Martin Lewis outlines details on the fifth SEISS grant
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Those claiming for a fifth SEISS grant will have noticed that it’s a slightly different process to previous claims, as this time self-employed workers are being asked to tell HMRC about their business turnover during the 2018 to 2021 tax years. These turnover figures then enable HMRC to work out what the claimant is entitled to. Money received from these coronavirus support scheme grants must also be accounted for when it comes around to filling out your Self Assessment tax return.
If the claimants turnover is down by 30 percent or more, they’ll be awarded a grant covering 80 percent of three months’ average trading profits, capped at £7,500.
However, if turnover is down by less than 30 percent, only 30 percent of three months’ average trading profits will be given, capped at £2,850.
Research by The Association of Independent Professionals and the Self-Employed (IPSE) on turnover levels within the self-employment sector highlighted many claimants may be getting the higher payments.
It discovered that two out of three freelance businesses (67 percent) were negatively affected by the pandemic, which translated into a drop in turnover for sixty percent of all freelancers.
READ MORE: SEISS turnover rules for fifth grants updated by HMRC
Is the grant subject to Tax and National Insurance?
The money received is a grant, not a loan, so it won’t need to be repaid.
However, not everyone is aware that these SEISS grant awards are subject to Income Tax and Class 4 National Insurance contributions.
HMRC advised that the first three SEISS grants are taxable in the 2020/21 tax year and they should be reported in full in your 2020/21 Self-Assessment tax return.
The fourth and fifth grant will need to be accounted for on your 2021/22 financial reports.
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How to report a grant on your Self Assessment form:
SEISS payments should be placed in the Self Employment Income Support Scheme Grant box on your Self Assessment form.
HMRC said claimants must record all other taxable Covid-19 payments in the ‘any other business income’ box.
Not only is the grant subject to Tax and National Insurance contributions, it also counts towards your annual allowance for pension contributions, additional support and guidance can be found at, gov.uk check if you can claim a grant through the Self-Employment Income Support Schem
Claims for the fifth Coronavirus Covid-19 support grant must be made by September 1 and the government has confirmed that it will be the final grant.
This month HMRC also announced changes that will affect construction workers and members of partnerships.
For subcontractor claimants who have received support under the Construction Industry Scheme (CIS), their turnover must include the full amounts on their invoices, before any deductions contractors have made in the “CIS deductions” field.
Furthermore for partnerships, how a claimant works out their turnover depends on when they were in the partnership and if they had other businesses.
HMRC explained: “If you were a member of the same partnership in your reference year and in April 2020 to April 2021 and had no other businesses in either of those years, you’ll need to work out and use the partnership’s total turnover figure for the reference year. ”
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Self Assessment tax returns, which are usually completed by self-employed workers, are due in various stages throughout the year.
Paper based tax returns must be completed by midnight on October 31, 2021.
For those completing an online return, this must be completed by January 31, 2022.
That said, it’s a good idea to fill out your return as soon as possible and not leave it until the last minute as it’s easier to get it right.
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