The fifth SEISS Covid support for the self-employed – the Self-Employment Income Support Scheme – is opening up for claims.
This round covers the period from May to September this year and there are new rules around eligibility, which have now been announced by the government.
To be eligible for the first round of SEISS you have to satisfy the requirements of three stages.
You must be a self-employed individual or a member of a partnership, and you must have traded in both tax years 2019/20 and 2020/21.
You must have:
• submitted your 2019/20 tax return on or before 2 March 2021
• trading profits of no more than £50,000
• trading profits at least equal to your non-trading income
Non-trading income is any money that you make outside of your business, for example having a part-time job or pension.
If you’re not eligible based on the trading profits from 2019/20, HMRC will look back at previous years.
In order to claim, you must intend to keep trading in 2021/22 and reasonably believe there will be a significant reduction in trading profits due to the impact of Covid between 1 May 2021 and 30 September 2021.
The amount of the fifth grant will be determined by a turnover test, which considers how much turnover has reduced in the 2020/21 tax year due to the pandemic.
To calculate how much your turnover has gone down by, you’ll need your turnover figures for the 2020/21 tax year, and either the 2018/19 or 2019/20 tax years for comparison purposes.
HRMC says applicants should use turnover for 2019/20 as a comparison if it was representative of a normal pre-Covid year for the business. Alternatively, use turnover from 2018/19.
If you’ve yet to submit your tax return for 2020/21, due by 31 January 2022, you are still allowed to apply.
If your turnover was down by 30% or more in 2020/21, you will receive a grant worth 80% of three months’ average trading profits (capped at £7,500).
If your turnover was down by less than 30%, you will receive a grant worth 30% of three months’ average trading profits (capped at £2,850).
HMRC says if turnover increased, you may still qualify for the 30% grant. You’ll still need to reasonably believe that, due to reduced demand or inability to trade between 1 May and 30 September 2021, you will suffer a significant reduction in trading profits.
Claims need to be made by the applicant and can’t be lodged by an agent, such as an accountant. Remember, any SEISS grants count as income and are therefore subject to tax, so it is important to put aside enough to cover this.