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04 August 2021

Self Employed Income Support Scheme (SEISS) | The Fifth & Final Instalment


FREQUENTLY ASKED BUSINESS QUESTION

Q&A SessionI have previously claimed the Self-Employed Income Support Scheme (“SEISS”). Will I automatically be entitled to claim the next payment?


TAX TIP:

What is the Self-Employed Income Support Scheme (SEISS)?

The SEISS was introduced by the Government to help support self-employed individuals. A total of four support payments have been made to date. The fifth and final payment will be available from late July 2021 to Thursday 30th September 2021. This final payment will cover the payment period from May 2021 to September 2021

Will I automatically qualify for the final Self-Employed Income Support Scheme (SEISS) payment?

Individuals can only make a claim if they have satisfied the eligibility criteria and have received notification from HMRC.

HMRC have already started to contact individuals who may qualify for the fifth and final SEISS payment with details of how they can apply online. The eligibility criteria is the same as the fourth SEISS payment, however, there is one new condition, a turnover test. This test is used to determine the amount of grant that the individual is entitled to.

Important Information: Not all claimants are required to consider the turnover test, there are exclusions. New traders, defined as individuals who only commenced trading in the 2019/20 tax year are exempt. Also, any individuals, who have an underwriting business are also excluded from the turnover test.

How do I complete a turnover test for the Self-Employed Income Support Scheme (SEISS)?

Whilst the concept of the turnover test seems relatively simple, the reality is that the rules on the calculation of the turnover are somewhat confusing. To satisfy the turnover test, there should be a reduction of 30% in turnover for the pandemic period compared to turnover in the reference period.

  • Pandemic Period: The 12-month accounting period beginning in the period from Wednesday 1st April 2020 to Monday 6th April 2020 only.
  • Reference Period: The 2019/20 tax year, or, alternatively, the 2018/19 tax year if it provides a more accurate record of the individual’s trading position.

The amount of grant received is dependent on the decrease in turnover. For example:

  • Where the turnover has reduced by 30% or more, individuals would be entitled to a payment equal to 80% of three months averaged trading profits, up to a maximum of £7,500.
  • Where the reduced turnover is less than 30%, individuals would be entitled to receive a payment equal to 30% of three months averaged trading profits, up to a maximum grant of £2,850.

However, for partnerships there are two sets of rules:

Rule 1: Partners who have no other business interests other than the partnership they are involved in. They are required to use the total turnover figure from the partnership.

Rule 2: Partners who do have other business interests in addition to the partnership. Here, partnership turnover should be adjusted by reference to the profit-sharing arrangements.

The turnover test includes the actual turnover relating to trading activities, not the taxable turnover. Therefore, when calculating the turnover figure, any government supports are excluded. For example, SEISS payments (1 to 4), local authority grants, furlough payments under the covid job retention scheme, and the eat out to help out scheme.

Here to HelpContact PKF-FPM

As with the previous SEISS payments, getting it wrong can be costly. Therefore, if you are thinking of making a claim for the fifth SEISS payment, it would be important to discuss this with your accountant and trusted advisor. If you were in a position to complete your 2020/21 tax return, we would strongly advise that this is completed in advance of making the fifth SEISS claim. In doing, it will ensure full clarity and peace of mind that the correct amount is being claimed

As always, the team at PKF-FPM are here to help with all your finance and tax queries. For more information and assistance on the Self Employed Income Support Scheme (SEISS), please contact our Tax Team.

Alternatively, you can visit the HMRC website to find out more.

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The advice in this column is specific to the facts surrounding the questions posed. Neither PKF-FPM nor the contributors accept any liability for any direct or indirect loss arising from any reliance placed on replies.

Contact Siobhan

Siobhan McCreesh / Associate Tax Director

s.mccreesh@pkffpm.com

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