Many of you will have already filed your Self Assessment Tax Returns for 2020/2021 but for those of you who are confused about how to account for any Self Employment Grants you may have received due to the Coronavirus pandemic, we explain how to fill out your tax return correctly…
What Are The SEISS Grants?
The Self-Employment Income Support Scheme (SEISS) grants are payments made by the government to eligible self employed businesses which have been adversely affected by the coronavirus pandemic. The grants are subject to income tax and self-employed National Insurance contributions (NIC).
Which Tax Return Should Include My SEISS Grants?
Which tax return (tax year) you include your SEISS grants in depends on which grant it is and whether you are a self-employed individual or in a partnership.
If you are Self-employed, then your first three grants must be included on your 2020/2021 tax return. Please be aware that the accounting period you use does not matter in this case.
There are different rules if you claimed the SEISS grants as part of a partnership and they were treated as partnership income, distributed accordingly to all partners and included in the partnership income accounts. If you’re unsure you can book a call with us where we’ll be happy to help.
For the 4th and 5th SEISS grants, they should be included in the tax year in which they were received, in this case 2021/2022.
Filling Out Your Online HMRC Tax Return – Self Employment
Your SEISS grants are recorded as other business income, not in your Turnover figures, so must be dealt with accordingly. There is a new section in the online tax turn form named : Self-Employment Income Support Scheme grant: (optional) – This is where you need to include the total of your first three SEISS grants unless you have repaid part or all of your grant, are in a partnership or have multiple trades.
The SEISS grants are included within your ‘Profits from self-employment’ and so will be subject to income tax and Class 4 NIC. The grants will also count as income when looking at the small profits threshold for Class 2 NIC purposes.
I Have Submitted My Tax Return But I Think I’ve Recorded the SEISS Wrong – What Can I Do?
If you have submitted your tax return and your SEISS grants have not been included in the correct way (don’t worry we know it can be confusing!) then HMRC should automatically amend your tax return to include the amount of the SEISS grants they have recorded and send you a revised tax calculation (form SA302). The form SA302 should explain the changes made to the figures you have submitted.
When you receive the revised tax calculation you should check that it is correct as you only have 30 days from the date of the SA302 letter to contact HMRC to let them know you disagree with their amendments
If you know that your 2020/21 tax return is incorrect for the SEISS grants and HMRC do not contact you, then you should amend your tax return yourself as soon as possible to correct the mistake. You should contact HMRC for help if you are not sure how to do this.
Can You Help Me With My Self Assessment Tax Return?
Of course! We love helping our clients to understand and enjoy their finances and we want to make it as stress free for you as possible. Book a call with us to discuss your Self Assessment Tax Return by emailing firstname.lastname@example.org