Originally written by Anna Jordan about Small Business
Rishi Sunak recently announced that an additional 600,000 self-employed entrepreneurs can apply for the fourth and fifth grants of the SEISS (Self Employed Income Support Scheme) program.
The prerequisite is that the applicant has submitted a tax return by March 3, 2021.
But vague details, complicated processes, tight deadlines, and fraudulent concerns can mean many of them are missing, financial experts warn Old Mill.
An example is when those who apply are contacted by HMRC and receive an email with instructions on how to verify their identity. You will then have two days to upload digital copies of your bank documents and ID to the HMRC Dropbox. If it doesn’t, the Dropbox link will expire and the applicant won’t be able to pass the pre-screening.
“There are a number of areas that can go wrong (such as opening a brown envelope from HMRC) and I have real concerns that some people may have difficulty negotiating those pre-review reviews or inadvertently deadlines to miss, “said Chris Bowles, director of Old Mill.
“There is also a concern that many merchants will view this HMRC call as yet another nifty attempt to obtain sensitive personal information at a time when fraudulent attacks are widespread.”
Grants are subject to income tax and social security contributions
Even after passing the pre-screening tests, the process of obtaining the grant is complex.
Bowles commented that new applicants will be subject to both income tax and social security contributions.
“It’s important for people to get their tax affairs up to date rather than leaving everything until the last minute, as that information will compromise your legitimacy. So it makes sense to be proactive in getting it under control.” he said.
“There are also certain conditions attached to the final grant on whether or not your sales have decreased by the 30 percent required to claim the higher grant amount when it opens in July.
“This can all be a little confusing for business owners trying to work their way through a minefield for the first time. So I urge people to speak to their advisor wherever possible.”
What do I have to consider during the SEISS preliminary check?
Old Mill has a detailed step-by-step process listed on their website, but here are some key elements to look out for.
- If you have not yet received a letter, you will receive one by mid-April. There is a limited window in which to process the application
- You will receive a call from HMRC within two weeks of receiving the letter. At this point, you’ll provide the email address to receive your Dropbox link
- You only have two days to send your digital documents. It is best to have this ready in advance
- The online portal for the fourth SEISS grant will open at the end of April (date TBC). However, all pre-screening steps must be completed before you can make a claim
The company also provides more information on the fourth and fifth grants. The fourth SEISS is said to represent 80 percent of your average trading profit and is capped at £ 2,500 per month. It is paid out in one lump sum over three months, giving you a maximum of £ 7,500.
The fifth grant is worth:
- 80 percent of three months’ average trading profit capped at £ 7,500 for those with a 30 percent decline in sales or more
- 30 percent of three months’ average trading profit capped at £ 2,850 for those with less than 30 percent decline in sales.
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