How to calculate SEISS (Self Employed Income Support Scheme) Updated 4 March 2021)
Grant 5 Announcement (May-September 2021)
#Budgetday2021 update
SEISS Grant 4 (Covering Feb 2021 - April 2021 :
Its been a LONG wait for Gov to finally include 2019/20 tax returns in the SEISS grant! For those who started self employment in that period will be relieved. The rest of the eligibility criteria remains unchanged (scroll to the bottom of this page).
You will be able to apply late April 2021 - early May 2021 (HMRC will contact you mid-April to give you your personal claim date).
Due to 2019/20 being included this time, it will mean amount of the fourth grant will differ. 80% of 3 months average trading profits, one payment, capped at £7.5k. Again, your profits cannot exceed £50k and must be at least equal to other income (ie: employment income). You must have traded in both 2019/20 and 2020/21 tax years.*
If your 2019/20 tax return did not reach HMRC by 2 March 2021 you will not be eligible at all.
If you’re not eligible based on your 2019/20 tax return, HMRC will then look at the tax years:
> 2016/17
> 2017/18
> 2018/19
> 2019/20.
* You must either:
be currently trading (2020/21) but are impacted by reduced demand due to coronavirus
have been trading but are temporarily unable to do so due to coronavirus
You must also declare that:
you intend to continue to trade
you reasonably believe there will be a significant reduction in your trading profits due to reduced business activity, capacity, demand or inability to trade due to coronavirus
update: Feb 2021 - Grant 4 details
update: Nov 2020 - Grant 3
After much anticipation, HMRC updated their guidelines on how they will calculate the second round of SEISS grants for the self employed 14 April 2020. The deadline to make this claim is 13th July 2020.
This scheme is being extended. If you’re eligible for the second and final grant, and your business has been adversely affected on or after 14 July 2020 you’ll be able to make a claim from 17 August 2020. You can make a claim for the second grant if you’re eligible, even if you did not make a claim for the first grant. Find out more about the extension to the scheme.
HMRC will assess your eligibility for the grant based on your total income and trading profits.
You can use this guide from their website to find out if you’re eligible and how much you may get.
Trading profits
HMRC will use the figures on your tax returns for your total trading income (turnover), then deduct any allowable business expenses and capital expenditure.
Allowable expenses include:
office costs, for example stationery or phone bills
travel costs, for example fuel, parking, train or bus fares
clothing expenses, for example uniforms
staff costs, for example salaries or subcontractor costs
things you buy to sell on, for example stock or raw materials
financial costs, for example insurance or bank charges
costs of your business premises, for example heating, lighting, business rates
advertising or marketing, for example website costs
training courses related to your business, for example refresher courses
It also includes:
any business expenses deducted through the trading allowance
capital allowances, used to buy assets used in your business
qualifying care relief
flat rate expenses
HMRC will not deduct from your trading profits:
any losses carried forward from previous years
your personal allowance
Example 1
If your total trading income (turnover) in each of the tax years 2016 to 2017, 2017 to 2018 and 2018 to 2019 was £20,000, and you claimed the £1,000 trading allowance each year.
This is worked out as:
£20,000 deduct the trading allowance of £1,000 = £19,000
Multiply £19,000 by 3 = £57,000
Divide £57,000 by 3 = £19,000
Your average trading profit would be £19,000.
If you have more than one trade in the same tax year
We will add together all profits and losses for all these trades to work out your trading profit.
Example 2
If you only traded in the tax year 2018 to 2019, and made a £60,000 profit for your first trade, and then a £20,000 loss for your second trade, your trading profit for that year would be:
Trade 1 £60,000 profit deduct trade 2 £20,000 loss = £40,000
If you traded for more than one year
To work out your average trading profit we will add together all profits and losses for all tax years you’ve had continuous trade.
Example 3
If you made:
£60,000 profit in tax year 2016 to 2017
£60,000 profit in tax year 2017 to 2018
£30,000 loss in tax year 2018 to 2019
Add £60,000 and £60,000 then deduct £30,000 loss = £90,000
Then divide £90,000 by 3
Your average trading profit for the 3 tax years would be £30,000.
Example 4
If you did not trade in tax year 2016 to 2017 but made:
£25,000 of profit in tax year 2017 to 2018
£45,000 of profit in tax year 2018 to 2019
Add £25,000 and £45,000 = £70,000
Then divide £70,000 by 2
Your average trading profit for the 2 tax years would be £35,000.
Total income
Your total income is the total of all your:
income from earnings
trading profits
property income
dividends
savings income
pension income
miscellaneous income (including social security income)
Eligibility
Your trading profits must be no more than £50,000 and more than half of your total income for either:
the tax year 2018 to 2019
the average of the tax years 2016 to 2017, 2017 to 2018, and 2018 to 2019
Example 5
Your trading profits must be no more than £50,000 and more than half of your total income for either:
the tax year 2018 to 2019
the average of the tax years 2016 to 2017, 2017 to 2018, and 2018 to 2019
2016/17 2017/18 2018/19 Ave for 3 years
Trading profit £50,000 £50,000 £(10,000) £30,000
Pension scheme £15,000 £15,000 £15,000 £15,000
Total Income £65,000 £65,000 £ 5,000 £45,000
Trading profit is Yes Yes No Yes
more than half of your total income
So even if you made a loss in the tax year 2018 to 2019, you would still be eligible for the grant because your average trading profit for the 3 tax years:
is £30,000 - which is less than £50,000
is more than half of your total income of £45,000
There is further help available here, including the Hardship scheme