The 5th Self-Employed Income Support Scheme (SEISS) Grant
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HMRC have advised that the online service to claim the fifth grant of the Self Employment Income Support Scheme (SEISS) will be available from late July 2021.
If you are eligible HMRC will contact you in mid-July to give you a date that you can make your claim from. It will be given to you either by email, text message, letter or within the online service.
You must make your claim on or before 30 September 2021.
Who will be eligible to claim the new SEISS grant?
To be eligible you must meet all of the following criteria:
- You must be a self-employed individual or a member of a partnership and you must have traded in both the 2019/20 and 2020/21 tax years
- You must have submitted your 2019/20 tax return on or before 2 March 2021.
- Trading profits in 2019/20 of no more than £50,000.
- Trading profits in 2019/20 must be more than the total of any non-trading income that you received during the year (Non-trading income is any money that you make outside of your business. For example, if you also have a part-time job or pension). If you’re not eligible based on the trading profits in your 2019/20 return HMRC will look back at previous years.
If you started trading in 2019 to 2020 HMRC will only use your trading profit and non-trading income from your 2019/20 tax return to work out if you’re eligible.
If you have traded for longer HMRC will work out your eligibility based on your tax return for the tax year 2019/20 and if you are not eligible based on 2019/20, HMRC will look at the average for the tax years 2016/17, 2017/18, 2018/19 and 2019/20 to work out if you’re eligible.
- You must intend to keep trading in 2021 to 2022.
- You must reasonably believe there will be a significant reduction in your trading profits due to the impact of COVID-19 between 1 May 2021 and 30 September 2021.
You must keep evidence that shows how your business has been impacted by COVID-19 resulting in less business activity than you would otherwise have expected.
HMRC will expect you to make an honest assessment about whether you reasonably believe your business will have a significant reduction in profits.
The reduction could be expected to occur because for example, you have had one or more contracts that have been cancelled and not replaced or you have carried out less work due to supply chain disruptions.
You shouldn’t claim if the only impact on your business is increased costs. For example, if you’ve had to purchase face masks and cleaning supplies. HMRC would not consider this to be reduced activity, capacity or demand.
You would be eligible to claim if you have been previously trading but are temporarily unable to do so. This could be because your business has had to close due to government restrictions, you’ve been instructed to shield or self-isolate in-line with NHS guidelines and are unable to work from home, you’ve tested positive for COVID-19 and are unable to work or you cannot work due to caring responsibilities, for example as a result of school or childcare facility closures.
This does not apply if you have not been able to trade because you have had to quarantine or self-isolate after returning from abroad to the UK.
Get ready to Claim
In most cases, when making your claim HMRC will need you to tell them about your business turnover so that they can calculate your grant amount.
To make your claim you will need to work out your turnover for the tax years 2018/19, 2019/20 and 2020/21.
HMRC will not ask you for any turnover figures if you started trading in 2019/20 but did not trade in the 2016/17, 2017/18 and 2018/19 tax years
How to work out your turnover so you can claim the 5th SEISS grant
For 2020/21 you need to work out your turnover for a 12-month period, starting on any date from 1 to 6 April 2020, for example 1 April 2020 to 31 March 2021, 2 April 2020 to 1 April 2021 and 6 April 2020 to 5 April 2021
If you started or ceased a business in 2020/21 you should include the turnover received between April 2020 and April 2021, even if this covers less than 12 months.
If you have more than one business as a sole trader your figure must include the total turnover from all of your businesses. This includes any new business you started between April 2020 and April 2021.
Do not include in your turnover figure anything reported as any other income on your tax return. You should also not include any coronavirus (COVID-19) support payments, for example, previous SEISS grants, Eat Out to Help Out payments or local authority or devolved administration grants
You should ensure that your figure is accurate. HMRC will be able to check your figures after you submit your tax return for this period.
For 2019/20 you must use the turnover reported in your 2019 to 2020 tax return as a reference year. The figure needs to be based on a 12-month period and include the total turnover for all your businesses.
If 2019/20 was not a normal year for your business, you can use the turnover reported in your 2018/19 tax return. Examples of 2019/20 not being a normal year for you could be if you were on carers leave, long term sick leave, had a new child, carried out reservist duties or lost a large contract.
How your turnover affects your SEISS grant amount
When you make your claim HMRC will ask you for your turnover figures and will calculate the difference between 2020/21 with either 2019/20 or 2018/19. HMRC will then tell you if you can claim the higher or lower grant amount.
If your turnover for 2020/21 compared to either 2019/20 or 2018/29 is down by 30% or more your grant will be worked out at 80% of 3 months’ average trading profits capped at £7,500.
If your turnover for 2020/21 compared to either 2019/20 or 2018/29 is down by less than 30% your grant will be worked out at 30% of 3 months’ average trading profits capped at £2,850.
If you do not need turnover figures to claim
As mentioned above HMRC will not ask you for any turnover figures if you started trading in 2019/20 but did not trade in the 2016/17, 2017/18 and 2018/19 tax years. Instead, your grant will be worked out at 80% of 3 months’ average trading profits. The maximum grant amount is £7,500.
How the 5th SEISS grant is treated
The grant is subject to Income Tax and self-employed National Insurance Contributions. It must be reported on your 2021 to 2022 Self-Assessment tax return.
The grant also counts towards your annual allowance for pension contributions. SEISS grants are not counted as ‘access to public funds’ and you can claim the grant on all categories of work visa.
We will continue to support our clients throughout these uncertain times and provide further information when we can. Additionally, if you have any queries on any of the information provided above, or if you require any further support, please get in touch with either Gordon Gruppetta or James Andrews by calling us 0113 257 4506.