Self-employed people affected by the Covid-19 pandemic are receiving notice to apply for the fifth SEISS grant. HMRC is currently emailing those who are eligible, although you can visit gov.uk if you haven’t received an email.
Claims must be made by 30 September 2021.
The rules for the fifth SEISS grant are different than the fourth and previous grants in the fact that you need to compare two different turnover figures: one for the 2020/2021 tax year and one from the previous tax year.
This will determine whether your turnover has fallen by 30% or less and, hence, what level of grant you will be awarded, if you are eligible.
Those whose turnover has fallen by more than 30% will receive 80% of three months’ average trading profits. It will be capped at £7,500. If turnover has dropped by less than 30%, the grant will be 30% of three months’ average trading profits, capped at £2,850.
Are you eligible for the fifth SEISS grant?
People who are self-employed or members of a partnership maybe eligible for the fifth grant if they:
- Submitted their 2019/20 self-assessment tax return by 2 March 2021;
- Traded in tax years 2019/20 and 2020/21;
- Are currently trading but impacted by reduced demand due to coronavirus or temporarily unable to trade due to Covid-19;
- Intend to continue trading;
- Reasonably believe their trading profits will be significantly reduced due to the impact of coronavirus in the period from 1 May 2021 to 30 September 2021.
Trading profits must be no more than £50,000 and at least half of their total income for either:
- The 2019/20 tax year;
- The average of the tax years 2016/17, 2017/18; 2018/19 and 2019/20.
- These are the same criteria as the fourth grant.
Claimants will need to provide two turnover figures during the claims process.
Remember that turnover is your sales figure not your profit figure.
It is advisable to have the two figures before making the claim. These figures are for:
The pandemic period
The turnover figure necessary will be for a 12-month period starting on any date between 1 and 6 April 2020 and ending between 31 March and 5 April 2021. If you prepare accounts on a tax-year basis can use the same figure as your 2020/21 self-assessment tax return. If you use a different accounting date, you will need to make a separate calculation.
The majority of people haven’t even started their self-assessment for the 2020/2021 tax year yet! However, all you need at this stage is to calculate how much money you made during that year, i.e. your sales/turnover.
Do not use any Covid-19 support payments in your turnover figure, such as SEISS grants, local council administration grants or Eat Out to Help Out payments.
If you have any questions about this your accountant will be able to help.
It is also a good time to start the process of preparing your self-assessment.
The reference period
Most people will use the turnover figure from the 2019/20 tax return. But there is an option to use 2018/19 if 2019/20 wasn’t a normal use for the business.
Those who started trading in 2019/20 and didn’t trade in any of the tax years from 2016 to 2019 do not need to provide turnover figures. They will receive a grant based on 80% of trading profits.
To work out your turnover for the fifth SEISS grant, visit the government’s website.
If you are a client of Guidon Group please do get in contact if you need any help with your calculations.