Last week the government provided guidance on the 5th SEISS grant. If you are eligible for the grant, based on the tax return you have submitted for the 2019/2020 tax year, HMRC will contact you in mid-July with a date to claim the grant. You will be able to start claiming for the grant from late July 2021 up until 30th September 2021. You can only claim this grant if you think your business profits will be impacted by Covid 19 between May 1st, 2021 and September 30th, 2021.
To be eligible to claim for the grant, it is important that you mean all of the criteria in stages 1, 2 and 3.
– you must be self-employed or a member of a partnership
– you must have traded in both the 2019/2020 and 2020/2021 tax year
– you cannot claim the grant if you traded through a limited company or trust
– you must have submitted your 2019/2020 tax return on or before March 2nd, 2021
– your trading profits must not be more than £50,000
– your trading profits must be at least equal to your non-trading income (non-trading income is any money you make outside of your business – if you have a part-time job or a pension)
– if you are not eligible based on your 2019/2020 tax return, HMRC will look at the previous tax years
– you must intend to continue trading in the 2021/2022 tax year
– have a reasonable belief that your trading profits will be significantly reduced due to Covid 19 between May 1st, 2021 and September 30th, 2021
There are different circumstances that can affect your claim:
– you filed your 2019/2020 tax return late, it’s been amended or under enquiry
– you are a member of a partnership
– you had a new child
– you have loans covered by the loan charge provisions
– you claim averaging relief
– you are a military reservist
– you are a non-resident or chose the remittance basis
– claiming Maternity allowance will not affect your eligibility
You can read more about how different circumstances can affect your claim here.
How to claim the 5th SEISS Grant
This grant is different to the other SEISS grants that have been available. You will need to tell HMRC about your business turnover so that they can work out how much you will receive. HMRC define turnover as takings, fees, sales or money earned or received by your business.
In order to make your claim, you will need to have two different turnover figures:
– you will need to work out your turnover for a 12-month period starting between April 1st, 2020 and April 6th, 2020
– you will need your turnover for either the 2019/2020 tax year or the 2018/2019 tax year
HMRC will compare the figures to work out how much you will get.
If you only started trading in the 2019/2020 tax year, HMRC will not ask you for any turnover figures. You will receive 80% of 3 months’ average trading profits up to a maximum of £7,500.
How much will you get?
There are 2 rates for this grant and HMRC will work out the amount you will receive based on how much your turnover is down by after they’ve compared your two turnover figures.
If your turnover is down by 30% or more, you will get 80% of 3 months’ average trading profits up to a maximum of £7,500.
If your turnover is down by less than 30%, you will get 30% of 3 months’ average trading profits up to a maximum of £7,500.
How to work out your turnover in order to claim the 5th SEISS grant?
Step 1: Work out your turnover for a 12-month period starting between April 1st, 2020 to April 6th, 2020
To work out your turnover for Step 1, you must ensure you include turnover from all of your businesses. You can find this information on your 2020/2021 tax return if you’ve completed it, check your accounting software, go through your bookkeeping records that cover your self-employment invoices and payments received, check the bank account you use for the business to account for money coming in from customers, ask your accountant or tax advisor.
Do not include anything reported as other income on your tax return or any Covid-19 support payments, such as previous SEISS grants, Eat Out to Help Out payments, local authority or devolved administration grants.
Step 2: Find your turnover from either the 2019/2020 tax year or the 2018/2019 tax year.
If the 2019/2020 tax year was not a normal year for your business, you must be able to show in your records why that it is. For example, if you were on carers leave, long term sick leave or had a new child, carried out reservist duties, lost a large contract, are eiligible for the 5th SEISS grant but didn’t submit a 2019/2020 tax return.
Additional things to think about:
– if you stopped trading 2020/2021, you should include any turnover received between April 2020 and April 2021, even if it’s less than 12 months
– if you have more than one self-employed business, you must include the total turnover from all of your businesses, including any new businesses you started between April 2020 and April 2021
– if you are a member of a partnership, you will need to work out and include your percentage share of the partnerships’s turnover
There is more information here: https://www.gov.uk/guidance/work-out-your-turnover-so-you-can-claim-the-fifth-seiss-grant
It is important to note that the grant money you receive is subject to income tax and self-employed National Insurance Contributions. You will be required to report it on your 2021/2022 tax return. It will also count towards your annual allowance for pension contributions.
You can read more about the grant here: https://www.gov.uk/guidance/claim-a-grant-through-the-coronavirus-covid-19-self-employment-income-support-scheme
I am continually monitoring the updates that the government and other business-related departments release and will continue to share that information for as long as I feel that it is beneficial to all businesses in the UK.
The information and policies are continually being updated by the government, so I urge you to keep on top of the information by visiting the relevant website for your area.
Northern Ireland: https://www.nibusinessinfo.co.uk/
I will be trying to keep myself as informed as possible and will share relevant information on my fb business page: https://www.facebook.com/ihelmenterprises/