A key measure that’s been used by the government to support the self-employed during the pandemic has been the Self-Employment Income Support Scheme, or SEISS for short.
Under the SEISS scheme, four previous grants have been available to those that are eligible. A fifth SEISS grant is now available. This is believed to be the last grant that will be made.
SEISS grant 5 now open for applications
The portal to apply for this grant is now open and will remain so until 30th September 2021.
Important note! This grant is for the self-employed (as HMRC see them). It does not include limited company owners.
How much is the grant?
This grant is different to the previous four SEISS grants in that there are 2 levels.
In order to work out what you will receive you need to work out your turnover. Turnover is (generally) the amount of money you charged your customers or clients, excluding any VAT. (More on this in the sections below.)
Your turnover needs to be down to be eligible for the self-employed grant 5. If your turnover is down by 30% or more, the grant is far higher.
|How much your turnover is down by||Level of the grant||Maximum grant amount|
|More than 30%||80% of 3 months’ average trading profits||£7,500|
|Less than 30%||30% of 3 months’ average trading profits||£2,850|
How HMRC calculate your grant level
HMRC look at your last four tax returns up to the year 2019/20. If you don’t have four tax returns submitted in that period, they will take what they have.
From this, they work out what an ‘average month’s profit’ is for you. You can see example of how they work this out on their website.
If you’ve claimed certain tax allowances (such as Annual Investment Allowance when you bought a van, computer etc), that will have reduced your taxable profit. Your self-employment grant will worked out on this lower amount.
What period does the grant cover?
The grant covers the trading period 1st May 2021 to 30th September 2021. Although the period is 5 months, the amount paid is worked out over 3 months.
Am I eligible for the self-employed grant?
HM Revenue & Customs has said it has contacted every self-employed taxpayer (by email or letter) who it believes could be eligible for the 5th SEISS grant.
The rules are fairly detailed. In most cases, to be eligible you will need to:
- Be a self-employed individual or a member of a partnership that traded in the 2019/20 tax year, and intends to keep trading in the 2021/22 tax year;
- Reasonably believe you have suffered/will suffer a significant reduction in trading profits due to the impact of COVID-19 for the period 1st May 2021 to 30th September 2021.
- Have submitted your 2019/20 tax return before 2nd March 2021.
- Have trading profits of no more than £50,000. These must be at least equal to your other income, such as employed income and rental profits. In other words, self-employment needs to be your main source of income. So ,if you have a small side hustle, for example, you would not be eligible.
Is the Self-Employment Income grant taxable?
Yes, all SEISS grants are subject to tax and National Insurance. The exact amount will depend on other income you may have. All grants received need to be reported on your 21/22 tax return.
How do I claim?
You should have been ‘invited’ by HMRC to apply around a certain date. If not, you can visit here.
To claim you will need you:
- Self-Assessment Unique Taxpayer Reference (‘UTR’)
- National Insurance Number
- Government Gateway User ID and password
- UK bank details (name, sort code, account number and address)
You will also need your turnover figures for:
- The 2019/20 year (you can find this in your tax return)
- The 2020/21 year (you will need to work this out from your records or from your 20/21 tax return if you’ve already done this)
Note: Do not include any previous grants in these figures.
Was the tax year 2019/2020 a ‘normal’ year for you?
If the 2019/20 year was not a ‘normal’ year for your business, you can choose to your 18/19 turnover in place of your 19/20. The example HMRC give is that you may have had a long period of sickness for example, in 2019/20.
Unfortunately, there are various scenarios where these turnover figures can be complex to calculate, so we’ve left the very detailed stuff out of this blog. You can see more detailed examples of how to work out these turnover figures here.
Can my accountant claim my self-employed grant??
NO. In fact, if they do it will hit a fraud check and you won’t receive the money. You must apply yourself via the portal. It is an easy process to do online, but make sure you keep records of all applications, the reasons for applying, and the application results for your accountant to report in your tax return.
How long does it take to get the SEISS 5 grant?
Presuming your application goes through the checks OK, you will usually receive the grant in your bank account in around six working days.
What happens if I expected my profits to be down and they weren’t?
You just need to keep evidence of why, at the time of your claim, you believed your profits would have reduced. You need to be able to demonstrate that reasonable belief at the time you applied. One example from HMRC is “records of reduced or cancelled contracts or appointments”.
HMRC guidance says your eligibility will not be affected if your business recovers, presuming you hold the above evidence.
How your accountant can help
As previously stated, your accountant cannot apply on your behalf. However, they would be able to provide figures from submitted tax returns if you haven’t got them on file. You might also do your 2020-21 accounting and tax return nice and early (like, now!) This would give you an accurate overview of how the pandemic affected your turnover in the past year.
If you don’t have an accountant, or feel you aren’t making the most of your self-employed tax status with your current accountant, we’d love a chat about how we can help.