How to work out your income when claiming the fifth SEISS grant

Self-Employment Income Support Scheme (SEISS) grants have provided a lifeline for millions of self-employed people who had to weather the COVID-19 storm. You may be one of them.

Four rounds of SEISS grants have already been made and in mid-July HMRC started contacting those eligible to apply for the fifth round. Sole traders can apply if they believe COVID-19 impacted/will impact their profits/earnings between 1 May 2021 and 30 September 2021.

Need to know! Fifth-round applications started in late July and you won’t be able to apply after 30 September 2021.

What makes the fifth SEISS grant different?

The maximum SEISS grant value for fifth-round applicants whose turnover is down by 30% or more is £7,500. A maximum of £2,850 will be available to those whose turnover fell by less than 30%.

To be able to apply you must:

• be self-employed or a member of an ordinary business partnership that traded in the tax years 2019-2020 and 2020-2021
• have submitted your 2019 to 2020 tax return on or before 2 March 2021 and
• have trading profits of less than £50,000 that are at least equal to your non-trading income (eg earnings from a part-time job or pension).

When you apply you must confirm to HMRC that you plan to carry on trading in 2021-2022 and that COVID-19 has impacted your trading profits significantly between 1 May and 30 September 2021. HMRC has produced guidance on how your circumstances can affect your eligibility for SEISS.

What really makes the fifth SEISS grant different is applicants need to provide HMRC with details of their recent business turnover, which HMRC will then use to work out the grant’s size.

Working out your income when claiming the fifth SEISS grant

To claim for the fifth SEISS grant, you’ll need to tell HMRC your turnover for April 2020 to April 2021, as well as your turnover for either the tax year 2019/2020 or 2018/2019 (which will act as a reference year).

You won’t be asked for your turnover if you started trading in 2019/2020 and didn’t trade in 2018/2019, 2017/2018 or 2016/2017.

Make sure that the figure you provide for your April 2020-April 2021 turnover is accurate, because HMRC can check after you submit your Self Assessment tax return. Also include turnover from all of your businesses, if relevant (including any business you started during the period).

Finding your April 2020 to April 2021 turnover could be as easy as referring to your 2020/2021 Self-Assessment tax return, if you’ve completed it. Alternatively, your accounting software could reveal the figure. Otherwise, HMRC recommends checking your business bank account records.

For turnover for previous years, HMRC recommends: “Logging in to your personal tax account to view online” or “checking your business records” or “asking your accountant (if you have one)”.

Help and support with SEISS grant applications

HMRC has published guidance for sole traders and ordinary business partnership members on how to work out your turnover if you plan to claim the fifth SEISS grant. It could be useful if your situation is more complex, for example, if you have more than one business, started or closed a business in your reference year, etc.

You’re strongly advised to ensure the turnover figures you provide to HMRC when applying for a SEISS grant are correct. If necessary, seek help from an accountant.

Quick facts: SEISS grants and tax

• You don’t repay a SEISS grant – it’s not a loan. However, SEISS grants are subject to Income Tax and Class 4 National Insurance contributions.
• SEISS grants are taxable in the tax year in which you receive them. So, the first three SEISS grants were taxable in the 2020/21 tax year and they should be reported in your 2020/21 Self-Assessment tax return.
• Fourth or fifth-round SEISS grant are taxable in the 2021/22 tax year and should be reported in your 2021/22 Self-Assessment tax return.

Blog content is for information purposes and over time may become outdated, although we do strive to keep it current. It's written to help you understand your Tax's and is not to be relied upon as professional accounting, tax and legal advice due to differences in everyone's circumstances. For additional help please contact our support team or HMRC.