Reporting the SEISS Grants
1 January 2022
If your unincorporated business was adversely affected as a result of the COVID-19 pandemic and your annual trading profits dipped below £50,000, you would’ve been eligible to claim the first three taxable grants via the self-employed income support scheme (SEISS) in 2020/21.
It is worth remembering:
- These need to be included in your ‘profits from self-employment’ 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.
You will find a separate box on your self-assessment tax return within the ‘other tax adjustments’ section for disclosing the total amount of SEISS received.
Assuming you claimed the maximum amount available to you which was £21,570, this will need to be added to any other taxable income before you are assessed for income tax on the excess above the personal allowance (£12,500).
Grants four and five will also be taxable for income tax and NICs purposes, but not until 31 January 2023. This is because if your applications were successful, these payments will be received in the 2021/22 tax year.
Maintaining SEISS Records
You need to maintain records of the amounts you claimed from any of the three grants paid out in 2020/21, along with your claim reference number(s).
For the first two grants, you will also need to show 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 tests can also demonstrate to HMRC how your business was affected.
Other records
You can keep your records however you wish (there are no rules on this in particular), although we would advise using software approved by HMRC which complies with Making Tax Digital – MTD for ITSA.
HMRC advises that you keep records of any income from sales or receipts from business expenses incurred in 2020/21. You should retain PAYE records if you employ anyone, and keep hold of VAT records if you’re VAT-registered.
Records of any personal income, such as from investments, savings, pensions, or rental proceeds should also be kept and declared on your submission.
You must keep your records for at least five years after the 31 January submission deadline of the relevant tax year. This is to ensure you pay the correct amount of tax.
If you need any help with your next Tax Return or if you have any questions about reporting your SEISS grants, please contact us and we can put you in touch with a tax specialist to assist.