This page provides an overview for members on the UK Government’s Self-Employed Income Support Scheme (“SEISS”). The content herein has been derived entirely from HMRC’s guidance and communications to Chartered Accountants Ireland and information also published on GOV.UK in respect of the SEISS.
A similar page providing guidance on the Coronavirus Job Retention Scheme is also available.
The SEISS was first announced by the Chancellor of the Exchequer on 26 March 2020. Applications for the first four SEISS grants are now closed. Brief details of the next SEISS grant, SEISS grant 5, were announced in Budget 2021. To qualify, self-employed individuals must have filed a 2019/20 Self-Assessment (“SA”) tax return by midnight on Tuesday 2 March 2021 and they must also meet the other eligibility criteria, including a turnover test (more on this below).
The Institute will continue to engage with HMRC on our members behalf in respect of COVID-19 supports and will share the most up to date information as it becomes available.
We therefore recommend that you bookmark this page and also regularly check the latest updates section of our COVID-19 hub.
This page was last updated on Monday, 9 August 2021.
SEISS grant 4
As announced in Budget 2021, SEISS grant 4 was worth 80 percent of three months’ average trading profits, and was paid out in a single instalment capped at £7,500 in total covering the period February 2021 - April 2021. Applications for claims opened in April 2021 and closed on Tuesday 1 June 2021.
SEISS grant 5
A fifth and final SEISS grant covering May 2021 - September 2021 is now available and must be claimed by 30 September 2021. The value of SEISS grant 5 is determined by a turnover test as follows:-
- anyone whose turnover has fallen by 30 percent or more will continue to receive the full grant worth 80 percent of three months’ average trading profits, capped at £7,500; and
- anyone whose turnover has fallen by less than 30 percent will receive a 30 percent grant, capped at £2,850.
The online claims service for SEISS grant 5 will therefore ask for the taxpayer’s turnover for the year April 2020 to April 2021 (the ‘pandemic year’) and the tax year 2019/20 (the ‘reference period’) – or the tax year 2018/19 if 2019/20 was not a normal year for their business.
More details on how to calculate turnover can be found on GOV.UK and a YouTube video is also available.
HMRC are stressing that taxpayers do not need to submit their 2020/21 Self-Assessment tax return at this time, even though the taxpayer is being asked for their 2020/21 turnover.
Applications for SEISS grant 5 opened from late July 2021. Taxpayers must meet all the criteria in stages 1, 2 and 3.
As with previous grants, anyone who is digitally excluded or Northern Ireland self-employed individuals who do not have a Government Gateway (“GG”) ID (and cannot verify their identity to set one up because they have an Irish passport and do not have a Northern Ireland driving licence) are required to claim over the phone.
HMRC has now contacted all taxpayers who may be eligible to let them know their personal claim date which is the earliest date they can make their claim.
If a taxpayer previously heard from HMRC that they were not eligible for SEISS grant 4, according to HMRC they will not be eligible for SEISS grant 5 either. This is because the same SA returns have been used to determine eligibility for both grants.
HMRC has also contacted a number of taxpayers before claims opened for SEISS grant 4, to get more information to check their eligibility. Where HMRC contacted someone and they did not provide the requested details, they will need to provide the information asked for if they would like their eligibility to be checked for SEISS grant 5. These taxpayers will receive details on what to do when they access the online SEISS claims service.
Recent developments and key updates
Important updates and recent developments in respect of the SEISS are as follows:-
Partnerships
A correction to the Treasury Direction for SEISS grant 5 has been published to cover claims made on or after 29 July 2021. HMRC has updated its guidance on the direction.
In respect of the turnover test for SEISS grant 5, partners must use turnover for the partnership as a whole unless they have another self-employed business as a sole trade or partnership. In those cases, they must use their share of partnership turnover when making the comparison.
The modified direction clarifies that the profit share rule applies only when the partner has multiple trades in either 2019/20 or the pandemic period (a 12-month period starting on any date between 1 and 6 April 2020).
Ineligible taxpayers
HMRC has contacted taxpayers who previously claimed SEISS support but are no longer eligible. There are a number of reasons for ineligibility, for example:
- ·not filing their 2019/20 SA return on or before 2 March 2021;
- if the information on their 2019/20 SA return means they no longer meet the eligibility criteria, or
- if they’ve permanently ceased trading.
If a taxpayer believes that HMRC has incorrectly assessed their eligibility, or the amount of their grant, they should follow the advice provided in the email or letter.
Amendments to 2019-20 SA returns after 3 March 2021
If an amendment has been made to a SA return on or after 3 March 2021, a taxpayer will need to check if their eligibility for SEISS grant 4 has been affected. This new requirement applies to claims for SEISS grants 4 and 5 only, and to amendments made on or after 3 March 2021 to SA returns for tax years 2016/17 - 2019/20 inclusive.
SA returns can only be amended up to 12 months following the filing date, so this time limit will have passed for most returns between 2016/17 - 2018/19, unless they were issued late. If returns are amended 'out of time', this will not change the relevant tax return so will not be taken into account for SEISS grants 4 and 5.
HMRC must be notified within 90 days if the amendment either:
- lowers the amount of SEISS grant the taxpayer is eligible for; or
- causes the taxpayer to no longer be eligible for a SEISS grant.
The taxpayer may need to pay back some or all of the grant. If HMRC is not notified, HMRC will make contact after the deadline for making amendments to tell them what amount they may need to pay back. If HMRC is not notified within 90 days, a penalty may also be payable.
HMRC does not need to be notified if either:
- the amount they’re eligible for is lowered by £100 or less; or
- they are no longer eligible and the grant they received was £100 or less.
Once a taxpayer has made an amendment, they can tell HMRC if they need to pay back some or all of a SEISS grant by completing a simple form online. HMRC will then contact them with details of how much they need to repay, and how to do this.
Eligibility for parents
Parents may be eligible even if they have taken time off, provided they meet the specific eligibility criteria.
If having a new child has affected a taxpayer’s 2019/20 SA return, HMRC may consider their eligibility in a different way. This would apply where a taxpayer’s trading profits or total income in their 2019/20 SA return meant that they did not meet the eligibility criteria for the grant, or they did not submit a SA return for 2019/20.
For new parents who did not submit a 2019/20 SA return, HMRC will assess eligibility using an average of the applicable 2016/17 - 2018/19 SA returns.
For parents to be eligible for SEISS 5 they must be a self-employed individual or a member of a partnership. Their average trading profits across their applicable 2016/17 - 2018/19 SA returns must be no more than £50,000 and at least equal to their non-trading income. They must 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.
Newly self-employed
HMRC has also been contacting some taxpayers who may be eligible for SEISS grant 5, if they started trading in 2019/20, to verify their identity. HMRC is asking taxpayers for one form of identity and three months’ worth of bank statements from the 2019/20 tax year. To confirm the contact is genuine, taxpayers can go to HMRC trusted contacts on GOV.UK.
Penalties for overclaims of SEISS grants
HMRC has now updated its guidance on the penalty regime for overclaims of SEISS grants which includes any amount of grant which the self-employed person was not entitled to receive or if this was more than the amount HMRC said the applicant was entitled to when the claim was made.
As was previously the case, overpayments must be notified to HMRC within 90 days of receipt of an SEISS grant. Penalties can be charged up to 100% on the amount of SEISS grant overpaid, however a penalty will not be charged if the overpayment is repaid to HMRC by 31 January following the tax year and the taxpayer did not know they were not entitled to the grant when it was received.
Can taxpayers still claim if they have outstanding SA debt?
As long as they are eligible, taxpayers can still claim the SEISS grant if they have an outstanding debt on their HMRC account from SA.
Scam warning
HMRC is also warning taxpayers of a phishing campaign circulating which is telling taxpayers that they can claim SEISS grants. The key advice is not to reply to the email or open any links in the message. Any phishing emails or texts should be notified to HMRC at phishing@hmrc.gov.uk so that they can be investigated.
Often, the scam email will have a subject line ‘HMRC SEISS Tax Refund Notification’ telling the recipient that claims for the SEISS grant have now opened for application. It then directs them to sign in to ‘HMRC online services’.
The SEISS – agents
For all five grants, agents are unable to make claims on behalf of their clients. As before, tax agents should not submit review requests on behalf of their clients, as this can lead to delays. HMRC will only discuss SEISS claims with the individual taxpayer.
As with previous SEISS grants, tax agents cannot make a claim on behalf of their clients, or use their log in details, as this will trigger a fraud alert and result in delays to their client receiving payment.
A SEISS ‘how to’ video, specifically for tax agents, provides screenshots of the claims service to help support clients.
HMRC has advised us that they may not be able to talk to you about your clients’ SEISS grants unless additional consent is received from them. This is because HMRC’s existing process – the 64-8 agent authorisation – was not designed to cover the support provided in response to coronavirus, such as SEISS grants, so the usual taxpayer confidentiality rules apply. The requirement for consent is explained in more detail below.
Before a SA tax return is filed:
- SEISS grant information cannot be disclosed to an agent without specific consent from their client; and
- written consent is HMRC’s preferred option, although HMRC can record consent if your client calls 0300 200 3310;
- written consent should include your client’s name, address, tax reference number (for example their Unique Taxpayer Reference (UTR)) and signature, in addition to the name and address of the agent they wish to authorise. This should be posted to: National Insurance contributions and Employers Office, HM Revenue and Customs, BX9 1AN.
After a SA tax return is filed:
- as an authorised agent, HMRC can talk to you about anything that your client entered on their return;
- HMRC can discuss any boxes on a return that have no entry (for example where HMRC knows a SEISS grant was paid but the return does not include this);
- where HMRC has corrected a SEISS grant amount following a mismatch between the taxpayer's SEISS figure and the figure HMRC holds, HMRC can discuss this with too.
If you plan to contact HMRC regarding your client's SEISS grant, please speak to them and make sure the relevant consent is in place where necessary, and allow time for required authorisation to be processed. HMRC understands that this is an additional workload for agents, your clients and HMRC, but ensuring the security of taxpayer information remains a priority.
Tax treatment and reporting of amounts received
Taxpayers should be aware that SEISS grants are taxable and subject to income tax and self-employed National Insurance contributions, which means they need to report their grants on their SA return(s).
No SEISS grants were required to be included in 2019/20 SA returns. If your clients received any of the first three SEISS grants, these should be included in their 2020/21 SA tax return, due to be submitted by 31 January 2022. For how to return grant payments made to a partner, who then distributed the grant amongst the partnership, more information can be found in the partnership tax return guide.
HMRC has received a number of 2020/21 tax returns where SEISS grants have been reported incorrectly, causing delays in processing them.
Although taxpayers remain responsible for the accuracy of their returns, HMRC has developed a solution which will automatically populate the right box on these returns with the correct amount of SEISS grant(s) received. This means most incorrect returns should be resolved by 5 July 2021. Your clients do not need to take any action in the meantime, as HMRC will let taxpayers know if their return has been corrected.
If you have clients who are preparing their own tax returns, please help them with the reporting of coronavirus support payments. HMRC has produced guidance on correctly reporting SEISS grants.
In summary, the following boxes should be used to report their SEISS grants on their 2020/21 return:
- box 70.1 on the Self-Employment (Full) page of the tax return;
- box 27.1 on the Self-Employment (Short) page of the tax return;
- box 9.1 of the partnership supplementary pages of the tax return; or
- box 3.10A of the SA200 (Short) tax return.
SEISS grants 4 and 5 should be included in 2021/22 SA tax returns, due to be submitted by 31 January 2023. The exception regarding partners who distribute the grant amongst their partnership still applies.
The treatment of SEISS grants 4 and 5 is determined by legislation included in Finance Act 2021 – draft guidance currently sets out that future payments are taxed in the year they are received.
Contacting HMRC
The contact details for the SEISS are available on GOV.UK. HMRC advice is to only use these contact channels if you cannot get the help you need online.
Useful links
Make sure to bookmark the relevant SEISS pages on GOV.UK on your web browser to ensure you’re getting the most up to date information.
Links to the most up to date guidance and related sources of information are provided below:-
Service availability
Members are also advised to regularly check the availability and any issues affecting the online SEISS portal so that they can provide their clients with the most up to date information.
Queries
If you have a specific query or issue in respect of the SEISS or any other COVID-19 support which HMRC are administering, please check if your query is covered anywhere on GOV.UK or in our hub before contacting UK Taxation Specialist Leontia Doran.
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