Freelancers' Questions: Do my low tax bills preclude me from the SEISS?

Freelancer’s Question: Does a taxpayer’s historical tax liability as a self-assessor have any bearing whatsoever on SEISS eligibility and grant value?

Freelancers' Questions: Do my low tax bills preclude me from the SEISS?

The background? My bookkeeper mentioned that the fifth SEISS grant is now open and even though I didn’t apply for the previous ones, apparently, I can apply now. But a friend of mine has told me there’s no point – because his tax payments in the SEISS-covered periods - - like mine he suspects --were so minimal, that it makes us ineligible. Is he right; is tax payment value the dictator of how much SEISS grant one receives? Or does paying little tax limit in any other way how the Self-Employment Income Support Scheme (SEISS) can help sole traders?

Expert’s Answer: How much tax you’ve paid historically does NOT impact your eligibility to apply for the SEISS grant.

The scheme is designed to award a grant based on business’s profits, and tax payments throughout the coronavirus pandemic (or prior to the pandemic) won’t have any bearing on your application. 

What HMRC will consider to determine your SEISS grant's total...

The fifth SEISS grant amounts will however be determined by how much your turnover has reduced between April 2020 and April 2021.

To work out what an individual can claim, the government will use a turnover test to compare the earnings between those dates, as well as average monthly profits.

If your turnover has dropped by 30% or more, it's likely you will be able to claim the full grant, which is worth 80% of three months’ average trading profits, capped at £7,500.

Check this strict list of conditions before you apply for the SEISS

As with the four previous SEISS grants, there is a strict list of requirements to be eligible, so you’ll need to meet each of the following to be successful in obtaining a grant:

  • You must be a self-employed individual or a member of a partnership. You must also have traded in the tax years 2019 to 2020 and have submitted and paid your tax return on or before March 2nd 2021 and have submitted your tax return for 2020 to 2021.
  • You must have trading profits of no more than £50,000 and have trading profits at least equal to your non-trading income. Non trading income will include income from employment.
  • You must either 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.
  • You must also confirm that you intend to continue trading, and reasonably believe there will be a significant reduction in your trading profits due to coronavirus. You will also be required to evidence this.

Providing you meet all requirements, you should be able to claim – but if you are eligible, HMRC should have contacted you in July with a date from which to make the claim.

UTR, key details and getting further help

Be sure to have your self-assessment unique taxpayer reference (UTR), National Insurance number, Government Gateway login details and UK bank details to hand in order to make a claim.

Further guidance on SEISS is available on the UK .gov website, and if you have any queries or doubts about applying, consult a qualified accountant.

Good luck in claiming!

The expert was Joanne Harris, Head of Technical Compliance and Payroll at SJD Accountancy.