COVID-19 Update – 25 November – Reduced profits’ test for third SEISS grant and tax exemption for COVID antigen test

Third SEISS Grant

The rules for the third SEISS grant have been further tightened and claimants need to consider the changes carefully before making a claim.

Ahead of the portal opening on the 30 November, the guidance for the third SEISS grant has been published. Claims must be made by 29 January 2021.

To make a claim for the third grant, you must have been eligible for the first and second grants. You must also 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 three months’ worth of your average monthly trading profits, paid in one single instalment. The total payment is capped at £7,500.

Earlier the government announced to qualify for the third grant, businesses must not only be adversely affected by the pandemic but also:

• Be trading but impacted by reduced demand due to the pandemic; or
• Have been trading but are temporarily unable to do so due to the pandemic

The latest guidance on  checking if you can claim a grant and new guidance on how trading conditions affect eligibility include an additional test stating the taxpayer must:

• Intend to continue to trade; and
• 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.

We understand that the ‘significant reduction in trading profits’ test is to be applied to the accounting period as a whole. HMRC has specifically said that a reduction in profits due to increased costs (such as having to buy masks) does not count for this purpose.

No claim can be made where the reduced activity, capacity or demand is caused solely because the person is required to self-isolate (unless they are unable to work from home), or care for a person required to self-isolate, as a result of quarantine upon travelling into the UK. HMRC’s guidance includes a number of examples of how the rules apply.

You must keep evidence that shows how your business has been impacted by coronavirus, resulting in less business activity than otherwise expected.

Tax exemption for COVID antigen test

On 8 December legislation will come into force providing a temporary exemption from income tax and national insurance on any relevant coronavirus antigen test provided to employees by their employer, from 8 December 2020 until 5 April 2021. Therefore there is no ‘benefit in kind’ arising on paying for the test for employees to take.

For any relevant antigen tests which have been provided since 6 April 2020, HMRC will exercise its collection and management discretion and will refrain from collecting any income tax or national insurance on the provision of a test.

Find out more