Full details of the fifth SEISS grant, including a new turnover test which determines the level of the grant, are now available.
Level of grants
The rules for the fifth SEISS grant are generally the same as for the fourth grant, however, a turnover test has been introduced.
The fifth grant is calculated as 80% of three months’ average trading profits capped at £7,500 for those whose turnover has reduced by 30% or more. Those individuals 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.
Self-employed individuals and members of a partnership are potentially eligible for the fifth SEISS grant where the taxpayer:
- submitted their 2019/20 tax return by 2 March 2021;
- traded in the 2019/20 and 2020/21 tax years;
- is currently trading but is impacted by reduced demand due to coronavirus, or has been trading but is temporarily unable to do so due to coronavirus;
- intends to continue to trade; and
- reasonably believes there will be a significant reduction in their trading profits due to the impact of coronavirus in the period 1 May 2021 and 30 September 2021
The taxpayer’s trading profits must be no more than £50,000 and at least half of their total income for either:
- the 2019/20 tax year; or
- the average of the tax years 2016/17, 2017/18, 2018/19 and 2019/20
The above criteria is unchanged from the fourth grant.
Claimants will need to provide two turnover figures during the claims process. HMRC will calculate the grant amount based on how much the turnover has reduced when comparing the two turnover figures.
The two turnover figures are for:
1. The pandemic period
The turnover figure required here is for a 12 month period starting on any date between 1 and 6 April 2020. Those individuals who prepare accounts in accordance with the tax year will be able to use the same turnover figure as will appear on the 2020/21 tax return, although it is not necessary to file the return before making a claim. Those taxpayers who use a different accounting date will need to make a separate calculation. For these purposes the turnover figure should include all of the taxpayer’s businesses, but exclude COVID-19 support payments (such as SEISS grants and local authority grants).
2. The reference period
In most cases the turnover figure will be taken from the 2019/20 tax return, however, there is an option to use 2018/19 if 2019/20 was not a normal year for the business. There are provisions to adjust the turnover figure if the accounting period was longer or shorter than 12 months, but there is no requirement to make the adjustment if the period covered is less than 12 months because the business started or ceased in the tax year.
Those individuals who started trading in 2019/20 and did not trade in any of the 2016/17, 2017/18 or 2018/19 tax years will not be required to provide turnover figures and will receive a grant based on 80% of trading profits.
Partners will need to provide turnover figures for the partnership as a whole unless they also have other trades, in which case they can use their share of the partnership turnover.
How to make a claim
The online service for the fifth grant will be available from late July 2021.
HMRC will contact eligible individuals (by email, text message, letter or within the online service) in mid-July to give a date from when the claim can be made. Claims must be made on or before 30 September 2021.
How the grant is treated
The fifth grant is subject to income tax and self-employed national insurance contributions. The fifth grant must be reported on the 2021/22 tax return.