The fifth SEISS grant opened for applications in late July. This is scheduled to be the last instalment of the SEISS grants and unlike ithe previous SEISS grants, 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.
How much is the grant?
Unlike SEISS grants one to four, the amount of the fifth SEISS grant available is determined by how much a self-employed individual’s turnover is reduced.
HMRC began contacting taxpayers in mid-July and claims opened in late July. It is important to note that it is the taxpayer who must make the claim: unfortunately, we as your accountants cannot submit the claim this claim on your behalf.
Who is eligible?
Self-employed individuals (and members of a partnership) are potentially eligible for the fifth SEISS grant where the taxpayer:
- submitted their 2019/20 self assessment tax return by 2 March 2021
- traded in the tax years 2019/20 and 2020/21
- is currently trading but is impacted by reduced demand due to COVID-19, or has been trading but is temporarily unable to do so due to coronavirus
- intends to continue to trade; and
- reasonably believes there will be a significant reduction in their trading profits due to the impact of COVID-19 in the period from 1 May 2021 and 30 September 2021. HMRC has not provided a definition of ‘significant reduction’.
The turnover test
Before making a claim, taxpayers must:
- work out their turnover for a 12-month period starting from 1 April 2020 to 6 April 2020
- find their turnover from either 2019/20 or 2018/19 to use as a reference year.
A taxpayer can calculate their turnover for 2020/21 in several ways:
- by referring to their 2020/21 self assessment tax return if this has already been completed
- by checking the figures on their accounting software
- by reviewing their bookkeeping or spreadsheet records that detail their self-employment invoices and payments received
- by checking the bank account they use for their business to account for money coming in from customers
- by asking their accountant or tax adviser for help in calculating the figures. However, accountants and agents are unable to make the claim on the taxpayer’s behalf.
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 here.
Turnover for the previous year
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:
- was on carers’ leave, long term sick leave or had a new child
- carried out reservist duties
- lost a large contract
- is eligible for the fifth grant but did not submit a 2019/20 return.
For further guidance on how an individual’s circumstances can affect eligibility visit here.
|Claiming the fifth SEISS grant is not straightforward. Please contact us for advice on determining your turnover figures or eligibility.