The fifth instalment of the Self-employment Income Support Scheme (SEISS) grant opened for applications in late July. This is scheduled to be the last instalment of the SEISS grants and unlike its predecessors it introduces a turnover test, which will determine the amount of grant awarded to self-employed workers whose businesses have been hit by the coronavirus (COVID-19) pandemic.
As well as meeting the turnover test, applicants will also need to show that they have a reasonable belief that there is a significant reduction in trading. Here, we take a look at the application process for the fifth SEISS grant.
Unlike SEISS grants one to four, the amount of the fifth grant available is determined by how much a self-employed individual's turnover is reduced.
The fifth grant is 80% of three months' average trading profits, capped at £7,500 for those self-employed individuals whose turnover has reduced by 30% or more. Those with a turnover reduction of less than 30% will receive a grant based on 30% of three months' average trading profits, capped at £2,850.
HMRC began contacting taxpayers in mid-July and claims opened in late July. Claims must be made by 30 September 2021. It is the taxpayer who must make the claim: an accountant or agent cannot submit the claim on their behalf.
Self-employed individuals (and members of a partnership) are potentially eligible for the fifth SEISS grant where the taxpayer:
The taxpayer's trading profits must be no more than £50,000 and at least equal to their non-trading income. If there is no eligibility based on the trading profits for 2019/20, then previous years will be considered.
Before making a claim, taxpayers must:
HMRC advises taxpayers will need to have both figures ready when they make their claim.
A taxpayer can calculate their turnover for 2020/21 in several ways:
HMRC has confirmed that the turnover figure should not include anything reported as any other income on the taxpayer's tax return. Also, do not include any COVID-19 support payments. For example:
HMRC's guidance is available at: https://www.gov.uk/guidance/work-out-your-turnover-so-you-can-claim-the-fifth-seiss-grant.
In most cases, a taxpayer must use the turnover reported in their 2019/20 self assessment tax return as a reference year. The figure needs to be based on a 12-month period and include the total turnover for the taxpayer's businesses.
In certain limited circumstances where 2019/20 was not a normal year for the taxpayer's business, they can use the turnover reported on their 2018/19 tax return. HMRC gives examples of the circumstances where this would apply. For example, if the taxpayer:
For further guidance on how an individual's circumstances can affect eligibility visit: https://www.gov.uk/guidance/how-different-circumstances-affect-the-self-employment-income-support-scheme.
Claiming the fifth SEISS grant is not straightforward. Please contact us for advice on determining your turnover figures or eligibility.