Self Employment Grant 3

HMRC have now published the qualification rules for the 3rd Self Employed Support Grant which can be applied for via HMRC’s website as from the 30th November ie next Monday. Applications must be submitted by the 29th January 2021.

The rules as to who can apply are the same as for the 1st two grants – so if you got either of those you may be eligible.

The big difference to the last two applications relates to how Coronavirus has affected your business. In the two previous applications, you merely had to state that your business had been adversely impacted by the pandemic.

don't get caught out

The rules for the 3rd Application state:

HMRC expects you to make an honest assessment about whether you reasonably believe your business will have a significant reduction in profits.
To make a claim for the third grant your business must have had a new or continuing impact from coronavirus between 1 November 2020 and 29 January 2021.
The third taxable grant is worth 80% of your average monthly trading profits, paid out in a single instalment covering 3 months’ worth of profits, and capped at £7,500 in total.
Applications for the third grant will open from 30 November 2020. Make your claim from the date we give you either by email, letter or within the service. If you’re eligible, you must make your claim for the third grant on or before 29 January 2021.
The grant does not need to be repaid if you’re eligible, but will be subject to Income Tax and National Insurance and must be reported on your 2020//2021 Self Assessment tax return.
You must keep evidence to support your claim.
Unsure if you're eligable?

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What is concerning in the above are the phrases “your business must have had a new or continuing impact from coronavirus between 1 November 2020 and 29 January 2021” and “You must keep evidence to support your claim.”

HMRC’s notes re the evidence required say as follows:

If you’re currently trading but have reduced demand

You must keep any evidence that your business has had reduced activity, capacity or demand due to coronavirus at the time you made your claim, such as:

  • business accounts showing reduction in activity compared to previous years
  • records of reduced or cancelled contracts or appointments
  • fewer invoices
  • a record of dates where you had reduced demand or capacity due to government restrictions

If your business is temporarily unable to trade

You must keep evidence if your business has been unable to trade due to coronavirus, such as:

  • a record of dates where you had to close due to government restrictions
  • NHS Test and Trace communications - if you’ve been instructed to self-isolate in-line with NHS guidelines and are unable to work from home (if you’ve been abroad and have to self-isolate, this does not count)
  • a letter or email from the NHS asking you to shield
  • test results if you’ve been diagnosed with coronavirus
  • letters or emails from your child’s school if you have had parental caring responsibilities

Clearly evidence is much easier to produce in case 2. If you were forced to close in November (eg because you were a pub or a non-essential shop) then you can apply straight away.

If your evidence comes from 1) above, what most commentators are recommending at present is that you hold off submitting a claim on Monday 30th November, so that you can demonstrate to HMRC if they ask that your turnover/income for November & December 2020 is significantly lower than in November & December 2019. Clearly you need to keep a record of this in case HMRC ever ask.