Covid-19 grants must be included on tax returns
HMRC is reminding self assessment customers to declare any Covid-19 grant payments on their 2020/21 tax return, including SEISS claims which are taxable
More than 2.7 million customers claimed at least one Self-Employment Income Support Scheme (SEISS) payment up to 5 April 2021. These grants are taxable and taxpayers must declare them on their 2020/21 tax return before the deadline on 31 January 2022.
The SEISS application and payment windows during the 2020/21 tax year were:
- SEISS 1: 13 May 2020 to 13 July 2020
- SEISS 2: 17 August 2020 to 19 October 2020
- SEISS 3: 29 November 2020 to 29 January 2021
If taxpayers received other support payments during the pandemic, including Coronavirus Job Retention Scheme (CJRS) grants, they may need to report this on their tax return if they are self-employed; in a partnership; or a business.
Information on which support payments need to be reported to HMRC and any that do not is available on the gov.uk website.
It is important that taxpayers check and make any changes to their tax return to make sure any SEISS or other Covid-19 support payments have been reported correctly in their self assessment.
Myrtle Lloyd, HMRC’s director general for customer services, said: ‘We want to help customers get their tax returns right, first time. We have videos, guidance and helpsheets available online to support you with your self assessment. Search ‘help with self assessment’ on gov.uk to find out more.’
HMRC has created resources to help taxpayers complete their tax return including a playlist on YouTube, webinars, and helpsheets and guidance available on gov.uk.
HMRC recently announced that more than 20,000 customers, who were unable to pay their tax bill in full, had used the self-serve time to pay facility, bringing in an estimated £46m. The online payment plan helps taxpayers who may feel worried or anxious about paying any tax owed by enabling them to spread the amount into manageable monthly instalments, up to the value of £30,000.
If taxpayers owe more than £30,000, or need longer to pay, they should call the self assessment payment helpline on 0300 200 3822.
HMRC urges everyone to be alert if they are contacted out of the blue by someone asking for money or personal information. Taxpayers should always type in the full online address www.gov.uk/hmrc to get the correct link for filing their self assessment return online securely and free of charge. HMRC sees high numbers of fraudsters emailing, calling or texting people claiming to be from the department. If in doubt, HMRC advises not to reply directly to anything suspicious, but to contact them straight away and to search gov.uk for ‘HMRC scams’.
Taxpayers that were employed and received CJRS (furlough) payments during the 2020/21 tax year will need to enter earnings and income tax as stated on their P60. The P60 will include any furlough payments received up to 5 April 2021, so these furlough payments do not need to be included on tax returns.
- Published in Business grants, Filing Deadlines, self employed scheme
Turnover calculation added to fifth SEISS claims
The application process for the fifth Self-Employment Income Support Scheme (SEISS) grant will depend on details of two years of turnover and losses resulting from the pandemic
The scheme is due to open shortly and HMRC will be contacting self employed individuals directly advising them of their eligibility to apply for the scheme, which will be open from late July. There are some rule changes for the fifth grant which are important to take into account and also note that accountants are not allowed to apply directly on behalf of their clients.
HMRC has confirmed that ‘the fifth grant is different. In most cases, you’ll need to provide two turnover figures when you make your claim. We’ll use these to work out how much you’ll get’.
Claims must include information about turnover if you submitted a tax return for your business in 2019 to 2020 as well as any of the following tax years: 2018-19, 2017-18 and 2016-17. Turnover includes the takings, fees, sales or money earned or received by your business.
Turnover must be calculated for a 12-month period, starting on any day from 1 April 2020 to 6 April 2020.
Where to find turnover figures
Turnover figures can be obtained from the 2020-21 self assessment tax return, from accounting software, go through your bookkeeping or spreadsheet records that cover your self-employment invoices and payments received, check the bank account used for your business to account for money coming in from customers, or ask your accountant or tax adviser.
Claims must not include previous SEISS grants, Eat Out to Help Out payments and local authority or devolved administration grants.
In the case of partnerships, work out and include your percentage share of the partnership’s turnover, for each individual partnership. This will be the same as the percentage of profit taken from each partnership in your reference year, even if your profit share percentage changed in 2020 to 2021. You should add this to the turnover from your other businesses.
In most cases, you must use the turnover reported in your 2019 to 2020 tax return as a reference year. The figure needs to be based on a 12-month period and include the total turnover for all your businesses.
If 2019-20 was not a normal year for your business, you can use the turnover reported in your 2018-19 tax return. Your records should show how 2019-20 was not a normal year for you. For example, if you were on carers leave, long term sick leave or had a new child; carried out reservist duties; lost a large contract or are eligible for the fifth grant but did not submit a 2019 to 2020 return.
If your turnover is down by 30% or more, the grant will be:
worked out at 80% of three months’ average trading profits; and
capped at £7,500.
If your turnover is down by less than 30%, the grant will be:
- worked out at 30% of three months’ average trading profits; and
- capped at £2,850.
If you had a total turnover of £20,000 for 2019-20, which fell to £10,000 for April 2020 to April 2021, representing a 50% drop in revenue, you will get the higher grant amount which is worth 80% of three months’ average trading profits as turnover is down by 30% or more.
If turnover is down by 20% compared to 2019-20 you will get the lower grant amount which is worth 30% of three months’ average trading profits as turnover is down by less than 30%.
If 2019-20 was not a normal year for your business, due to the pandemic, SEISS applicants can use 2018-19 as the turnover reference year.
If you are currently trading but have reduced demand, you must keep any evidence that your business has had reduced activity, capacity or demand due to Covid-19 at the time you made your claim, such as:
- business accounts showing reduction in activity compared to previous years;
- records of reduced or cancelled contracts or appointments; and
- a record of dates where you had reduced demand or capacity due to government restrictions.
- Published in self employed scheme
Fifth SEISS grant will be open to claims from late July
HMRC has confirmed that the fifth Self-employment Income Support Scheme (SEISS) grant covering the period May 2021 to September 2021 will open to claims from late July.
To be eligible for the grant, an individual must be self-employed or a member of a partnership. They must have traded in the tax year 2019/20 and submitted their tax return on or before 2 March 2021, and also have traded in the tax year 2020/21. Claimants must either be currently trading but are impacted by reduced demand due to coronavirus or have been trading but are temporarily unable to do so due to coronavirus.
The amount of the fifth grant will be determined by how much an individual’s turnover has been reduced in the year April 2020 to April 2021.
HMRC will provide more information and support by the end of June 2021 to help individuals work out how their turnover was affected.
The online claims service for the fifth SEISS grant will be open from late July 2021. In mid-July HMRC will contact individuals who are eligible based on their tax returns to give them a date from which they can make their claim.
Internet link: GOV.UK publications
- Published in self employed scheme
Fourth self-employed grant now open for online applications
On 21 April, the online service for applications for the fourth Self-employment Income Support Scheme (SEISS) grant was opened for claims, HMRC confirmed.
All applications must be submitted by the individual self-employed worker and cannot be handled by accountants or tax advisers.
The fourth grant will be 80% of three months’ average trading profits, to be claimed from late April 2021.
Payment will be in a single instalment capped at £7,500 in total and will cover the period 1 February to 30 April 2021. The scheme has been extended to those who filed a 2019/20 self-assessment tax return prior to 3 March 2021.
Claimants must have been impacted by reduced activity, capacity and demand, or have been trading previously and are temporarily unable to do so. All claims must be made on or before 1 June 2021.
There is no requirement for an earlier SEISS grant to have been claimed to be able to claim the fourth grant.
The fifth SEISS grant will cover the period from 1 May to 30 September 2021 and will be available from July.
It will be set at 80% of three months’ average trading profits, paid out in a single instalment, capped at £7,500, for those with a turnover reduction of 30% or more.
Alternately, it will be worth 30% of three months’ average trading profits, capped at £2,850 for those with a turnover reduction of less than 30%.
Further details of the fifth grant will be provided in due course.
Internet link: GOV.UK
- Published in self employed scheme
HMRC publishes details of final grants for self-employed
HMRC has published details of the eligibility criteria of the final two grants available under the coronavirus (COVID-19) Self-employment Income Support Scheme (SEISS).
At the 2021 Budget it was confirmed that the fourth SEISS grant will be set at 80% of three months’ average trading profits, paid out in a single instalment, capped at £7,500. It will cover the period from February 2021 to April 2021.
To be eligible for the fourth grant, self-employed workers must have filed their 2019/20 tax return by midnight on 2 March 2021. This includes those who became self-employed in 2019/20, provided they have filed according to the deadline.
Eligibility will be based on the 2019/20 self assessment tax return which may affect the amount of the fourth grant which could be higher or lower than previous grants.
The remaining eligibility criteria are unchanged so applicants must either be currently trading but impacted by reduced demand, or be temporarily unable to trade due to COVID-19. They must also declare an intention to continue trading.
Claims can be made from late April until 31 May 2021.
The fifth SEISS grant will cover the period from May to September 2021 and will be available from July.
It will be set at 80% of three months’ average trading profits, paid out in a single instalment, capped at £7,500, for those with a turnover reduction of 30% or more.
Alternately, it will be worth 30% of three months’ average trading profits, capped at £2,850 for those with a turnover reduction of less than 30%.
Further details of the fifth grant will be provided in due course.
Internet link: GOV.UK
- Published in self employed scheme
Check if you can claim a grant through the Self-Employment Income Support Scheme
HMRC is advising the self employed that the Self-Employment Income Support Scheme (SEISS) has been extended. Taxpayers who were not eligible for the first and second grant will not be eligible for the third.
To make a claim for the third grant the taxpayer’s business must have had a new or continuing impact from coronavirus between 1 November 2020 and 29 January 2021, which they reasonably believe will have a significant reduction in their profits.
The third taxable grant is worth 80% of a taxpayer’s average monthly trading profits, paid out in a single instalment covering three months’ worth of profits, and capped at £7,500 in total.
The online service to claim the third grant is open. Taxpayers should make their claim from the date HMRC give taxpayers either by email, letter or within the service. Eligible taxpayers must claim the third grant on or before 29 January 2021.
The grant does not need to be repaid, but will be subject to Income Tax and self-employed National Insurance and must be reported on the taxpayer’s 2020 to 2021 Self Assessment tax return. Taxpayers must keep evidence to support their claim.
Internet link: GOV.UK guidance
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Increased support made available for the self employed
The government has increased the support available to self-employed workers and extended its emergency business loan schemes as the UK heads for a second national lockdown.
On 5 November Rishi Sunak announced an increase in the level of the third instalment of the Self-employment Income Support Scheme (SEISS) from 55% to 80% of average trading profits for November to January. SEISS grants are calculated over three months and the uplift for November to January, increases the level of the third grant to 80% of trading profits. The maximum grant will be capped at £7,500.
The SEISS grants will also be paid faster than previously planned, with the claims window opening at the end of November rather than the middle of December.
Chancellor Rishi Sunak said:
‘The rapidly changing health picture has meant we have had to act in order to protect people’s lives and I know this is an incredibly worrying time for the self-employed. That is why we have increased the generosity of the third grant, ensuring those who cannot trade or are facing decreased demand are able to get through the months ahead.’
Internet link: GOV.UK SEISS grant extension
- Published in self employed scheme
Self Employment Income Support Scheme Grants
HMRC are inviting those individuals that are self employed or a member of a partnership and have been adversely affected by coronavirus to claim a second grant under the Self Employed Income Support Grant.
Applications for the first grant under the scheme closed on 13 July 2020.
The second and final taxable grant is worth 70% of an individual’s average monthly trading profits, paid out in a single instalment covering three months’ worth of profits, and capped at £6,570 in total.
Applications for the second and final grant are now open. The grant is only available to businesses that have been adversely affected on or after 14 July 2020. Taxpayers must make a claim for the second grant on or before 19 October 2020.
HMRC will work out businesses’ eligibility for the second grant in the same way as the first grant.
Taxpayers are able to make a claim for the second grant if they are eligible, even if they did not make a claim for the first grant.
HMRC have confirmed that taxpayers can:
- continue to work
- start a new trade or take on other employment including voluntary work and duties as a military reservist.
The grant does not need to be repaid if a taxpayer is eligible, but will be subject to both income tax and self employed National Insurance.
Internet link: GOV.UK SEISS guidance
- Published in self employed scheme
HMRC releases guidance for self-employed scheme
HMRC has released guidance on the COVID-19 Self-employment Income Support Scheme.
Under the scheme, self-employed individuals will be able to claim a taxable grant based on an average of their earnings over the past three years. To be eligible, workers must have filed all relevant income tax self assessment returns; have traded in the 2018/19 and 2019/20 tax years, and intend to carry on trading in the 2020/21 tax year. Profits, based on an average of the last three years, must be no more than £50,000, and at least equal to any non-trading income, such as employment income, dividends or rental income.
Directors of their own companies who are paid through Pay as You Earn (PAYE) may be able to get support via the Coronavirus Job Retention Scheme.
HMRC began to contact those eligible in early May and invited them to apply online. Payments are scheduled to start later in May and run for three months, but may be extended if necessary.
Internet link: GOV.UK publications
- Published in self employed scheme