Throughout the pandemic there have been a number of grants available from the government for those working self-employed. These grants have been referred to as “Self-Employment Income Support Schemes” (SEISS). To date, there have been 5 of these grants made available, with the most recent in July 2021.
The SEISS Fifth Grant, opened in July and covers the five month period from May to September 2021. The grant is worth either 80% or 30% of three months’ average trading profits, depending on how much your turnover has reduced. The online service for this grant opened on Wednesday 28th July and in order to obtain this, you must make your claim on or before Thursday 30th September 2021.
Within this blog we will cover the core points you need to be aware of, whether you are eligible, how you can make a claim and what accepting this grant will mean for you and your tax.
What is the SEISS Fifth Grant?
We have already briefly covered what the Fifth SEISS grant means but it is worth noting that it is quite different to other grants that have previously been made available. What you are able to claim will now be based on turnover reduction in the year April 2020 to April 2021 and as previously mentioned, there are levels of cover available: 80% and 30%.
Similarly to other grants, your accountant is not able to apply for this on your behalf, however they can of course advise you and assist you in making the right decision.
The grant covers the period of 1st May to 30th September (five calendar months).
Who can claim?
The eligibility criteria has been divided into 3 core stages, all of which need to be met in order to qualify for this claim:
Stage 1: Your trading status and when you must have traded
You must be a self-employed individual or a member of a partnership
You must also have traded in both tax years: 2019-2020 and 2020 to 2021
You cannot claim the grant if you trade through a limited company or a trust.
Stage 2: Tax returns and trading profits
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
Stage 3: Deciding if you can claim
When you make your claim you must tell HMRC that you:
- Intend to keep trading in 2021 to 2022
- Reasonable belief 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
NOTE: If you are not eligible based on your 2019-20 tax return, HMRC will look at the tax years 2016-2017, 2017-2018, 2018-2019 and 2019-2020.
Further guidance on how to work out your turnover is available here
How much you’ll receive
If you are eligible to make this claim based on the above criteria, you will need the following information:
- A 12-month period starting between 1st April 2020 and 6th April 2020
- Either the 2019/2020 or 2018/2019 years
HMRC will use these two figures to calculate how much grant you are entitled to. This will be calculated using the following:
- If your turnover is reduced by 30% or more, you will be entitled to 80% of 3 months’ average trading profits, with a maximum grant amount of £7,500
- If your turnover is reduced less than 30%, you will be entitled to 30% of 3 months’ average trading profits, with a maximum grant amount of £2,850
How to make a claim
If you would like to make a claim, and you are eligible, you can visit the government portal here
During the application process, you will also require the following:
- Your turnover figures as mentioned above
- Government gateway user ID & password
- National Insurance number
- Self assessment unique taxpayer reference (UTR)
- Bank details
You may have already been contacted by HMRC with your “earliest date to apply”, which for some people was the 29th of July.
Once you have completed your application, HMRC will go through these details and confirm your eligibility. If accepted, you will receive the grant funding into your bank account within six working days of receiving your claim. The SEISS grant allows self-employed individuals to continue working, unlike furloughed employees.
NOTE: It is important to note that the grant is subject to Income Tax and self-employed National Insurance Contributions. You must therefore report the grant on your 2021/2022 Self Assessment tax return.
If you receive a grant, it is important that you keep hold of the following information to support with the above reporting:
- Amount claimed
- Claim reference number
Ready to make a SEISS Fifth Grant claim?
If after reading this, you are thinking of applying for the SEISS fifth grant, you can do this here