Full details of the fifth Self-Employed Income Support Scheme (SEISS) grant, including a new turnover test which determines the level of the grant, were published by HMRC on 6th July.
Unlike the CJRS Furlough Grants to support employees’ wages, Tax Agents are not allowed to make SEISS grant claims on their client’s behalf. This seems unreasonable as most self-employed traders will find the HMRC guidance inexplicable and will need their accountant/ tax agent’s assistance in determining how much they are entitled to!
Although the eligibility for the fifth grant is the same as the fourth grant, the amount of the fifth grant will be determined by how much the turnover of the business(es) have reduced compared to the turnover in the reference year.
See: Check if you can claim a grant through the Self-Employment Income Support Scheme - GOV.UK (www.gov.uk)
The fifth grant is 80% of three months’ average trading profits capped at £7,500 for those whose turnover has reduced by 30% or more. Those with a turnover reduction of less than 30% will receive a grant based on 30% of three months’ average trading profits, capped at £2,850.
We have been waiting for the precise rules for determining turnover, but HMRC guidance provides more questions than answers and further clarification is still required.
See: Work out your turnover so you can claim the fifth SEISS grant - GOV.UK (www.gov.uk)
The turnover figure required is for a 12-month period starting on any date between 1 and 6 April 2020. Those who prepare accounts on a tax year basis will be able to use the same figure that will appear on the 2020/21 tax return.
That turnover figure is then compared to the turnover in the “reference period” which for most individuals will be the turnover figure from their 2019/20 tax return and there is an option to use 2018/19 if 2019/20 was not a normal year for the business.
The turnover figure will be the sum of all of the taxpayer’s businesses but should exclude coronavirus support payments (for example previous SEISS grants, eat out to help out payments and local authority grants).
The rules for partners seem particularly illogical, especially where they are also involved in another business. We will keep you updated if and when further clarification is published.
Please contact us if you need help with making the claim.