5th coronavirus grant for the self employed opens end of July

Earlier this month, HM Revenue & Customs issued some guidance about the fifth, and potentially final, Self Employed Income Support Scheme grant which kicks off at the end of this month.

Back in our March Tax Bulletin we announced that the 4th and 5th SEISS grants to support self-employed taxpayers (including partners in partnerships and LLPs) whose business have been adversely affect by COVID-19 had been confirmed, but at that stage the finer details for the 5th grant hadn’t been made available. These details were eventually published on 2 July 2021.

So, who qualifies for the fifth grant? The eligibility criteria are the same as for the fourth grant, with the additional requirement to quantify how much your trade has been affected, the results of which will lead to two levels of grant for the first time.

You’ll therefore need to meet ALL of the following conditions to make a claim:

• you must carry on a trade which has been adversely affected by Coranvirus;
• you must have submitted your 2019/20 tax return to HMRC by 2 March 2021;
• you must have carried on a trade in both the 2019/20 and 2020/21 tax years;
• you must intend to continue to carry on a trade in the 2021/22 tax year;
• you must meet the profits condition for the fifth grant as set out below;
• your trade must have suffered reduced activity, capacity or demand in the period 1 May 2021 to 30 September 2021;
• at the time you make the claim you must reasonably believe that you will suffer a significant reduction in annual trading profits compared to what you would have reasonably expected if you had not suffered that reduced activity, capacity or demand.

You cannot claim under the scheme if the only reason for your business being adversely affected is due to a period of self-isolation in the UK following an overseas holiday. In other words, if you lost income because you couldn’t work after going on holiday then this must be disregarded.

Does the profits condition still apply? Yes it does, as it has done for all of the SEISS grants. This means that if your profits exceeded £50,000 in 2019/20 or your non trading income exceeded your trading income (i.e., less than half of your taxable income came from self-employment) then you are not eligible to claim. However, if either of those applies in 2019/20 you can average your profits for the tax years 2016/17 to 2019/20 as an alternative, so may still be able to claim.

How much is the fifth SEISS grant? There are two levels of grant for the first time with the fifth SEISS grant, dependent on the impact of COVID-19 on your turnover. To claim the full grant equal to 80% of 3 months profits (capped at a maximum grant of £7,500) you must be able to demonstrate that your turnover has reduced by at least 30%, as a result of COVID-19, compared to the 2019/20 tax year (you can compare to 2018/19 if that more accurately reflects the usual turnover of the business). If you meet all of the other conditions to claim the grant, but your turnover has reduced by less than 30%, then your claim will be equal to 30% of 3 months profits (capped at £2,850).

Please see our Insight article for a deep dive into how to calculate the turnover reduction.

When can you claim? Claims will open from the end of this month, with HMRC contacting taxpayers directly to let them know when they can submit their applications. The deadline for making claims will be 30 September 2021.

To summarise, if you qualified for the fourth SEISS grant and your business has continued to be affected by COVID-19 then you should qualify for the fifth SEISS grant. The amount you receive will be the same as you received for the fourth grant if your turnover has reduced by at least 30% since 2019/20, or 30/80ths of that amount if your turnover has reduced by less than 30%.

If you have any questions on this then please don’t hesitate to contact your Client Manager.

Earlier this month, HM Revenue & Customs issued some guidance about the fifth, and potentially final, Self Employed Income Support Scheme grant which kicks off at the end of this month.

Back in our March Tax Bulletin we announced that the 4th and 5th SEISS grants to support self-employed taxpayers (including partners in partnerships and LLPs) whose business have been adversely affect by COVID-19 had been confirmed, but at that stage the finer details for the 5th grant hadn’t been made available. These details were eventually published on 2 July 2021.

So, who qualifies for the fifth grant? The eligibility criteria are the same as for the fourth grant, with the additional requirement to quantify how much your trade has been affected, the results of which will lead to two levels of grant for the first time.

You’ll therefore need to meet ALL of the following conditions to make a claim:

• you must carry on a trade which has been adversely affected by Coranvirus;
• you must have submitted your 2019/20 tax return to HMRC by 2 March 2021;
• you must have carried on a trade in both the 2019/20 and 2020/21 tax years;
• you must intend to continue to carry on a trade in the 2021/22 tax year;
• you must meet the profits condition for the fifth grant as set out below;
• your trade must have suffered reduced activity, capacity or demand in the period 1 May 2021 to 30 September 2021;
• at the time you make the claim you must reasonably believe that you will suffer a significant reduction in annual trading profits compared to what you would have reasonably expected if you had not suffered that reduced activity, capacity or demand.

You cannot claim under the scheme if the only reason for your business being adversely affected is due to a period of self-isolation in the UK following an overseas holiday. In other words, if you lost income because you couldn’t work after going on holiday then this must be disregarded.

Does the profits condition still apply? Yes it does, as it has done for all of the SEISS grants. This means that if your profits exceeded £50,000 in 2019/20 or your non trading income exceeded your trading income (i.e., less than half of your taxable income came from self-employment) then you are not eligible to claim. However, if either of those applies in 2019/20 you can average your profits for the tax years 2016/17 to 2019/20 as an alternative, so may still be able to claim.

How much is the fifth SEISS grant? There are two levels of grant for the first time with the fifth SEISS grant, dependent on the impact of COVID-19 on your turnover. To claim the full grant equal to 80% of 3 months profits (capped at a maximum grant of £7,500) you must be able to demonstrate that your turnover has reduced by at least 30%, as a result of COVID-19, compared to the 2019/20 tax year (you can compare to 2018/19 if that more accurately reflects the usual turnover of the business). If you meet all of the other conditions to claim the grant, but your turnover has reduced by less than 30%, then your claim will be equal to 30% of 3 months profits (capped at £2,850).

Please see our Insight article for a deep dive into how to calculate the turnover reduction.

When can you claim? Claims will open from the end of this month, with HMRC contacting taxpayers directly to let them know when they can submit their applications. The deadline for making claims will be 30 September 2021.

To summarise, if you qualified for the fourth SEISS grant and your business has continued to be affected by COVID-19 then you should qualify for the fifth SEISS grant. The amount you receive will be the same as you received for the fourth grant if your turnover has reduced by at least 30% since 2019/20, or 30/80ths of that amount if your turnover has reduced by less than 30%.

If you have any questions on this then please don’t hesitate to contact your Client Manager.

You may also like to read this month’s Q&A article about paying tax and NIC on the SEISS grants.