Fifth and Final SEISS Grant
Fifty updates! I never believed when I wrote the first one last year, that I would still be writing them now. Do we get some kind of medal for a half-century? I am sure you lot should do for having to read 50 of the things...
This one is purely for the self-employed, as it is in respect of the final SEISS grant. If you are a director of a limited company, you are not self-employed. I know I keep saying that, it's because I keep being asked. As my old German teacher used to say "repetition is the key" - at least I think that is what he was saying, my german was incredibly poor. Anyway, I digress, if you are not self-employed, you get an early pass (you should be thankful, this is a complicated one) but there will be more for you soon about loss relief, super deductions and the like - just in case you need something to look forward to...
HMRC have published the details of the fifth, and final, Self-Employed Income Support Scheme (SEISS) grant which will be available to claim later this month.
As with previous claims we, as agents, are not allowed to submit these claims for you (no-one else should either, so beware of scams and dodgy tax agents)
The amount of the fifth grant will be based on how much your turnover has dropped in the "reference year".
If your turnover has dropped by 30% or more, then you will be eligible for the full amount (80% of three months’ average trading profits capped at £7,500).
If your turnover has dropped by less than 30%, you will receive a grant based on 30% of three months’ average trading profits (capped at £2,850 in total)
In shocking news, the guidance is confusing and convoluted, so we are hoping there will be some clarification from HMRC or the accounting bodies.
The turnover figure you need to provide is for a 12-month period starting on any date between 1 and 6 April 2020. If your accounting year is 31st March or 5th April (in line with the tax year) you'll be able to use the figure on your tax return.
You then need to calculate the turnover for the “reference period”. Again, if you have a tax year end (31 March or 5 April) this will be the turnover figure from their 2019/20 tax return and there is an option to use 2018/19 if 2019/20 was not a normal year for the business.
You then compare these two figures. Don't you love maths... isn't this just so much fun and not at all confusing. Just wait, it gets worse.
To calculate turnover you exclude coronavirus support payments (for example previous SEISS grants, eat out to help out payments and local authority grants but if you have more than one business, you need to include all businesses (sole trader and partnership, ignore income from limited companies).
If you are in a partnership and think your income has dropped, then you should contact us for more information, as these rules make no sense whatsoever.
If your accounting period does not run from the 1 or 6 April, then you will need to do some workings. I suggest you do this in a spreadsheet that you save. You will need to prove how you got to that figure. Use your accounting software to find your turnover figure for the 12 months starting on the 1 April.
If your business ceased or started in either of the reference periods, you need to follow special rules
If you changed your year end, you need to follow special rules
If you chose not to use 2019/20 as your reference year, you need to document why. Reasons given by HMRC include:
were on carers leave, long term sick leave or had a new child
carried out reservist duties
lost a large contract
are eligible for the fifth grant but did not submit a 2019 to 2020 return
You can find more information here
Basically, it's quite headache inducing and a bit of a pain, but if your turnover has dropped considerably and you need the assistance, then it will be worth it.
Please contact us if you need help with making the claim. If you need us to work out the figures for you, we will provide a quote in advance of the work.
This article was first published on the 12 July 2021 and the information was relevant at that time. Please note that grants may have closed or rules may have changed and you should get advice from a professional.
Photo by Jon Tyson on Unsplash