Fifth Round of SEISS Grant Announced

The UK Government has recently announced further measures of income support for the self-employed community, including CIS workers and Sole Traders. Applications for the fifth Self-Employed Income Support Scheme grant are now open – here’s everything you need to know before you apply.

Since the Coronavirus pandemic struck in early 2020, the UK Government has introduced various schemes to support impacted individuals, most notably the furlough scheme for employers and the Self-Employed Income Support Scheme (SEISS). Recent figures show that since the introduction of the SEISS, the UK self-employed population has claimed a total of 9.1 million grants, adding up to £25.2 billion across 2.9 million self-employed individuals whose income has been affected by the pandemic. This has included everyone from construction workers and electricians, to hairdressers and care workers.

Although the fourth round of SEISS grants came to an end on 1st June 2021, the UK Government has announced a fifth grant is now open for applications. Following this announcement, HMRC has released a series of guidelines to help you determine whether you’re eligible for a grant and, if so, how to make a successful claim:

Who Can Claim?

The fifth SEISS grant is available to any members of the self-employed community, including CIS workers and sole traders (though excluding limited company contractors), who have been affected by the Coronavirus and feel that their business profit will continue to be impacted between 1 May 2021 and 30 September 2021.

To be eligible for the grant, you must meet all three of the following criteria:

1) Trading status:

You must be a self-employed individual or member of a partnership (a situation in which two or more people run a company, pay tax on their shares of profits, but aren’t personally liable for any business debts) who has traded in both 2019-20 and 2020-21 tax years.

2) Tax returns & trading profits:

You must have:

• Submitted your Self-Assessment Tax Return for 2019-20 tax year on or before 2nd March 2021.
• Trading profits of no more than £50,000.
• Trading profits that are equal to or more than your non-trading income. (Non-trading income is defined as any money that you make outside your business, such as a part-time job or pension).

Although HMRC is focused on your 2019-20 tax return, it has been stated that if your figures from last year mean you won’t be eligible for the grant, figures from previous years will be examined to establish an accurate picture of your typical trading profits.

3) Future intent

To make your claim successfully, you must state that you intend to continue trading in the 2021-22 tax year AND that you believe your trading profits will be significantly reduced between 1 May 2021 and 30 September 2021 due to Covid-19.

Claim Exemptions

Certain circumstances may alter the likelihood of you claiming successfully, including:

• Your SATR is late, amended, or under enquiry.
• You’re a member of a partnership.
• You had a new child between the 2019-20 tax year.
• You have loans covered by the loan charge provisions.
• You claim averaging relief.
• You’re a military reservist.
• You’re a non-resident or chose the remittance basis.

Note: Claiming a Maternity Allowance will not affect your eligibility for a fifth SEISS grant.

How To Claim

Providing you started trading before the 2019-20 tax year, you will need to provide HMRC with details of your business turnover, including your takings, fees, sales, and money earned/received to enable HMRC to calculate how much you will be entitled to under the grant.

HMRC requires details of your turnover for both:

• 12 months between April 2020 and April 2021.
• Either the 2019-2020 or 2018-2019 tax year.

However, if you started trading in 2019-20, you do not need to submit any previous turnover figures before you can claim.

When the applications open, you will be able to make your claim online now. HMRC should have contacted you by email, SMS, letter, or within the online service in mid-July to notify you of the opening date for applications.

How Much You’re Entitled To

After receiving your turnover figures, HMRC will calculate how much your turnover is down due to coronavirus to determine which level of grant you will receive.

For this fifth grant, there are two levels:

1. If your turnover is down by 30% or more, you will receive 80% of 3 months’ average trading profits, capped at £7,500.
2. If your turnover is down by less than 30%, you will receive 30% of 3 months’ average trading profits, capped at £2,850.

If you are eligible, HMRC will inform you of how much you are entitled to and which grant level you’re in.

How it Impacts You

Tax

When applying for your SEISS grant, it’s important to bear in mind that any money you receive through the scheme will be subject to Income Tax and self-employed National Insurance Contributions. Therefore, it must be reported on your 2021-2022 Self-Assessment Tax Return – which we can help you with if you need it.

Pensions

The grant will also count towards your annual allowance for pension contributions, so it’s important to consider how this will impact your other financial planning arrangements.

Mortgages

Some self-employed individuals are also finding their mortgage applications are impacted after claiming a SEISS grant. In recent news reports, it has been revealed that some of Britain’s largest high-street banks are refusing to give mortgages to self-employed people who claimed under SEISS, especially if they applied for the grant on or after 14 July 2020. However, some banks are stating that they may be flexible if they can see evidence of business recovery (such as good business turnover) or the applicant can provide a larger-than-normal deposit of 20-25%.

It’s important to be aware of the consequences and consider how they may impact your plans before applying for the fifth SEISS grant. Since lenders traditionally use the last two years of accounts from self-employed individuals to calculate average earnings and decide if they’re a suitable mortgage candidate, the impact of applying for the SEISS grant now could continue into 2023.

Here to Help

Whilst we’re unable to provide any advice relating to your personal finances and investments, our experts are always available to offer support and guidance relating to your SATR, CIS, Umbrella and your self-employment status.

If you’d like help with your SATR before applying for the fifth SEISS, please don’t hesitate to get in touch on 01244 684700.