to these people. However, as Lewis says, pressure stills needs to be applied to politicians who make these decisions.