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COVID Update – The Fifth SEISS Grant – The Calculation

SEISS 5th Grant Claim
Self-Employed Income Support Scheme

The window for the Fifth SEISS Grant will soon be open. However, the calculation is very different to the previous grants.

The 5th, and final SEISS Grant will support many more individuals whose businesses have been affected by the COVID pandemic and the restrictions imposed by the Government. Here’s what we know so far …

The Application Process

The application process for the fifth grant will depend on details of two years of turnover and losses resulting from the pandemic.

HMRC has confirmed that the turnover figures will be used to work out the amount of the SEISS grant. Claims must include information about turnover if you submitted a tax return for your business in 2019 to 2020 as well as any of the following tax years: 2018-19, 2017-18 and 2016-17.

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Your Turnover

Turnover includes the takings, fees, sales or money earned or received by your business. It does not include any other SEISS grants or other funding received, e.g. rates grants, loans or charity.

It must cover a 12 month period commencing between 1st April – 6th April 2020.

Your previously submitted tax returns will be the best place to start. This will include the information that you will need to provide for your 2020-21 tax return. You will also need to refer to the previous tax years 2019-20, 2018-19, 2017-18 and 2016-17.

For the 2020-21 turnover figure you will need to refer to your bookkeeping software, spreadsheets and bank statements.

Whilst Onyx cannot submit your claim, we can assist with calculating your turnover. If you have never completed accounts before then our dedicated accounts team are on hand to manage this for you. They will be able to compile all of your data to establish the turnover figure required for your claim. We can then go onto to complete your Self-Assessment tax return and advise on your tax position.

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Partnerships

If you are in a partnership then the same percentage share used on the end of year profits will be used on the partnership’s turnover.

As with individuals, the turnover figures reported on the 2019-20 partnership return will be used as a reference. Previous years will also be referred to.

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Unusual Trading Results

As with many business, what if 2019-20 was not a normal year for your business?

If this is the case, then you can use the turnover reported in your 2018-19 tax return.

The comparison of tax years will show how 2019-20 was not a normal year for you. For example, a lost major contract, you had a baby, were on long-term sick leave, or on carers leave.

This will also apply if you are eligible for the fifth grant but did not submit a 2019 to 2020 return.

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The Calculation

The best way to explain this is to show you an example:

For example, if you had a total turnover of £100,000 for 2019-20, which fell to £50,000 for April 2020 to April 2021, representing a 50% drop in revenue, you will get the higher grant amount.

Where your turnover only fell to £80,000, therefore down by 20% compared to 2019-20 you will get the lower grant amount.

HMRC’s rules are:

  • If your business turnover has fallen by 30% or more, as with previous grants you will receive 80% of 3 months’ average trading profits, capped at £7,500.
  • If your turnover has not been as severely affected and the reduction is less than 30%, you will only receive 30% of 3 months’ average trading profits, capped at £2,850.

In the event that 2019-20 was not a normal year for your business, due to the pandemic, SEISS applicants can use 2018-19 as the turnover reference year.

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Making a Claim

HMRC will contact you automatically, if you are eligible, to give a date that you can make your claim.

Claims must be made directly by eligible individuals and cannot be processed by agents or accountants.

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Who is Eligible?

To be eligible for the fifth grant, and for new entrants to the scheme, you must have filed a Self-Assessment tax return for the 2019/20 tax year by midnight on 2nd March 2021.

All other eligibility criteria will remain the same as the previous grants.

Firstly, you must be a self-employed individual or a member of a partnership.

You must also have traded in both the 2019/20 and 2020/21 tax years and submitted your 2019/20 tax return by 2nd March 2021.

You must either:

  • be currently trading but are impacted by reduced demand due to coronavirus; or
  • have been trading but are temporarily unable to do so due to coronavirus

You must also declare that:

  • you intend to continue to trade; and
  • you 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 coronavirus

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Previous SEISS Grants

The first grant – A grant of up to 80% of your average monthly trading profits capped at £7,500. This closed on 13th July 2020.

The second grant – A grant covering up to 70% of your average monthly trading profits, capped at £6,750. This closed on 19th October 2020.

The third grant – A grant covering 80% of your average monthly trading profits capped at £7,500. This closed on 29th January 2021.

The fourth grant – A grant covering 80% of your average monthly trading profits capped at £7,500. This closed on 1st June 2021.

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HMRC Online Toolkits

HMRC have provided an online tool to check if you’re eligible. 

If you received the previous grants you are likely to be eligible for the fifth grant if your business continues to be affected.

The government has an online portal for making a claim.

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How Onyx Accountants can help you?

We are unable to make the claim for you. However we can review your previously submitted tax returns and advise on how much you should be entitled to. We can advise on fund management and how to make the best use of your grant once received.

By planning ahead we can monitor your business performance as it emerges from the numerous lockdowns, and restricted business activity. Helping your business get back on track.

We would recommend completing your next tax return early, so you know how much tax you need to pay and by when. It also makes perfect sense if you are due a refund. We want to make sure that any refunds due are received as soon as possible. We can also advise on how best to make provision for any additional tax payments due by 31st January 2022.

By using Onyx Accountants and Business Advisors to undertake a review of the SEISS grants along with your self-assessment tax return, you eliminate the worry which allows you to concentrate on running your business.

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GET IN TOUCH WITH ONYX

If you have any queries, or want to discuss further, please give us a call; or e-mail us at  enquiries@onyx.accountants for a FREE no obligation consultation.

Got any questions or queries? Our friendly team of tax specialists are happy to help. Just drop us a line! Call us on 0121 753 5522 or 01902 759 800.

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