Self-employed Income Support SchemeTHE SELF EMPLOYED 5TH SEISS GRANT WHAT YOU NEED TO KNOW TO CLAIM

Anyone who is self-employed needs to be aware that the window for claiming the 5th Self Employed Income Support Scheme (SEISS) grant opens in late July.

So any time now….

The window for making a claim will remain open for 2 months before shutting on 30th Sept 2021

 

To help you pick your way through this SEISS minefield so that you avoid making a mistake here’s a guide on what you need to know….

THE 5th SEISS GRANT IN SUMMARY

The main points to be aware of are….

  • Covers the 6 months 1st May 2021 to 30th Sept 2021.
  • The claim % depends on by how much sales fell in the 12 month ‘pandemic period’ compared to the 12 month ‘pre pandemic reference period’.
  • IF the sales in the Pandemic Period fell by more than 30% then the claim is based on 80% of average profits.
  • IF the sales fell by less than 30% then the claim is based on 30% of average profits.
  • Deadline for claiming 5th SEISS grant is 30th Sept 2021

THE QUALIFYING CRITERIA

BEFORE deciding whether to make a claim or not you MUST be SURE that you meet all the qualifying criteria.

Thankfully the qualifying criteria are largely unchanged from the 4th SEISS grant.

For the self-employed to legitimately make a claim then ALL SIX of the following eligibility criteria must be met:-

  1. Have submitted the 2019/20 Self-Assessment Tax Return before 2/3/2021.

  2. Have traded in the tax years 2019/20 AND 2020/21.

  3. Are currently trading BUT have been impacted by reduced demand OR would have been trading BUT are temporarily unable to do so due to Covid19.

  4. Intend to continue to trade.

  5. The self-employed trading profits must also be less than £50,000 AND more than half of the taxpayer’s income must come from self-employment.

  6. Reasonably believe there will be a significant reduction in trading profit due to Covid19 in the 6 months from 1st May to 30th Sept 2021.

REMEMBER : This 6th criteria has 2 big pitfalls – if you need a reminder to make sure you avoid them then revisit our 4th SEISS Grant article published earlier this year.

THE TURNOVER TEST

Claimants will need to provide HMRC with TWO turnover figures as part of the claim process….so it’s advisable that you have these before you start.

These turnover figures should be a total for ALL the taxpayer’s businesses AND must exclude Covid19 support payments (eg SEISS grants, eat out to help out payments, etc).

These two turnover figures are:-

 

1 Pandemic Period turnover

 The turnover figure required is for a 12-month period ending on either 31st March or 6th April 2021.

 

2 Pre-Pandemic Reference Period turnover

 In most cases this will be the turnover figure from the 2019/20 tax return although there is an option to use 2018/19 IF 2019/20 was not a normal year for the business.

Those who started trading in 2019/20 AND did not trade in any of the 3 tax years 2016/17 to 2018/19 will not be required to provide turnover figures and will receive a grant based on 80% of trading profits.

HOW MUCH TO CLAIM

 These two turnover figures are now compared.

 Is the Pandemic Period turnover 30% or more LOWER than in the Pre-Pandemic Reference Period?

 

IF YES           Then you can claim 80% of average trading profits

IF NO             Then you can claim 30% of average trading profits

A couple of examples to help….

EXAMPLE 1

Turnover 1/4/20 to 31/3/21               £25,000           (Pandemic Period)

Turnover for 2019/20                         £50,000           (Pre-Pandemic Reference Period)

Claim 80% : The Pandemic Period turnover is 50% lower than in the Pre Pandemic Reference Period lower (& therefore does meet the 30% reduction requirement)

 

EXAMPLE 2

Turnover 1/4/20 to 31/3/21               £40,000           (Pandemic Period)

Turnover for 2019/20                         £50,000           (Pre-Pandemic Reference Period)

Claim 30% : The Pandemic Period turnover is 20% lower than in the Pre-Pandemic Reference Period lower (& therefore doesn’t meet the 30% reduction requirement)

AND FINALLY……

You MUST keep EVIDENCE that shows how your business has been impacted by Covid19 resulting in less business activity than otherwise expected.

This is SO IMPORTANT….

Without that evidence you’re unlikely to satisfy HMRC if they come calling (which they could do any time in the next 6 years).

That could result in you repaying the 5th SEISS grant you received…with the amount being doubled by a very painful 100% penalty.

 

As you look to recover after Covid19 a big HMRC tax demand is the last thing you need…..

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info@kmaaccountancy.co.uk

KMA Accountancy
Progress House
17 Cecil Road
Hale
Altrincham
Cheshire WA15 9NZ

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