The Job Retention Scheme will be ending at the end of September. The final (fifth) instalment of the Self-Employment Income Support Scheme (SEISS) needs to be claimed before 30 September 2021.
HMRC should have contacted you in July if you’re eligible for the fifth instalment of the Self-Employment Income Support Scheme (SEISS) grant. This will be communicated via text message, letter, or within the online service, and will give you a date from when you can complete your claim.
The online service for claims will be available from late July 2021 and claims must be made on or before 30 September 2021.
Despite being contacted by HMRC, you’ll still need to confirm that you meet other eligibility criteria. HMRC breaks the criteria down into 3 stages and these are summarised below.
Stage 1
You need to have traded as self-employed during both the 2019/20 and 2020/21 tax years.
Stage 2
You must have submitted your 2019/20 tax return by 2 March 2021 and your trading profits need to be no more than £50,000. Your trading profits also need to at least equal your income from outside of your business, for example rental income.
If you’re not eligible based on the trading profits in your 2019/20 return, HMRC will look back at previous years to see if you are eligible based on those years.
Stage 3
You must intend to keep trading during the 2021/22 tax year and reasonably believe that your profits between 1 May 2021 and 30 September 2021 will be significantly reduced due to COVID-19.
HMRC have issued guidance on the reduction in profits and that can be found here.
Grant amount
If you meet all the criteria, you’ll need to provide HMRC with your business turnover. This is different from all the previous grants.
HMRC have issued guidance on how to calculate your turnover, which can be found here.
There are two levels of the grant and which one you receive will depend on your turnover. If your turnover has reduced by 30% or more, you’ll receive 80% of three months’ average trading profits, capped at a maximum of £7,500.
If your turnover has reduced by less than 30%, you’ll receive 30% of three months’ average trading profits, capped at a maximum of £2,850.
Making Tax Digital
Hopefully you will have heard of Making Tax Digital (MTD). Since April 2019 all VAT registered businesses with VAT taxable turnover above the registration threshold (£85,000) have been required to keep records digitally and use software to submit VAT returns. As an aside, the registration limit hasn’t been increased for a number of years, and so more businesses will need to register as their turnover reaches that threshold.
HMRC’s objectives for MTD are:
- reducing scope for error
- making it easier for businesses to get their tax right
- improving certainty and control
- supporting digital integration
- understanding the extent of costs and benefits experienced by businesses as a result of their response to MTD for VAT
- understanding the extent of wider impacts of MTD for VAT on businesses
- understanding the factors most likely to lead to positive outcomes following MTD
HMRC recently commissioned a report on the impact of MTD, you can read it here, although you may well have better things to spend your time on:
The next step is to extend MTD for VAT to all VAT registered businesses from April 2022, although over 280,000 businesses under the VAT turnover threshold have already joined voluntarily.
My point in mentioning this, is that the next stage of MTD is commencing in April 2023, and whilst that may sound a long way off, to make this as painless as possible, now is the time to start thinking about its implementation.
There is significant data/information to be input for each affected taxpayer and the plan by HMRC is to facilitate that from 6 April 2022. From April 2023 MTD for Income Tax Self-Assessment (ITSA) will apply for unincorporated business and landlords with total business or property income above £10,000 per year. This will mean that such businesses and landlords will need to send a quarterly summary of their business income and expenses to HMRC using MTD-compatible software.
In response, they will receive an estimated tax calculation based on the information provided to help them budget for their tax. At the end of the year, they can add any non-business information and finalise their tax affairs using MTD-compatible software. This replaces the need for a self-assessment tax return. Currently there are no plans to amend when tax is due, although it seems logical that HMRC will require payments on a quarterly basis at some point in future.
If you have any queries, you can contact me on 01473 833411 or [email protected]
Peter is the Guild’s accountant.This article is designed for the information of readers. Whilst every effort is made to ensure accuracy, information contained in this article may not be comprehensive and recipients should not act upon it without seeking professional advice. “Larking Gowen” is the trading name of Larking Gowen LLP, which is a limited liability partnership registered in England and Wales (LLP number OC419486). Where we use the word partner it refers to a member of Larking Gowen LLP. © Larking Gowen
