How Can Sole Traders Claim the Fifth SEISS Grant for Self-Assessment?

Are you unsure how to claim for the fifth Self-Employment Income Support Scheme grant (SEISS) for your self-assessment? This blog will consider how to claim the fifth grant as discussed in the March 2021 budget, and the eligibility to claim based on factors such as turnover.

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What is the fifth SEISS grant?

The fifth SEISS grant is the last out of five grants made available by the government to support self-employed individuals in the UK whose businesses have been affected by the COVID-19 pandemic. 

£25.2 billion has already been paid by the UK government to 2.9 million self-employed workers who require financial support, with a total of 9.1 million grants having been claimed by self-employed individuals in the UK since the scheme was initiated last year, according to HMRC. The grants available are worth up to £7,500.

To be eligible for the grant, the following conditions need to be met:

  • Your business trade must be negatively affected due to the pandemic.
 
  • Your business was trading in 2019/2020 and 2020/2021.
 
  • From 1 May 2021 to 30 September 2021 the business should have suffered a loss.

The First Step to Claim Fifth Grant

In order to claim for fifth grant, your business is required to calculate the turnover (see below) in 2020-2021, as well as calculating the turnover in the previous years (2019, 2018).

 

Applicable Turnover Figures:

  • A business may check their self-assessment form
  • Accounting software such as Xero
  • Business bank account
  • Bookkeeping data
  • Tax accountant may help
 

If a business has received other income due to the pandemic, then that income would not be considered as an applicable turnover figure.

Calculating Turnover

If the accounting period is longer than 12 months, then the business needs to apportion it.

If the sole trader has another business, then the turnover for both businesses should be calculated over the 12-month period.

The Grant is Dependent Upon the Turnover

When you enter your business’ data online, the service will automatically calculate whether the turnover has increased or decreased compared to the reference year.

If the turnover is has decreased by 30% or more, then the grant will be based on 80% of the three-month trading profits, restricted at £7,500.

However, if the turnover has dropped less than 30%, then the grant is based on 30% of three-month trading profits, restricted at £2,850.

How to Claim Fifth Grant for a Partnership

If you have partnership with another business, then the total turnover for the business needs to be added in order to calculate the grant.

If a self-employed individual is involved in a partnership, then they are required to add their self-employed turnover to their partnership share of profits.

How to Claim Fifth Grant if You Are a New Self-Employed Business

If a business is new and the owner has not been involved in a partnership in previous years, then they are not required to do the grant test. Instead, they will receive the grant calculated at 80%.

Before the business receives the grant, there will be a pre-validation check conducted by HMRC. If a business is new and has started trading in 2019/2020, then the HMRC requires proof such as trading and identity validation.

Deadline to Make the Fifth Grant

The deadline to make the fifth SEISS grant is from July to 30 September 2021.

If your business requires help in the application process, the HMRC SEISS helpline is available.

If a business has had made changes to its tax returns after 2 March 2021, then it will affect the amount of grant eligible. For example, the grant can be reduced from 80% to 30%, or a business may not be eligible at all. Therefore, if a business does make a change to the tax return after claiming the grant, then they may be required to repay the grant, and if they don’t pay within the deadline then penalties may arise.

Overall, this blog has considered how and who is eligible to claim the fifth grant which is all dependent upon the amount of turnover.

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