Self-employed and want to know more about the fifth Self-Employment grant?

Most importantly, the fifth Self-Employment grant differs from previous grants. There’s an extra turnover test to see how much you can claim. This podcast looks at this, grant eligibility, what you must do. In addition, I will share examples and tips. Above all, your claim is based on your reasonable judgement, evidence, and judgement.

Click here for the full podcast now! You won't regret it! I'll answer your questions so you can make an informed decision about applying for the grant.

Who can claim the fifth Self-Employment grant ?

This fifth Self Employment Grant is for those affected by the coronavirus outbreak.  The grant will cover the period May 2021 to September 2021.

No government announcements have been made for additional financial support for the self-employed beyond September 2021.

In today’s podcast, I am going to be looking at how the fifth self-employed grant differs, compared to previous grants.  Furthermore I look at eligibility criteria, and evidence.  Lastly, I will be looking at how much the grant is worth, and possible HMRC follow up action.

How is the claim made for the fifth Self-Employment grant ?

Firstly, HMRC will make the initial assessments as to whether you are eligible to apply.  They should you to to confirm whether you can make the application.

Initial eligibility, for example whether you are self-employed, level of your trading profits, and filing your tax return HMRC will know that.  No change compared to previous claims, check out those details.

You don't need to provide any financial data because HMRC have that on file, you've got to make a declaration that you intend to continue to trade, you've got a reasonable belief that there's going to be a significant reduction in your trading profits because of reduced business activity.  The key thing is the link and connection between Coronavirus and your business between May and September 2021.

But make sure you have the evidence to back that up. More of that in the podcast.

What next

Above all, do you want to know more about the fifth Self-Employment grant?  You can get it if you meet all these conditions.   This podcast will tell you what you need to know about eligibility, the pitfalls, examples and tips.  Your  claim is based on your reasonable judgement, evidence, and judgement.  What does this mean?

Listen to find out more.

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The fifth and final self-employed grant is due to be paid out over the coming summer months, and this grant, this final grant, will cover the periods between May, ‘21 and September, 2021. At this moment in time, the government have made no announcement for any further financial support for the self-employed beyond September, 2021.

Now, in today's podcast, I am going to be looking at how the fifth self-employed grant differs compared to previous grants, your role as the applicants, HMRC’s role in all of this. We're going to look at eligibility criteria. We'll talk numbers about how much the grant is actually worth, and we're talking about follow-up action by HMRC in the future.

You are listening to the I Hate Numbers Podcast with Mahmood Reza. The I Hate Numbers podcast mission is to help your business survive and thrive by you better understanding and connecting with your numbers. Number love and care is what it's about. Tune in every week. Now, here's your host, Mahmood Reza.

Now, in the first instance, HMRC will be making the initial assessments as to whether you are eligible to apply or not. They will contact you to verify whether or not you can actually make the application. And that initial eligibility, by the way, is based on whether you are self-employed, the level of trading profits that you have, whether you've submitted your tax return in due time.

Check out the show notes at the end for a link for the eligibility condition, so no change there. On top of that, your pot role will be, once you're invited and you go through to make the claim, you don't need to provide any financial data, by the way, because HMRC already have that on file. You've got to make a declaration that you intend to continue to trade.

You've got a reasonable belief that there's going to be a significant reduction in your trading profits because of reduced business activity, and the key thing is that it is connected to Coronavirus, and the impact on your reduced demand, your reduced capacity, your inability to trade is going to occur between May and September, 2021.

So, it's irrelevant what's happened before May. It’s irrelevant what's going to happen after September. Now, realistically, if you're going to make the claim before the end of September 2021, you're going to have to have a view about how you see your business panning out over those months. Now, as long as you make a reasonable judgment, as long as you make an honest judgment based on some evidence, then HMRC are going to be quite cool and quite relaxed about that.

But make sure you have the evidence to back that up and I'll talk about evidence towards the end of the podcast. Now, let's talk about how the fifth grant is fundamentally different to the previous grants before we look at what we mean by temporary unable impacts of coronavirus and throwing a few examples.

Now, the critical thing is that the fifth grant, the level of grant that you receive is going to be determined, apart from satisfying the eligibility criteria, but the value of the grant you receive is based on the impact on your turnover, and this is the impact on turnover that's occurred for the 2021

period, April ‘20 to April ‘21, and what that looks like compared to the previous 12 months. If your turnover has reduced by 30% plus in that comparative period, then you'll be entitled to the maximum grant, and the maximum grant that you'll get is equivalent to 80% of three months of your average trading profits with a maximum grant being payable of seven and a half thousand pounds.

Now, if your turnover has not suffered as much, and in HMRC’s terms, that's less than 30%, then the maximum grant you'll get is 30% of three months' worth of average trading profits, and the maximum grant you'll be entitled to is 2850 that covers that three month period. So remember, this is in addition to satisfying those earlier conditions, and that's the value of the grant that you will get.

Now, it's worth mentioning also that within the grant conditions, and all grants have conditions attached to them, is that HMRC expects you to confirm that your business is going to continue to be affected by Coronavirus, and, I'll emphasise that and, you must believe you'll have a significant reduction in profits for one of two reasons, either because of reduced demand, activity, or capacity, or you've just not been able to trade.

Now, what does that mean in practice? Now to show that you've been temporarily unable to trade, you've got to prove that your business has got to close due to government restrictions. So, having the notices that you've received, keep them on file. If you personally have been instructed to shield, self-isolate in line with NHS guidelines, and you can't work from home, then that also is another piece of evidence.

By the way, if you've been abroad, If you've gone overseas to self-isolate, that specifically is excluded and doesn't count. So, if you've been basking the sunshine through self-isolation or been trapped there, unfortunately you will not be eligible. If you've been tested positive for Coronavirus and unable to work, again, that will be a condition that satisfies HMRC.

If you've had parental responsibilities through caring due to childcare or school closures, that also counts, so again, that should be relatively straightforward. Archive it, keep it as a piece of information, and keep it on file. Now, a lot of people, a lot of clients I come across are quite nervous about whether they're eligible.

Some people I know are not making the claims because they're not quite sure whether they comply. They're quite nervous about the examples that HMRC are putting forward. So, it's important that you understand fully the eligibility criteria and do not lose out on a valuable lifeline. Now, here's some examples of what's perfectly acceptable as a reason to claim

for the fifth grant. Let's look at the meaning of reduced activity, capacity, and demand. Quite a mouthful within the HMRC Guidance. Now, if you've got fewer customers or clients than you would normally expect because of Coronavirus, and I must stress that relationship, then again, that is a good example.

Now, if you're thinking, I'm not quite sure whether that applies, have a look at your records, have a look at what you are aware of, see if you've got any reference points to last year, and ask yourself that question. Where would my business be, as far as I reasonably believe and honestly think, if it wasn't for Coronavirus?

Check your emails, check your order book. Those are good ways to get some additional evidence. If you've got contracts that have been canceled and, unfortunately, they've not been replaced, you've not managed to replace that with additional work, that is an example of reduced activity, capacity and demand. If you've had supply chain disruptions, and therefore, that's impacting your ability to trade, your ability to carry out your business,

that again, is another example that will support your claim. Unfortunately, by the way, if Coronavirus has meant that you've had to spend more money on things like PPE face masks, cleaning supplies, that does not count as reduced activity. So, even though the bottom line suffers, even though you've got more of a cost burden, that does not count as qualifying criteria.

Let's explore some more examples and now there is a reference point in the guide where HMRC talks about previously trading, but are temporarily unable to do so. Now, this could be because you've had to close and you've been closed. Make a note in your diary. Make a note somewhere that you've had that closure time. Again, having to self-isolate and you are unable to work from home,

perhaps your business is not suitable to home-working, again, that will be a good example. Caring responsibilities we've mentioned earlier, again, that is another example of being temporarily unable to ply your trade. It's interesting sharing some examples here from HMRC guidance, by the way, about what they see as examples where you will not be eligible to claim the fifth grant.

I'm going to share some examples from the HMRC guidance where in their opinion, these are situations where you are unable to trade, you have no reasonable belief, and being aware of these examples here is a good reference point to your own particular situation. A mechanic unable to work for two days because of having to deep clean their premises, because of Coronavirus, has the belief

that their profits will not be significantly reduced. That's a situation where they're not going to be eligible to claim the grant. A builder developing symptoms, self-isolating for five days before receiving a negative result, unable to work, but able to rearrange the work they were contracted to do,

therefore, that's a situation where they're not eligible to claim the grant. So, where you manage to make good, where you manage to actually rearrange your workload, that will be an example where you will not be eligible to make the claim. The key words here are impacted by Coronavirus and, remember, impacts during the months May to September ‘21,

significant impact on your profitability. Coronavirus is the cause behind that, and not also forgetting the magic turnover test as well. Let's continue. The one that I found quite amusing myself, quite close to home, an accountant reducing business activity because they're looking to retire. They know that this will have a significant impact on their trading profits; however,

they won't be eligible for the grant because the business activity that's been cut down is not because of Coronavirus, but looking at the possibility of retiring. The dog walker who counsels a contract due to Coronavirus, choosing not to look for additional work to replace the contract, and that is interpreted as the business activity and trading profits are reduced because they choose not to replace the contract, not because of Coronavirus.

That seems a bit odd. Coronavirus has been the cause initially, but actually, because of a lack of interest, a lack of motivation in HMRC’s eyes to replace that work, they will not be eligible. So, what does that make me think? That makes me think that if you have a business that's lost because of coronavirus, have something on file to indicate what you've done to try and make up that shortfall.

The last example I'm going to look at is an IT consultant that has a mixture of profit, of income, some from renting out profit, some from their IT work. Now, they're self-employed, they make less losses on the renting due to renovation, but this has nothing to do with the IT consultancy business, which would be classified as self-employed income. Because the self-employed business has not been affected by Coronavirus,

they're not eligible for the fifth grant. Even though the rental income may suffer, rental income is not an eligible income stream for self-employed grants. Now, let's wrap up on the last thing here, and that's the evidence which we’ve mentioned earlier in the podcast, and I'm going to repeat some of these factors here.

Now, for the fifth self-employed grant, you've got to keep evidence that your business has been affected by reduced demand, or you've been unable temporarily to trade. Keep your records as all self-employed individuals should be doing anyhow. So, you need business accounts showing a reduction of turnover.

Keep a diary date of the date your business has had to close. Make a note of those dates where you've had to take on shielding or caring responsibilities. Records of canceled contracts: they could be by email; if they're by conversation or by note, make a note of the dates. Iif you've issued fewer invoices, if you got some test results there, conversations you might have had with clients and they've decided to defer and cancel the contract.

Now, the good thing to bear in mind is by the way, that HMRC do say that if your business recovers after you've made your claim, your eligibility will not be affected as long as you've got a reasonable belief backed up, or some evidence at the time that you made that claim. Now, some cautious people that I know are going to wait until September before they make that claim.

You need to actually factor in what the impact on your cash flow will be. You need to think about what evidence that you've got and remember, it's easy to rush into ticking, saying yes, I'm eligible, or perhaps holding back because you think you might not be. Examine carefully, check the eligibility criteria, and once those doors open for making the claiming, late July,

crack on folks. Now, I hope you found this podcast useful. I hope you got some value from it. I'd love it if you could comment on it accordingly, and folks, keep calm, keep sanguine, and I'll see you on the other side next week. We hope you enjoyed this episode and appreciate you taking the time to listen to the show.

We hope you got some value. If you did, then we'd love it if you shared the episode. We look forward to you joining us next week for another I Hate Numbers episode.