What period does the 5th grant cover?
• May 2021 to September 2021 inclusive.
When can the 5th grant claim be made?
• If you may be eligible, HMRC should contact you around mid-July 2021 to provide you with a date from which you can make the claim through the Gov.UK online portal.
• The final deadline for making the claim will be 30th September 2021.
What are the eligibility criteria for the 5th grant?
• You must have been self-employed (S/e) during the 2019/20 and 2020/21 tax years.
• You must have submitted the 2019/20 Tax Return by 2nd March 2021.
• You must either be trading but impacted by reduced demand due to the pandemic or have been trading but are temporarily unable to do so due to the pandemic.
• You must intend to continue to trade.
• You must reasonably believe there will be a significant reduction in your trading profits due to reduced business activity, capacity, demand or inability to trade due to the pandemic.
• Your S/e profits for 2019/20 tax year must be no more than £50,000 and represent at least 50% of your total 2019/20 income or (if that fails) your average S/e profits for the tax years 2016/17 to 2019/20 inclusive must be no more than £50,000 and represent at least 50% of your average total income for the same period.
• If you commenced S/e later than the 2016/17 tax year the average is over the period from the tax year you commenced trading up to and including 2019/20.
• If you had a gap period between S/e businesses since 6th April 2016 then the average is based upon the end of the gap period up to and including 2019/20 tax year.
What is meant by ‘reasonably believe’ and significant reduction’?
• You must have experienced reduced activity, capacity or demand or to be temporarily unable to trade in the period from 1st May 2021 to 30th September 2021, compared with what could reasonably have been expected but for the adverse effect on the business due to the coronavirus.
• Before making the claim, you must reasonably believe the impact will cause a significant reduction in trading profits for the relevant accounting period as a whole (not just the 5 months ending 30th September 2021), compared with what would otherwise have reasonably been expected as a result of that reduced activity, capacity or demand.
• You ignore any Covid-19 grants you may have received when considering this situation.
What will be the size of the grant?
1) The lower of 80% of 3 months average trading profits or £7,500 (the higher grant) or
2) The lower of 30% of 3 months average trading profit or £2,850 (the lower grant).
How will the higher/lower grant options be decided?
a) It will be based upon the comparison between S/e turnover figures, which will need to be provided to HMRC when a claim is made.
b) Firstly, you will need to provide your S/e turnover figure for all your businesses for a 12-month period starting from between 1st April 2020 and 6th April 2020.
c) Secondly, you will need to provide your S/e turnover figure for all your businesses shown on your 2019/20 Tax Return.
d) If turnover in b) is 30% or more less than c) then the higher grant applies.
e) If turnover in b) is down less than 30% in comparison to c) then the lower grant applies.
f) If you believe that the 2019/20 year was not a ‘normal’ one, then you can opt for providing similar details on your 2018/19 Tax Return instead.
g) If you commenced trading in the 2019/20 tax year and did not trade in any of the tax years 2016/17, 2017/18 or 2018/19 you will not be required to provide turnover figures.
What might constitute ‘not a normal’ year?
• You were on carers leave or long-term sick or you had a new baby.
• You carried out reservist duties during that time.
• You lost a large contract during that period.
• Note the above are examples, there may be other acceptable reasons.
An example of when you might get the higher grant?
If you have a total turnover of:
• £20,000 for 2019/20 tax year
• £10,000 for April 2020 to April 2021
Your turnover for April 2020 to April 2021 is down by 50% compared to 2019/20.
You’ll get the higher grant amount which is worth 80% of 3 months’ average trading profits because your turnover is down by 30% or more.
An example of when you might get the lower grant? If you have a total turnover of: • £20,000 for 2019/20 tax year • £16,000 for April 2020 to April 2021 Your turnover for April 2020 to April 2021 is down by 20% compared to 2019/20. You’ll get the lower grant amount which is worth 30% of 3 months’ average trading profits because your turnover is down by less than 30%.
What will you need to make the claim?
• Your Unique Taxpayers Reference number.
• Your National Insurance number.
• Government Gateway ID and password.
• Bank account and sort code.
What evidence should be kept?
• A copy of the amount claimed.
• A copy of the claim reference number.
• Evidence to show the impact and reduction in your business activity across the period from May to September 2021 inclusive.
• Evidence that, at the time of making the claim, you had reason to believe that the trading profits were going to be significantly reduced, not just for the period May to September 2021, but for the accounting periods affected.
• How you calculated both sets of S/e turnover figures supplied to HMRC when making the claim.
• If relevant, evidence to support why the 2019/20 S/e turnover figure, per your 2019/20 Tax Return, did not represent a ‘normal’ year.
• The grant will need to be reflected within your self-employed accounts and will be liable for tax and national insurance.
• Be careful: If the S/e turnover figure reflected in the 2019/20 Tax Return is as a result of you lengthening the accounting period you need to adjust that figure to 12 months. If you opt for 2018/19 tax year the same will apply.
• Be careful: If the S/e turnover figure reflected in the 2019/20 Tax Return is as a result of you shortening the accounting period you need to adjust that figure to 12 months. If you opt for 2018/19 tax year the same will apply.
• Be careful: When supplying S/e turnover figures remember to strip out previously paid SEISS payments and other Covid-19 related Government or Local Authority grants.
• Be careful: HMRC will be reviewing the two respective turnover figures submitted and could claw back the SEISS grant at a later date.
• Keeping a copy of evidence backing up the reasons for your claim will help should HMRC look to review your claim in the future.
How can we help?
• We are not allowed to make the claim on your behalf.
• However, we can assist you in understanding the implications regarding making the claim.
• We can look to see whether we think you are eligible to make the SEISS claim based upon the information before us.
• We can help you with providing HMRC with the relevant S/e turnover figures.
• We can check to see if we believe the SESSS grant paid across to you is correct.
Please contact us if you would like advice on this or other matters