Heads up for the self-employed – HMRC have urged eligible self-employed traders to get their paperwork in order to apply for the fifth and final grant under the Self-Employment Income Support Scheme (SEISS) before September.
The payment, which covers the period 1 May 2021 and 30 September 2021, can be applied for online on HMRC’s website.
But beware, unlike previous SEISS grants, these grants will be determined by how much a trader’s self-employment turnover has been reduced in the 2020/21 tax year.
What does that mean?
Despite the fact that the grant covers a period of five months, the level of grant will only be worth 80% of three months’ average trading profits, capped at £7,500 for those with a turnover reduction of 30% or more.
For those with a reduction in turnover of less than 30%, the grant will be worth substantially less - 30% of three months average trading profits, capped at £2,850.
HMRC will require two years’ of turnover figures to calculate the grant amount, including your turnover for the period April 2020 to April 2021 and your turnover from either 2019 to 2020 or your turnover from 2018 to 2019 to use as a reference.
Turnover includes the business takings, fees, sales or money earned or received but will exclude previous SEISS grants, Eat Out to Help Out payments and local authority/devolved administration grants.
It sounds complicated but actually the HMRC have provided guidance on their website on how to calculate the turnover figure and the periods which it should cover.
And although we can’t apply for the grant on your behalf, we can help guide you through the figures.
Am I eligible?
To be eligible you must meet all criteria in stages 1, 2 and 3.
Stage 1: Your trading status and when you must have traded
You must be a self-employed individual or a member of a partnership.
You must also have traded in both tax years:
2019 to 2020
2020 to 2021
You cannot claim the grant if you trade through a limited company or a trust.
Stage 2: Tax returns and trading profits
You must have:
submitted your 2019 to 2020 tax return on or before 2 March 2021
trading profits of no more than £50,000
trading profits at least equal to your non-trading income
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 to 2020 return, HMRC will look back at previous years.
Stage 3: Deciding if you can claim
When you make your claim you must tell the HMRC that you:
intend to keep trading in 2021 to 2022
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
We can help
Like I explained, we can’t do the SEISS application for you but we can help you where your accounts are concerned.
Remember, HMRC are likely to be checking grants, so it is strongly recommended for applicants to keep detailed and robust records.
What’s more, as with the previous SEISS support, the grants are taxable and the fifth grant will need to be included on your 2021/22 tax return.
We can sort all this out for you as we would usually.