SEISS Grants Extension for Self-Employed Installers

The Furlough scheme allowed many self-employed installers financially affected by the Coronavirus pandemic to apply for grants through the Self Employed Income Support Scheme (SEISS), and allowed limited companies to apply for coronavirus loans.

Following the Spring Budget announcement, these Covid grants have been extended, which means 21/22 tax returns could also include Covid Grant Income. Sudesh Sud, CEO and founder of digital tax software, APARI explains what this means for installers.

Who should apply?

HMRC contacts the individuals it believes are eligible for SEISS. The current (5th) round of grants covers May to September 2021. The amount installers will receive depends on how much their turnover decreased between April 2020 to April 2021.

If turnover has reduced 30% or more, the grant will be worth 80% of 3 months’ average trading profits, capped at £7,500.

If turnover has reduced by less than 30%, the grant will be worth 30% of 3 months’ average trading profits, capped at £2,850.

What SEISS means for tax

SEISS grants were paid as a percentage of previous years’ average monthly income, as calculated from previous tax returns, and were released in batches throughout the past year.

Yet, while these grants were a lifeline for many self-employed installers, they were paid gross – i.e. before tax. That means that self-employed taxpayers are now expected to show the grant money received on 20/21 tax returns and pay tax on the money received.

What installers need to do

HMRC will be altering the self-assessment tax return, adding a section to include the amount claimed through the SEISS in the relevant tax year.

Installers simply need to record the income made available via the grants and include the grant money in annual income calculations.

Unfortunately, since the SEISS grants will require a new entry field, those who have claimed SEISS grants will not be eligible to sign up for Making Tax Digital (MTD) early, as many other self-employed people already have. However, by the time MTD becomes mandatory in 2023, Covid will (hopefully) be a distant memory.

It will still be a self-employed installer’s responsibility to confirm that the amount claimed is correctly stated and that the amount of tax calculated on that claim is correct.

For more advice and to find out how to make tax doable, visit: https://www.apari-digital.com/