HM Revenue & Customs (HMRC) has published detailed guidance for the fifth round of the Self-Employment Income Support Scheme (SEISS), that is due to open for claims in the forthcoming weeks. The rules for this grant are very similar to the fourth round, however what has changed significantly is the level of the grant is dependent on whether turnover has fallen by more or less than 30%.
It will be possible to submit claims for the grant online from late July 2021. Based on the returns submitted to date, HMRC will be contacting those individuals that are potentially eligible for the grant from mid-July 2021, and will be giving them a date they can submit a claim.
The closing date for the fifth round is 30th September 2021, after which no further claims will be accepted.
To be eligible for this grant, a taxpayer’s trading profits must have been no more than £50,000 and have made up at least half of their total income for either the 2019/20 tax year, or the average of the tax years 2016/17,2017/18. 2018/19 and 2019/20.
Self employed individuals and members of a partnership are potentially eligible to claim provided they have
- Submitted their 2019/20 tax return to HMRC by 2 March 2021.
- Have traded in the tax years 2019/20 and 2020/21.
- Intend to continue to trade in 2021 to 2022; and
- Reasonably believe the has been a significant reduction in their trading profits due to reduced business activity, capacity, demand or inability to trade due to Coronavirus from May 2021 to September 2021.
They will also need to keep records of evidence that supports their declaration.
Unlike previous rounds of the scheme, the fifth round of the SEISS will offer two levels of grant, depending on the impact Coronavirus has had on a self-employed individual’s turnover in the year to April 2021.
For those whose turnover fell by 30 per cent or more, will once again be able to claim a grant worth 80 per cent of three months’ average trading profits, capped at £7,500 in total.
If the turnover fell by less than 30 per cent an individual will still be able to claim a grant with 30 per cent of three months’ average trading profits, but this will be capped at £2,850 in total.
Self-employed individuals who have already completed their 2020/21 Self-Assessment Tax Returns will need to use the figure included on their return, although they should not include anything reported as ‘other income’. Previous SEISS grants, ‘Eat Out to Help Out’ receipts and local authority or devolved administration grant money, should not be counted towards turnover figures for the purposes of this scheme.
However, as the deadline for submission of the 2020/21 Self-Assessment Tax Return is not until 31 January 2022, many self-employed individuals will not yet have completed their tax return. In these circumstances, HMRC advises that individuals should:
- Check their accounting software
- Go through bookkeeping or spreadsheet records that cover self-employment invoices and payments received
- Check the bank account they use for their business to account for money coming in from customers
This turnover figure should then be compared with the figure reported on a 2019/20 Self-Assessment Tax Return to calculate the percentage fall in turnover compared to the 2020/21 tax year. Self-employed individuals can access their previous returns via their HMRC online personal tax account .
Where the 2019/20 was not a normal trading year for a self-employed individual, they may use the turnover reported in their 2018/19 Self-Assessment Tax Return. However, they must be able to demonstrate how the 2019/20 figures did not reflect normal trade.
HMRC gives the following examples of circumstances that might have meant 2019/20 was not a normal year:
- Being on carers leave, long-term sick leave or having a new child
- Carried out reservist duties
- Lost a large contract
- Did not submit a 2019/20 return for reasons that mean you are still eligible for a grant, such as having a new child.
Self-employed individuals who began trading in 2019/20 and did not trade in any of 2018/19, 2017/18, or 2016/17 tax years, may be able to claim 80 per cent of three months average trading profits, capped at £7,500 in total, provided they meet the other eligibility criteria.
Taxable treatment of the grant
SEISS grants are subject to Income Tax and National Insurance Contributions, and must be included on a 2021/22 Self-Assessment Tax Return. Grants are also counted toward annual allowances for pension contributions.
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