It has been confirmed that self-employed workers will now be waiting until budget day on 3 March, to find out what to expect from the fourth SEISS grant. The fourth SEISS grant delay means that millions of self-employed workers will now face further financial uncertainty.
A fourth Self Employed Income Support Scheme (SEISS) grant has been expected since October from the Chancellor, to support self-employed workers through continuing disruption to their earnings, due to social restrictions imposed by the government to curb the spread of the virus. Originally this fourth SEISS grant was expected to arrive in order to support the financial survival of self-employed workers throughout the months of February until April 2021.
A delay of the fourth SEISS grant, by opening the application portal as late as March, will leave many self-employed workers, without income in February, just after they have paid a potentially large income tax bill 31 January. This fourth SEISS grant delay is also a blow to annual fiscal planning for the self-employed, especially whilst experiencing rolling lockdown reviews, during the third official, national lockdown. Which measures were brought in following the discovery of variant strains of COVID-19 which have been causing a faster spread of the disease, thought to be chiefly responsible for the rise in cases following Christmas. It is also unknown when schools will reopen for most families, with a review expected by 8 March. Which is another challenge to the self-employed continuing to work from home.
Further to the fourth SEISS grant delay, so far there has been no indication of how much the fourth, and potentially final, grant is expected to be, nor what trading period it will be based on. Plus most crucially, when the money is going to arrive.
Time to Pay
Workers affected by the the fourth SEISS grant delay may need to take into consideration, applying for HMRC’s Enhanced Self-Employed Payment Plan also known as Time to Pay, to make income tax payments for profits made in 2019/20, which was partially deferred from July 2020, and possibly the first payment on account for 2020/21.
A Time to Pay Arrangement with HMRC is a debt repayment plan for self employed workers with outstanding taxes. HMRC increased the threshold for paying tax liabilities from £10,000 to £30,000 for self assessment customers last Autumn, with the aim of easing financial burdens caused the pandemic.
Those experiencing difficulty paying tax originally due by 31 Jan, have 60 days after the elapsed payment date to apply for a Time to Pay plan. However we have learned that some applicants are being rejected by the online portal despite meeting the published criteria. An issue magnified by the limited resources of HMRC to answer call volume, whilst respecting social distancing for call centre employees. Add to this the time deficit experienced by applicants, due to lockdown measures, to spend time on these calls. Especially for those working from home, locked down with others, particularly those with children awaiting the safe reopening of schools.
HMRC expects applicants to suggest their own payment plan, whether they apply online or by phone. This is a huge challenge for many self-employed workers, exacerbated by the inability to predict how much they may or may not receive in grant support, or whether they will be required to pay the first instalment of their 2021/22 business rates due in April 2021, in full.
It is speculated that the fourth SEISS grant delay will mean that self-employed profits reported on the 2019/20 tax returns will be taken into account for the fourth SEISS grant. 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. So far we can’t be sure.
A shift in the profit basis such as this, would mean that any self-employed workers who launched their businesses following 5 April 2019, would qualify for SEISS for the first time. Yet it still fails to take into consideration workers who must report lower than usual earnings, because they took maternity leave during any qualifying period.
Campaign groups continue to lobby the Chancellor in the run up to his second budget published under the effects of the COVID-19 pandemic.
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