Covid grant on tax return

Many people who are self-employed have been adversely affected by the Covid situation. The government set up the Self-Employed Income Support Scheme (SEISS) and has announced that the fourth grant is available, set at 80% of three months average trading profits, paid out in a single instalment which is capped at £7,500. The fourth grant will take into account 2019 to 2020 tax returns and will be open to those who became self-employed in the tax year 2019 to 2020. To be eligible, the applicant must be a self-employed individual or a member of a partnership. Part of the application process requires a declaration that the applicant reasonably believes that there will be a significant reduction in their trading profits due to reduced business activity, capacity, demand or inability to trade due to coronavirus. An application can be made for the fourth round of the grant in late April. There will be a fifth and final grant available covering May to September 2021.

Applicants need to keep records showing the amount claimed and the claim reference number. Unsurprisingly they should also retain evidence that their business has been adversely affected by coronavirus. This could include:

  • business accounts which show a reduced turnover
  • dates that a business was closed due to lockdown restrictions
  • dates that staff were unable to work due to coronavirus symptoms, shielding or similar
  • full records of accounts
  • cancelled contracts
  • communications from the NHS regarding issues such as shielding and test results for Covid

What many workers who have claimed the SEISS grant do not realise is that the grants should be included on tax returns and are subject to income tax and self-employed national insurance. Any failure to include the grants and the tax returns could lead to potential penalties.

To discuss this or any other employment related matter, contact us.

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