COVID-19 Update – 18 January – Small Business COVID insurance claims and deadline for third SEISS grant

Small Business COVID insurance claims

As a result of the pandemic, tens of thousands of small businesses that were forced to close during the first lockdown could now receive insurance payments following the Supreme Court ruling in favour of small businesses that were initially denied payouts on their business interruption insurance policies following the first wave of coronavirus restrictions.

It was reported that hundreds of thousands of businesses were forced to close during the first lockdown, resulting in a significant loss to their income. As a result, businesses attempted to claim on their business interruption insurance but a number of leading insurers disputed the claims, arguing the policy did not cover the restrictions.

This prompted the watchdog to bring a test case on behalf of policyholders seeking legal clarity on the issue and the court has now accepted the policyholders’ arguments and dismissed appeals from six insurers against an earlier High Court judgment which found in policyholders’ favour.

Deadline for third SEISS grant

The window to claim for the third SEISS grant closes on the 29 January. Here is a reminder of the additional conditions for the third grant:

• You do not need to take the first and second SEISS grant or any other COVID-19 government support payments into account when deciding if you meet the ‘significant reduction in trading profits’ test.
• You can use the previous year or an average of say the last three years trading profits when assessing whether there has been a significant reduction in trading profits.
• If you have more than one trade it is sufficient to show that one of the trades has suffered reduced activity, capacity, or demand, or has been temporarily unable to operate since 1 November 2020.
• If you have decided to take on a part-time job or college course alongside your reduced self-employment you will still be eligible for the third grant so long as least some of the reduced activity, capacity or demand is due to COVID-19 restrictions.

We would also like to remind you that SEISS grants are all taxable in the 2020/21 tax year and should not be reported in the 2019/20 self-assessment tax returns that are due to be filed by 31 January 2021.

Details on the fourth grant covering the period February to April 2021 are yet to be announced. We will update as soon as we have the information.