Home   Business News   Article

Subscribe Now

Leigh Thurston, from Lovewell Blake, with the latest news on Covid support for the self-employed

The disappointment in the hospitality and travel sectors in particular about the pushing back of the so-called Freedom Day by four weeks has been very evident in the media since the announcement was made by Boris Johnson – but for the self-employed, support continues to be in place, and will be right through until September.

A fifth Self-Employment Income Support Scheme (SEISS) grant has now been announced, covering the period May to September 2021.

But perhaps recognising that the economic effects of the pandemic are starting to recede for many businesses, this round of support is not as generous as previous tranches, and the amount available will be determined by how much a trader’s self-employment turnover had actually reduced in the 2020/21 tax year.

Leigh Thurston, from Lovewell Blake
Leigh Thurston, from Lovewell Blake

If your turnover has reduced by 30 per cent or more, the grant will be worth 80 per cent of three months’ average trading profits (even though the period covered is actually five months), and the payment is capped at £7,500.

For those whose turnover has reduced by less than 30 per cent, the grant will be worth just 30 per cent of three months’ average trading profits, capped at £2,850.

As with the previous SEISS grants, the amount is based on an average of trading profits for up to four years between 2016/17 and 2019/20, and those profits (on average) must not be more than £50,000. Claims are expected to be opened in July.

Lovewell Blake
Lovewell Blake

Meanwhile, HMRC is now starting to flex its muscles when it comes to ensuring that this support is targeted where it is needed – and is also starting to claw back some of the cash through tax returns.

Self-employed taxpayers are required to make an honest assessment that there has been a significant reduction in trading profits due to Covid, and the Revenue is likely to be taking a close look at applications to ensure this is the case.

Don’t forget also that the SEISS grants count as taxable income, and therefore need to be declared on your tax return. The first three rounds of grants need to be included on the 2020/21 tax return, which is due to be submitted by January 31, 2022, while the fourth and fifth grants will need to be included on the 2021/22 tax return.

Now is also the time to tell HMRC if you received a grant which in retrospect you were not entitled to, perhaps because your business was not as adversely affected as you predicted, or because your business changed, for example by becoming incorporated. You should tell HMRC within 90 days of receiving the grant if you have been overpaid; they may charge penalties if you don’t tell them in this period without a reasonable excuse.

Read more: Business news and opinion from around Suffolk

Read more: News from around Suffolk