The fifth instalment of the Self-Employment Income Support Scheme (SEISS) grant opened at the end of last month. This is expected to be the last available grant to self employed individuals and unlike the previous four grants, this one includes a turnover test, in order to calculate the amount of grant to be award to self employed individuals who are still continuing to be affected by the Covid-19 pandemic.
As well as this, individuals applying for the grant will also need to show they have reasonable belief that there is a significant reduction in trading.
Unlike the first four grants, the fifth grant is calculated using the reduction in the business turnover for a self employed individual.
Capped at £7,500, the grant is 80% of three months average trading profits, for self employed individuals whose turnover has reduced by 30% or more.
Those whose turnover has reduced by 30% or less will be entitled to 30% of three months average trading profits, however this will be capped at £2,850.
Claims have recently opened, however HM Revenue and Customs has been contacting taxpayers since early July to advise them of the process. Claims can be made up to 30 September 2021, however as with the previous claims, the application must be made by the taxpayment and not the accountant or agent.
Self employed individuals, and members of partnerships are potentially eligible for the grant where the individual:
- submitted their 2019/20 self assessment tax return by 2 March 2021
- traded in the tax years 2019/20 and 2020/21
- is currently trading but is impacted by reduced demand due to COVID-19, or has been trading but is temporarily unable to do so due to coronavirus
- intends to continue to trade; and
- reasonably believes there will be a significant reduction in their trading profits due to the impact of COVID-19 in the period from 1 May 2021 and 30 September 2021. HMRC has not provided a definition of ‘significant reduction’.
The business profits must not exceed £50,000 and should make up 50% or more of the taxpayers total income. If there is no eligibility based on the 2019-2020 profits, then HMRC will consider the previous years.
Before starting a claim, individuals must:
- work out their turnover for a 12 month period starting from between 01/04/2020 and 06/04/2020
- confirm their turnover for either 2019-2020 or 2018-2019 to use as a reference year
It is advised that individuals have both figures when ready to make a claim
The 2020-2021 turnover can be calculated in many ways
- if the 2020-2021 tax return has been completed, use the figures from there
- use the figures from their software
- reviewing the book-keeping/spreadsheet records to confirm invoices raised and payments received
- check the bank account for payments received which are business related
- asking for support from their accountant or advisor. However the accountant/advisor is not able to submit the application on behalf of the taxpayer
HM Revenue and Customs has confirmed the turnover figure should not include any figures which are reported as other income on the tax return. Also, any payments received as Covid-19 support payments should be excluded.
- previous SEISS grants
- Eat Out to Help Out
- Local authority or devolved administration grants
HMRC’s guidance is available at: https://www.gov.uk/guidance/work-out-your-turnover-so-you-can-claim-the-fifth-seiss-grant.
Previous Year’s Turnover
Generally, taxpayers will need to use the turnover figure reported on the 2019-2020 tax return as a reference year. This needs to be for a 12 month period and include the total turnover for the business.
Where 2019-2020 was not a normal year for the taxpayer, they can use the turnover reported in 2018-2019. Examples of exceptional circumstances are:
- Taxpayer was on carers leave, long term sick leave, or maternity leave
- Taxpayer carried out reservist duties
- Taxpayer lost a large contract
- Taxpayer is eligible for the fifth grant, but did not submit a 2019-2020 tax return
For further guidance on how an individual’s circumstances can affect eligibility visit: https://www.gov.uk/guidance/how-different-circumstances-affect-the-self-employment-income-support-scheme.
For further advice or assistance in claiming the fifth SEISS grant, please do not hesitate to contact us on 0121 271 0336 or firstname.lastname@example.org