The Self-Employment Income Support Scheme (SEISS), launched in May 2020, provided essential financial support to many individuals impacted by the Covid-19 pandemic.
Self-employed individuals or business partners who were eligible could have claimed up to £21,570 in total from the three grants available during the tax year 2020/21. As the SEISS grants are taxable they need to be included on the tax return.
The self assessment deadline to report online all taxable income for 2020/21 is midnight on 31 January 2022. Paper tax returns should be filed by 31 October 2021. (It should be noted here that the Government will be ending this method of submission as part of its Making Tax Digital for Income Tax Self Assessment regime starting from April 2024).
Reporting the SEISS Grants
If your unincorporated business had annual trading profits of £50,000 or less and was adversely affected by the pandemic you would have been eligible to obtain the first three SEISS grants in 2020/21.
These should be included in the ‘profits from self employment’ section of your tax return for 2020/21 and will be subject to income tax and Class 4 NICs. The grants also form part of the small-profits threshold for Class 2 NICs.
There is a separate box on the tax return within the ‘other tax adjustments’ section for disclosing the amount of SEISS received.
If you claimed the maximum amount (£21,570) this will be added to any other taxable income before you are assessed for income tax on the excess above your £12,500 personal allowance.
The fourth and fifth SEISS grants will also be taxable for income tax and NICs but not until 31 January 2023 as they will have been received in the 2021/22 tax year.
SEISS Records Required
You need to have records of the amounts you claimed from any or all of the three grants received in 2020/21, along with the claim reference number.
For the first two grants, you should disclose evidence of how the pandemic impacted on your business’s trading profits. This could include:
- Business accounts showing lower turnover
- Evidence of any Covid-19 business loans you received
- Dates your business closed due to lockdown restrictions
- Dates your staff were unable to work due to Covid-19 symptoms, shielding or caring responsibilities due to school closures.
For the third taxable grant, having records of fewer invoices, contract or appointment cancellations, test-and-trace communications, and positive Covid-19 test can demonstrate to HMRC how your business was affected.
All other personal income, such as from investments, savings, pensions or rental proceeds should also be declared in your tax return.
HMRC state you must keep your records for at least five years after the 31 January submission deadline of the relevant tax year.
If you have any questions regarding your tax return you can call the HMRC self assessment helpline on 0300 200 3310. If you have a National Insurance number and Self Assessment Unique Taxpayer Reference, make sure you have them with you when you call.