It has been announced that self-employed taxpayers will be able to apply for the 5th Self-Employment Income Support Scheme (SEISS) grant from ‘late July’.

Anyone who is eligible based on their tax returns can expect H M Revenue & Customs (HMRC) to contact them from ‘mid-July’ with the earliest date from when they can make a claim. Further details are not being announced until the end of this month, but we do know that the 5th grant will cover the period from 1 May to 30 September and be worth up to £7,500.

Turnover test and average profits

Whilst it seems that much of the eligibility criteria is the same as before, a heads up that this (supposedly final) grant could work out very differently for claimants because it will be determined by a turnover test comparing the year April 2020 to April 2021 with the pre-pandemic period, and average monthly profits:

  • If turnover has reduced by 30% or more, you will be entitled to 80% of 3 months’ average trading profits up to a maximum of £7,500.
  • If turnover has reduced by less than 30% you will be entitled to 30% of 3 months’ average trading profits up to a maximum of £2,850.

More information on the turnover test and how average profits will be calculated will be provided by HMRC by the end of June. We’ll be interested to see how it impacts anyone operating on the cash basis, like many of our barrister clients, who can suffer significant delays between doing their work and getting paid for it, which can be distortive in terms of year-on-year comparisons.

One particularly important point to note in terms of eligibility is that average trading profit must be £50,000 a year or less. This is a cliff-edge requirement, anyone with annual trading profit of £50,001 or more won’t be able to get any support from this scheme.

Next steps

As soon as the Government provides the additional information that we are waiting for to help us understand more about the 5th grant, we’ll update our guidance. The details that are already available, including the strict eligibility criteria, are available on the Government website, click here to read more.

Remember that HMRC has made it clear that they will be reviewing claims for both the SEISS and Coronavirus Job Retention Scheme, so it is vital that you keep records of why you have claimed to support any challenge.

And finally, we’ve mentioned in previous blogs that, as agents, we are unable to complete SEISS applications on behalf of taxpayers, but we can provide a useful sounding board for concerns or queries about eligibility, so do get in touch with your usual Sagars contact if there’s anything we can help you with.

Kate Naylor
Kate Naylor
Tax Partner

Kate works with businesses and their owners on tax strategies and mitigation, looking at business and personal tax structures to achieve long term goals.

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