Self-employed taxpayers are now apply for the fifth SEISS grant, but they may need to provide two different turnover figures from their business as part of their application.
The portal opened on the 29th July but HMRC should have contacted every eligible self-employed taxpayer (by email or letter), giving them a personal start date from which they can apply. You must wait until your personal start date before you apply otherwise your claim will not be processed.
By giving tax payers a personal start date, HMRC hopes to prevent every eligible taxpayer applying on the same day and crashing the system, and this will also give HMRC time to process all the grant payments due. So fingers crossed that this will work!
The portal to make the 5th and last SEISS grant application will remain open until 30 September 2021, but of course the sooner you apply, the quicker the money will arrive.
Accounting Web have posted a great article going through eligibility and explaining the turnover test. HMRC have also created a YouTube video which will show what you will see during the application process.
Who is eligible?
Please note that you need to show that you have suffered a “significant reduction” due to COVID from 1st May 2021 to 30 September 2021.
However, you only need to look forward to estimate profits in the period ending 30 September 2021, and NOT to re-examine your claim with hindsight after the event.
As long as you keep all evidence of why you think profits have reduced (ignoring any covid-related grants received), you will be able to show that their reasonable belief at the time of application was that profits would be reduced.
If you were eligible for the SEISS-4 grant (or earlier grants), but failed to apply on time you can still apply for the SEISS-5 grant, if you meet the other conditions.
Turnover test
To complete the grant application the most taxpayers need to submit two different turnover figures and there is updated guidance from HMRC in this regard.
New traders, who started trading in 2019/20 and didn’t have a (different) self-employed trade in any of the years 2016/17 to 2018/19, don’t need to provide a turnover figure at all, as HMRC already has a figure for 2019/20 from their tax return. These new traders will get the 80% level of the grant.
Finding the figures
The turnover figure is gross sales for all concurrent trades, not profit. It should exclude all Covid-related grants received: SEISS, CJRS, business rates support, and ‘eat out to help out’. These figures are only used to determine which level of grant the taxpayer qualifies for (30% or 80% of average monthly profits), they do not feed into the actual calculation of the grant to be paid.
The two turnover figures required are:
- Pandemic period
This will be approximately the same for everyone. Irrespective of the date the accounts are drawn-up to the taxpayer must report their turnover for the 12 months ending between 31 March and 5 April 2021, eg 12 months from 1 April 2020 to 31 March 2021
2.Reference period
This is the turnover for the accounts reported on the 2019/20 tax return or the 2018/19 return if 2019/20 was unusual. Unless the taxpayer uses an accounting period ending between 31 March and 5 April, it will not cover the same months as correspond to the turnover reported for the pandemic period.
Example
Amanda draws up accounts for her self-employed business to 30 September each year. She will report turnover for the following periods as part of her application for SEISS-5 grant:
- Pandemic: 1 April 2020 to 31 March 2021, excluding SEISS grants 1, 2 and 3 received in that year.
- Reference: 1 October 2018 to 30 September 2019, as reported on her 2019/20 tax return.
For partnerships, it is the partnership turnover as a whole that HMRC wants to compare for the pandemic to reference period, not just the partner’s share of the partnership. That is why a partner is required to report the turnover for the whole partnership business.
Only where the individual partner also has another concurrent self-employed business (sole-trader or another partnership) in 2019/20 should he report just his share of the partnership turnover.
The amount of the grant depends on how much your turnover has decreased. If the comparison of figures from reference period to pandemic period shows that turnover has decreased by 30% or more, HMRC will calculate the SEISS grant based on 80% of the taxpayer’s average monthly profits for three months capped at £7,500.
If the turnover between the reference and pandemic periods has decreased by less than 30%, the taxpayer will get a SEISS grant calculated at 30% of average monthly profits for three months capped at £2,850.
Where turnover has not fallen at all no SEISS grant is payable. So it is really important to enter the correct turnover figures relating to the pandemic period and reference period in the right places in the application (see HMRC YouTube video).
As your tax agent, we can help you with the turnover but we cannot make the claim on your behalf.
