Get Ready For SEIS 5 - Can You Claim The Grant

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A fifth Self-Employed Income Scheme grant covering May 2021 to September 2021 will be open to claims from late July 2021. The grant is taxable and will be paid out in a single instalment.

To be eligible for the grant you must be a self-employed individual or a member of a partnership and you must have traded in the tax years 2019 to 2020 and submitted your tax return on or before 2 March 2021 and have traded in 2020 to 2021 and must be currently trading but are impacted by reduced demand due to coronavirus. Alternatively, you have been trading but are temporarily unable to do so due to coronavirus.

If 2019 to 2020 was not a normal year for your business, you can use the turnover reported in your 2018 to 2019 tax return. Your records should show how 2019 to 2020 was not a normal year for you. For example, if you were unable to work because you were sick.

You must intend to continue to trade and reasonably believe there will be a significant reduction in your trading profits due to reduced business activity, capacity, demand or inability to trade due to coronavirus from May 2021 to September 2021.

You must keep evidence that shows how your business has been impacted by coronavirus resulting in less business activity than otherwise expected. HMRC expects you to make an honest assessment about whether you reasonably believe your business will have a significant reduction in profits.

If you have an accounting period longer than 12 months, you will need to work out what your 12-month turnover was. If you have an accounting period shorter than 12 months because you changed your accounting date you will need to work out what your 12-month turnover was.

 

Tax returns

To work out your eligibility for the fifth grant, HMRC will first look at your 2019 to 2020 Self Assessment tax return. Your trading profits must be no more than £50,000 and at least equal to your non-trading income.

If you’re not eligible based on your 2019 to 2020 tax return, HMRC will then look at the tax years 2016 to 2017, 2017 to 2018, 2018 to 2019 and 2019 to 2020.

 

How the fifth grant is different

The amount of the fifth grant will be determined by how much your turnover has been reduced in the year April 2020 to April 2021. If you have lost 30% or more, you'll get 80% of 3 months’ average trading profits up to a maximum on £7,500. If you've lost less than 30%, you'll get 30% of 3 months’ average trading profits up to a maximum of £2,850.

The online claims service for the fifth grant will be available from late July 2021. If you are eligible based on your tax returns, HMRC will contact you from mid-July 2021 to give you a date that you can make your claim from.

 

Get ready

Work out your turnover for a 12-month period starting from 1 April 2020 to 6 April 2020. Find your turnover from either 2019 to 2020 or 2018 to 2019 to use as a reference year. You will need to have both figures ready when you make your claim.

You should check that your figure is accurate. HMRC will be able to check your figures after you submit your tax return for this period.

 

What not to include

Anything reported as any other income on your tax return.

You should also not include any coronavirus support payments, such as previous SEISS grants, Eat Out to Help Out payments (if you own a restaurant), local authority or devolved administration grants.

If you started or ceased a business in 2020 to 2021, you should include the turnover received between April 2020 to April 2021, even if this covers less than 12 months.

If you have more than one business as a sole trader, your figure must include the total turnover from all of your businesses. This includes any new business you started between April 2020 to April 2021.

 

Partnerships

If you’re a member of a partnership and have no other businesses, you will need to work out and use the partnership’s total turnover figure. For each partnership (if you have more than one), you’ll need to work out and include your percentage share of the partnership’s turnover. This will be the same as the percentage of profit you took from each partnership in your reference year, even if your profit share percentage changed in 2020 to 2021. You should add this to the turnover from your other businesses.

 

How your turnover affects your grant amount

When you make your claim, the online service will ask you for your turnover figures and compare them for you. The claims service will then tell you if you can claim the higher or lower grant amount.

 

Get help working out your turnover

To register for free webinars to learn more about how to work out your business turnover - Click Here

 

 

Picture: Will you be giving a big thumbs up when you receive the fifth Self-Employed Income Scheme grant?

Article written by Cathryn Ellis
09th July 2021

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