Taxing the Self-Employment Income Support Scheme Grants (SEISS)

Claims for the fourth SEISS grants have now closed.  The fifth grant will open for claims in late July and, from mid-July, HMRC will contact all eligible customers to let them know their personal claim date.

Attention now turns to the reporting requirements of the SEISS grants on Self-Assessment Tax Returns and the tax and national insurance liabilities which will result.

All construction industry sub-contractors registered as self-employed who received grants should be aware of the tax implications and reporting requirements.  The first three grants were paid in the 2020/21 tax years and are therefore reportable on their 2020/21 Self-Assessment Return.  This return needs to be submitted to HMRC by 31 January 2022.   In order to report the grants correctly, the following boxes need to be completed on 2021 Tax Returns.

• Full Self-Employment SA 103(F) Box 70.1 on page SEF 4 and box 20.1 on TR8
• Short Self-Employment SA 103(S) Box 27.1
• Short Tax Return SA200 31.0A and 13.0

HMRC will have issued text or email messages confirming the amounts of each grant and, hopefully, taxpayers will have retained a screenshot of the amounts received or, alternatively, can check the amounts via their bank statements.

The fourth and fifth grants will be included on the 2021/22 Self-Assessment Tax Returns due to be submitted by 31 January 2023.

If completing the Returns using HMRC’s online software, the taxpayer will be taken through a number of steps, the first of which asks questions regarding the business turnover and expenses.  The SEISS grant should be ignored until the tax return software reaches the page “Other Tax Adjustments”, which is where the SEISS grants are declared.

It is important that HMRC’s system matches the total SEISS grants with amounts declared by the Self-Assessment Taxpayer.  If the amounts do not match, there will be delays in processing returns.  In such cases, manual intervention will be required by HMRC before statements and tax calculations are issued, which may result in delays to calculations and repayments to taxpayers.

If clients or sub-contractors have any queries on the declaration of the grants or its impact on your business, please discuss this issue with us or your individual tax adviser.

Please note that the above has no impact on furlough payments for employees and employers, or any loans received by businesses under the Bounce Back or Business Intervention Schemes.

If you would like to raise anything we’ve discussed in this article, please call us on 020 8515 2975 or email us at info@guildhubservice.co.uk and talk to our expert team. We’re here to help.