Self-employed workers’ profits must be “significantly reduced” in order to claim the third instalment of the Self-Employment Income Support Scheme (SEISS), it has been revealed.
The new guidance comes less than a week before applications open on 30 November 2020.
Under previous iterations of the scheme, self-employed workers were asked to declare that their business had been adversely affected due to the coronavirus pandemic and were suffering reduced demand or unable to trade due to local restrictions.
However, the latest guidance now states that businesses must “reasonably believe there will be a significant reduction in their trading profits due to reduced activity, capacity or demand or inability to trade due to coronavirus”.
According to the report, the “significant reduction in trading profits test” is to be applied to the whole year’s accounting period. This means, therefore, that self-employed workers will be required to forecast trading profits to establish eligibility for the third instalment of the SEISS.
Commenting on the guidance, the Institute of Chartered Accountants in England and Wales (ICAEW) said: “The Tax Faculty understands (and the direction makes it clear) that the significant reduction in trading profits test is to be applied to the accounting period as a whole.
“For many taxpayers, for example those that use a 31 March or 5 April accounting date, the significant reduction of trading profits will be expected to appear in the results they report on their 2020/21 tax return. However, some taxpayers, for example those that use a 30 April accounting date, will not report the trading results for the relevant period until their 2021/22 tax return.”
For help and advice on related matters, please get in touch with our expert team today.
Smailes Goldie Group
Latest posts by Smailes Goldie Group (see all)
- What is RTI for Payroll? - June 11, 2021
- OTS to consider “benefits and implications” of moving tax year end date - June 10, 2021
- Now is the time to prepare details of your taxable benefits - June 9, 2021