Guidance on the COVID-19 Self-Employment Income Support Scheme (SEISS) Jump to main content

Guidance on the COVID-19 Self-Employment Income Support Scheme (SEISS)

Dr Jane MacArthur FCA DipABRSM of Amati UK Ltd provides useful guidance on the fifth Self-Employment Income Support Scheme (SEISS) grants, introduced by the government during COVID-19.

This page is intended for information only and should not be considered as a substitute for financial advice.


Page updated 29 July 2021

Key points - the fifth grant

  • Eligibility is similar to before, that you 'reasonably believe there will be a significant reduction in your trading profits due to COVID between 1 May and 30 September'.
  • The 3 months' average trading profits are calculated as before.
  • The new turnover test (see below) is used to decide if you get 80% of 3 months trading profits, or 30% of 3 months trading profits.
  • You will need to give two turnover figures as part of the claim process.
  • Claims are now open and will close on 30 September 2021.

NB: The turnover test is not used to assess your eligibility for the grant, or in calculating the amount you get (profit is used for this), it is purely the decision tool between whether you get 80% or 30% of 3 months trading profits. (Turnover is gross income before expenses).

Eligibility

Eligibility criteria remain similar to the fourth grant, per HMRC:

'You must have:

  • submitted your 2019 to 2020 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

Deciding if you can claim

When you make your claim you must tell us [HMRC] that you:

  • intend to keep trading in 2021 to 2022
  • reasonably believe there will be a significant reduction in your trading profits due to the impact of COVID-19 between 1 May 2021 and 30 September 2021'

More information can be found on the HMRC website.

How much is the grant?

The amount of SEISS fifth grant that you get will be determined by the turnover test (next section) and will be either:

1) 80% of 3 months' average trading profits capped at £7,500, if your turnover is down by 30% or more - ie the same amount as you got for the fourth SEISS grant if you made a claim for it.

Or

2) 30% of 3 months' average trading profits, capped at £2,850 if your turnover is down by less than 30%.

What is the 'the turnover test?'

To determine if your turnover is down by 30% or more, you must compare your 2020-21 turnover figure with 2019-20 (or 2018-19 if you can justify that 2019-20 was not a typical year for your business). You will need to submit both turnover figures to HMRC in the course of making your claim. This does not mean you have to file your full 2020-21 tax return immediately, the deadline for filing is still 31st January 2022, but you do need to finalise your turnover (income before any expenses) to make your claim.

It will potentially be very easy for HMRC to send out automatic query letters if the turnover figures you submit to claim your grant do not agree with your turnover figures on your tax returns, so it is important to get them right.

NB: If you started self-employment in 2019-20 and did not file returns previously, you will get 80% of 3 months' average trading profits. This is so that you don't have to unfairly compare 12 months of COVID turnover with (potentially) just a few months of start-up turnover for a part-year in 2019-20.

Calculating your turnover

1) You must work out your turnover for a 12-month period starting from 1 April 2020 to 6 April 2020.

This means 6th April 2020 to 5th April 2021 for most people, 1st April 2020 to 31st Mar 2021 for a number of others. If you have a different month as your usual accounting year end, the guidance contradicts itself in two places, so we are awaiting further advice on this situation.

If you have more than one self-employment, you need to add up the total turnover from all self-employments.

If you have income from any partnerships, you will need to refer to the partnership tax return for the turnover figure, and apply your partnership percentage share to the turnover figure and add this in.

What not to include: Anything reported as ‘any other income’ on your tax return. You should also not include any Government COVID-19 support payments, for example:

  • previous SEISS grants
  • Eat Out to Help Out payments
  • local authority or devolved administration grants

    In calculating your turnover for 2020-21, you should include any taxable grants from other sources. However, be aware that some hardship grants issued by Help Musicians or the Arts Council may be non-taxable and thus will not need to be included either for this turnover calculation or on your tax return. This is based on withdrawn 1979 guidance agreed between HMRC and the Arts Council that has not been replaced.
  • 2) Find your turnover from either 2019 to 2020, or 2018 to 2019, to use as a reference year.

    For most of you, this will be box 9 on the ‘Self-employment (short)’ orange pages of your 2019-20 tax return. If you have more than one self-employment, you need to look at both sets of pages on the tax return and add both box 9 pages together.

    If you have ‘Self-employment (full)’ pages then the turnover is in box 15. If you have partnership income, you will need to refer to the partnership tax return for the turnover figure, and apply your partnership percentage share to the turnover figure and add this in.

    If 2019-20 was an atypical year, you can instead use 2018-19 turnover, but you will need to keep notes and be able to justify why 2019-20 was atypical, eg becoming a parent, or a long period of illness. There are some examples of what they will consider atypical on the HMRC website.

    You may also wish to read the Treasury Direction (the underlying legislation on which HMRC guidance is based)

    Information from the Budget can be read below.

    ISM members get access to a tax and legal helpline to help you with any questions that arise from your work. You can also contact our in-house lawyers for help with contracts and advice on your rights at work.