The Covid-19 pandemic presented an existential threat to many businesses and industries whose work was hindered by the lockdowns and the public anxiety and financial struggles brought about as a result of the virus. The UK government introduced several schemes and initiatives in an effort to ensure the economy remained as stable as possible during a time of such profound instability.
SEISS grants were one such initiative and were payments made available to self-employed people with trading profits of up to £50,000 and whose business was negatively affected by the pandemic. Five grants were offered in total, and the requirements for who could receive them were tightened each time.
Although the SEISS grant scheme has now finished, you may still need to include the money you received on any tax returns you filled out from the period in which they were available.
We are going to look at the SEISS grant scheme, find out what it was, who it helped, and how to add it to your Self-Assessment tax returns.
The Self-Employment Income Support Scheme (SEISS) was a financial scheme set up to support self-employed people, including partnerships, whose employment had been adversely impacted by the Covid-19 pandemic. There were five grants made available between 13 May 2020 and 30 September 2021, and it has now been discontinued.
The SEISS grant scheme has now ended, but there may be amendments or additions you need to make to your tax return from that year.
So let's jump in and find out whether or not you should include SEISS grants on your tax return.
The SEISS grants are liable to taxes in the tax year in which they were made. Recipients are required to pay both Income Tax and National Insurance on the grant payments, provided they earned over the minimum taxable threshold.
The first three grants were made in the 2020/21 tax year and should have been reported in the Self-Assessment tax returns of that year.
The fourth and fifth grants were made in the 2021/22 tax year and, therefore, should be reported in the Self-Assessment returns of that year.
How are SEISS grants taxed?
SEISS grants do not need to be repaid as they are grants, not loans. However, SEISS grants are subject to Income Tax and Class 4 National Insurance contributions.
The amount of Income Tax and National Insurance contributions you have to pay is based on your total taxable income. So the amount the SEISS grants are taxed depends on your overall tax bill, which is based on how much income you had once the SEISS payments had been made.
Who could claim an SEISS grant?
SEISS grants were designed to support self-employed workers and members of partnerships whose work was negatively affected by Covid-19. The scheme sought to target individuals who were most reliant on the income they got from their self-employment and aimed to allow self-employed people to remain in business.
To claim the SEISS grant, claimants had to meet the following requirements:
- be either self-employed or a member of a partnership
- traded in the tax years 2019/20 and 2020/21
- submitted their 2019/20 tax return on or before 2 March 2021
- trading profits of up to £50,000
- trading profits of at least equal to your non-trading income, which is any income made outside of your business
- be intending to continue trading in 2021/22
Around 3.36 million self-employed people in the UK were eligible to claim the SEISS grant.
As the grants developed, the rules were adapted to target those who most needed them. To qualify for the fifth and final grant, the claimant's business must have had a new or continuing impact from Covid-19 between 1 May 2021 and 30 September 2021.
How to report SEISS grants on a tax return
To simplify the process of reporting SEISS grants on tax returns, HMRC included a box on the Self-Assessment tax return forms for the tax years 2020/21 and 2021/22.
These boxes are not included on tax return forms from previous or subsequent years.
To report your SEISS grant, simply write the amount of money you received from the grant (in total that year) in the relevant box.
How to get help with your tax return
If you want help with your Self-Assessment tax return, several options are available. For example, you can:
- employ an accredited accountant
- ask a friend or relative who has experience in filing returns
- watch instructional videos and webinars online
- use HMRC's digital assistant
- contact HMRC with a specific question.
What to do if you make a mistake on your tax return
If you make a mistake on your tax return, you can still make a change to it once it has been filed. The way in which you update your tax return depends on how and when it was filed.
The deadlines for making changes to your tax return are on the same dates each year: 31 January for online returns and 31 October for paper returns.
So, for the tax year between 2020/21, the deadlines to make changes to your tax return are:
- 31 January 2023, if you filed online
- 31 October 2023, if you filed a paper return
If you miss either deadline or if you want to change a return from an earlier tax year, you need to write directly to HMRC. Any changes made after the deadline may result in a fine, which will increase the longer it takes you to submit the amendments.
To make a change to an online tax return, take the following steps:
- wait at least 72 hours before making your updates
- log in to your HMRC using your Government Gateway user ID and password
- in the section titled 'Your tax account,' select 'Self Assessment account'
- select ‘More Self Assessment details’
- select 'At a glance' in the left side menu
- select 'Taxt return options'
- choose the correct tax year for the return you want to update
- go into that year's tax return, make the corrections, and file it again.
If you want to make a change to a paper tax return, take the following steps:
- download a new tax return from the year you want to amend
- correct each page that requires an amendment, write 'amendment' on each one, and write your name and Unique Taxpayer Reference (UTR). You can find your UTR on earlier tax returns or on letters from HMRC
- send the amendments to the address for HMRC on your Self Assessment paperwork. If you can't find this address, send it to the address for general Self Assessment inquiries.
Summary
The SEISS grants scheme was a government initiative set up to help self-employed workers whose businesses were adversely affected by the Covid-19 pandemic. It consisted of five payments in total and was discontinued in September 2021.
Although the scheme has now ended, you may still need to include the payments you received on your Self Assessment tax returns. If you didn't include the payments on your tax returns and have already sent them off for the years in which you received the SEISS grant, you can still make amendments to your returns to ensure you comply with tax laws.