The fifth Self-Employment Income Support Scheme (SEISS) grant is for self-employed individuals or members of a partnership that think their business will be impacted by Covid-19 between 1 May 2021 and 30 September 2021.

This grant is different from those that preceded it as the amount of the grant is determined by how much turnover has been reduced.

HMRC have published updated information on the eligibility criteria for the fifth grant, including a new ‘three step’ criteria and a requirement to provide two different turnover figures to determine the grant amount.

Eligibility

To claim the fifth grant, applicants must be either

  • Currently trading but impacted by reduced demand due to Covid-19; or
  • Have been trading but are temporarily unable to do so.

The three step criteria

Claimants must ensure that they meet all the criteria in each of the three stages outlined by HMRC.

Stage 1: Trading status and timings

Claimants must be self-employed individuals or a member of a partnership.

They must also have traded in both tax years:

  • 2019-20; and
  • 2020-21.

Stage 2: Tax returns and trading profits

They must have

  • Submitted their 2019-20 tax return on or before 2 March 2021;
  • Have trading profits of no more than £50,000; and
  • Have trading profits at least equal to their non-trading income.

Stage 3: Making a decision on eligibility

They must tell HMRC that they

  • Intend to keep trading in 2021-22; and
  • Reasonably believe there will be a significant reduction in trading profits due to reduced business activity, capacity, demand or inability to trade due to Covid-19 between 1 May 2021 and 30 September 2021.

Evidence must be retained to show how the business has been impacted by Covid-19 and there must be an honest assessment about whether the applicant reasonably believes they will have a significant reduction in profits.

Applications for the grant should not be made until there is a reasonable belief that trading profits will be significantly reduced. Claims should not be made if the only impact on a business is increased costs.

Provision of two turnover figures

Before a claim can be made, two different turnover figures will need to be calculated and provided to HMRC.

Turnover includes the takings, fees, sales or money earned or received by a business. The figure provided should include total turnover from all businesses.

Turnover should not include anything reported as any other income on a tax return or Covid-19 support payments.

Claimants will need to work out their turnover for

  • A 12-month period starting between 1 April 2020 and 6 April 2020 (for those that started or ceased a business in 2020-21, include all turnover even if this covers less than 12 months); and
  • For either 2019-20 or 2018-19 – to use as a reference year. In most cases, the turnover reported in the 2019-20 tax return should be used as the reference year, unless this was not a normal year for the claimant’s business, in which case 2018-19 can be used.

HMRC then compares each of these turnover figures to calculate the grant amount.

Turnover figures will not be required for claimants that started trading in 2019-20 and did not trade in 2018-19, 2017-18 and 2016-17.

Turnover and the grant amount

The two turnover figures will be compared and used by HMRC to advise if the higher or lower grant amount can be claimed.

If turnover is down by 30% or more, the grant will be

  • Worked out at 80% of 3 months’ average trading profits; and
  • Capped at £7,500.

If turnover is down by less than 30%, the grant will be

  • Worked out at 30% of 3 months’ average trading profits; and
  • Capped at £2,850.

If turnover figures were not required to submit a claim (where the claimant started trading in 2019-20), the grant will be 80% of 3 months’ average trading profits, capped at £7,500.

Grants are subject to Income Tax and self-employed National Insurance Contributions and must be reported on the 2021-22 Self-Assessment tax return.

How to make a claim

HMRC are currently contacting claimants that could be eligible for the fifth grant, based on their tax returns. They will be given a date from which they can make their claim from. A list of genuine HMRC contacts can be found here.

The online service to make a claim will be available from late July 2021.

Claims must be made on or before 30 September 2021.