The final SEISS grant: An update

As the ‘mid-point’ of the applications window for the fifth Self-Employment Income Support Scheme (SEISS) approached, HMRC clarified some of its guidance.

Claims for the final grant, worth up to £7,500 must be made by September 30, 2021. New to the process is a “turnover test”.

The amount of support available depends on how much the applicant’s turnover has been affected by the pandemic.

Those whose turnover has reduced by at least 30 per cent can apply for a grant of 80 per cent of three months’ average trading profits, capped at the £7,500 mark.

Those whose turnover has been reduced by less than 30 per cent can apply for a grant of 30 per cent of three months’ average trading profits, capped at £2,850. The grant is taxable.

You should claim this fifth grant if you think that your business profit will be impacted by coronavirus between May 1, 2021 and September 30, 2021.

HMRC should by now have contacted you if you’re eligible for the grant based on your tax returns.

In the meantime, it has updated its guidance to remind subcontractors in the construction industry scheme (CIS) that, when calculating their turnover for the pandemic year and the reference pre-pandemic period, they should include the full amount before any deductions made by contractors.

The taxman has also made a minor change to the wording of its guidance on the turnover test as it applies to members of partnerships.

The guidance now reads: “How you work out your turnover depends on when you were in the partnership and if you have other businesses.

“If you were a member of the same partnership in your reference year and in April 2020 to April 2021 and had no other businesses in either of those years, you’ll need to work out and use the partnership’s total turnover figure for the reference year.

“If you were a member of a partnership in the tax year 2019 to 2020 and had any other businesses in that tax year or in the period April 2020 to April 2021, 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 the partnership in your reference year. You should add this to your turnover from any other businesses.”

If incorrect turnover figures were reported when making a claim, the action required depends on whether the grant amount was too high or too low.

If the grant amount was too high, the process described in HMRC’s guidance on reporting and paying back a SEIS grant should be followed.

If the grant amount was too low, an additional claim can be made by phoning the SEISS helpline; the deadline for any additional claim is September 30.

The government has already paid out £25.2billion in financial support to 2.9 million self-employed individuals whose business has been affected by coronavirus through this scheme.

Who can claim

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 and 2020 to 2021

You cannot claim the grant if you trade through a limited company or a trust.

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.

When you make your claim, you must tell HMRC that you intend to keep trading in 2021 to 2022 and 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.

The fifth grant is different from previous grants. In most cases, when making your claim you will need to tell HMRC about your business turnover so it can work out your grant amount.

Turnover includes the takings, fees, sales or money earned or received by your business.

To make your claim, you’ll need to have two different turnover figures. You’ll need to work out your turnover for:

• April 2020 to April 2021
• either 2019 to 2020 or 2018 to 2019

HMRC will compare these figures to work out how much you’ll get.

You will not be asked for any turnover figures if you started trading in 2019 to 2020 and did not trade in the following tax years:

• 2018 to 2019
• 2017 to 2018
• 2016 to 2017