Self-employed musicians: Financial guidance (COVID-19)
Financial guidance for the self-employed
Dr Jane MacArthur FCA DipABRSM of Amati UK Ltd provides useful guidance on the fourth and 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 4 June 2021
According to information taken from the Government website, the fourth grant will be:
To be eligible for the fourth grant you must:
The fourth grant will take into account 2019 to 2020 tax returns and will be open to those who became self-employed in tax year 2019 to 2020. The rest of the eligibility criteria remain unchanged.
To work out your eligibility:
As long as your 2019-20 tax return on its own shows less than £50,000 net self-employed profit, and self-employed profit is more than half of your total taxable income, you should be eligible.
If the 2019-20 tax return does not show this, they will instead look at those four years’ averaged, ie 2016-2020. The four year average profit figure will need to be below £50,000, and represent more than half of your of your total taxable income over those four years.
It is therefore possible, for a few people previously eligible for SEISS 1-3, that if your 2019-20 self-employed profit falls foul of the two rules, in a bad enough way to also make your four year average fail the two tests, that you may not be eligible for SEISS 4 and 5.
The Government guidance says: 'Your eligibility for the scheme will now be based on your submitted 2019 to 2020 tax return. This may also affect the amount of the fourth grant which could be higher or lower than previous grants you may have received.'
The ‘average trading profits’ will now be calculated using four year’s profits where available, 2016-2020, which will mean the amounts paid out will be different to those received by those eligible previously.
Similarly to the third SEISS grant, you will need to reasonably believe there will be significant reduction in your trading profits for February, March, and April 2021.
You must either:
You must also declare that:
There will also be fifth and final grant covering May to September, though this will be a value of a three months’ average trading profits (despite the fact that May to September is five months).
According to the Government website:
The online claims service for the fifth grant will be available from late July 2021. If you’re eligible based on your tax returns, HMRC will contact you in mid-July 2021 to give you a date that you can make your claim from.
The amount of the fifth grant will be determined by how much your turnover has been reduced in the year April 2020 to April 2021.
The fifth grant will be worth:
Information from the Budget can be read below.
2.15 Self-Employment Income Support Scheme (SEISS) fourth grant – To support the self-employed across the UK through the next stage of the pandemic, the government confirms that the fourth SEISS grant will be worth 80% of three months’ average trading profits, paid out in a single instalment and capped at £7,500 in total. The grant will cover the period February to April, and can be claimed from late April. Self-employed individuals must have filed a 2019-20 Self Assessment tax return to be eligible for the fourth grant. This means that over 600,000 individuals may be newly eligible for SEISS, including many new to self-employment in 2019-20. All other eligibility criteria will remain the same as the third grant. Further details will be published in due course.
2.16 SEISS fifth grant – The government announces that there will be a fifth and final SEISS grant covering May to September. The value of the grant will be determined by a turnover test, to ensure that support is targeted at those who need it the most as the economy reopens. People whose turnover has fallen by 30% or more will continue to receive the full grant worth 80% of three months’ average trading profits, capped at £7,500. People whose turnover has fallen by less than 30% will receive a 30% grant, capped at £2,850. The final grant can be claimed from late July. Further details will be published in due course.
The updated HMRC SEISS guidance so far..
Evidence that the SEISS 4 grant is taxable in 2021-22.
Financial guidance for the self-employed
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