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THE FIFTH AND FINAL SEISS: How much is it worth, how do I account it and how is it calculated?

Sunak image credit: HM Treasury (Flickr CC2.0)

As eligible self-employed workers apply for and receive their fourth vital government coronavirus support grant, attention will swiftly turn to the fifth and final support package promised to those still feeling the financial impact caused by the pandemic.

In the March Springtime Budget the Chancellor Rishi Sunak announced new details concerning the Self-Employment Income Support Scheme (SEISS) which has helped millions of workers through the pandemic.

Sunak not only confirmed the value of the fourth SEISS payment, but also vitally for many self-employed workers the Chancellor said there will be a fifth and final SEISS grant.

So what do we know and how much will the fifth grant be worth?

The fifth and final grant is calculated a little differently to previous grants. Crucially the level of support is based on how financially affected each individual is.

The fifth SEISS grant will provide support between May and September with the value of the grant based on the claimant's turnover. Despite the support running for a total of five months, only three months of trading profit support will be offered.

The value of the grant will be determined by a turnover test, to ensure that support is targeted at those who need it the most as the economy reopens.

People whose turnover has fallen by 30% or more will continue to receive the full grant worth 80% of three months’ average trading profits, capped at £7,500. People whose turnover has fallen by less than 30% will receive a 30% grant, capped at £2,850.

The fifth and final grant can be claimed from late July. Further details will be published in due course by HM Treasury and HMRC.

No other firm details have been shared on the scheme’s fifth and final grant yet, however the application process is expected to be similar to the previous four SEISS grants.

How will the fifth SEISS grant turnover test work?

This is the big question for workers. According to the Institute of Chartered Accountants in England and Wales (ICAEW), details of how the turnover test will work may not be available for some time. In an article explaining the fifth SEISS grant the ICAEW does however say: “The Tax Faculty understands that the comparison is likely to be tax year 2020/21 compared with 2019/20 (this may need to be varied where taxpayers do not prepare accounts to 31 March or 5 April).”

The ICAEW adds: “The grants are based on three months trading profits despite covering a five-month period. HMRC has indicated that this approach is intended to tailor support as the economy opens up. It also notes that employers will be required to contribute to furloughed employees’ income in July, August and September, and that the self-employed can work and claim whereas no claim under the Coronavirus Job Retention Scheme is possible for hours worked.”

When do I account for the fifth SEISS grant?

According to the ICAEW a new Finance Bill 2021 will include a measure to amend the tax treatment of SEISS grants. This change will subject the grant to taxation in the tax year in which the amount was received.

The current position is that all SEISS grants are taxable in 2020/21, but given the extension of the scheme this needs to change.

It is expected that 2020/21 and 2021/22 returns will include boxes for SEISS grants to be reported separately and crosschecked by HMRC. HMRC are said to be exploring how it might pre-populate tax returns or give agents access to information of the amounts claimed by their clients.

How do you claim the fifth grant?

The Government has so far remained tight lipped as to whether the application process will be similar to the previous four grants.

In previous rounds of SEISS grants, HMRC contacted eligible self-employed workers directly with a personal date they could claim. Application dates have historically been staggered over a one week period.

Once a worker has received their application open date, they are then invited to apply for the SEISS grant via the GOV.UK website.

Those eligible after the application process receive a confirmation message and a timescale detailing when the payment will be paid into the chosen bank account. In SEISS four claimants were paid within 10 working days.


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