With applications for the third Self-Employment Income Support Scheme (SEISS) grant opening this week, many self-employed professionals are breathing a sigh of relief.
The grant has provided vital support for thousands of professionals who have seen their profits and/or demand affected by the Covid-19 pandemic. But as many will discover there are various factors to consider before making your claim, including the tax implications that it could create for you in the not so distant future.
Here we delve deeper into the under-reported tax burden that could be faced by countless self-employed professionals due to the SEISS grant.
Will I have to pay tax on the grant?
Many are likely to see the grant as ‘free money’, yet the small print tells a very different story. Whilst the grant itself will not have to be repaid if the person claiming fulfils the eligibility criteria, all SEISS grants – including the previously provided grants, the third grant available from this week, and the fourth and final grant due next year – are taxable.
The grants will have to be declared as income on your 2020-21 Self Assessment return, and both Income Tax and National Insurance (NI) will be due on the sum.
When is the SEISS tax and NI payment due?
HM Revenue and Customs (HMRC) are yet to confirm an exact date for the repayment of tax and National Insurance due for the 2020-21 tax return, but it is expected to be 31st January 2022. This date should mean that even those who have been adversely affected by Covid-19 have time to financially recover.
Can I claim the third SEISS grant?
You can claim the third SEISS grant on or before 29th January 2021. To claim, your business must have been affected by Covid-19 on or after 1st November 2020. You can claim the third grant even if you have not previously claimed an SEISS grant before.
Claims should be made online. All you need is your Self Assessment Unique Taxpayer Reference (UTR), NI number, Government Gateway login, and bank details. Once you have submitted your application, your grant will be paid directly into your bank account within six working days. If you have not received your grant 10 working days after you submitted your claim, contact HMRC.
Don’t forget to keep evidence that proves that you have suffered reduced demand and/or been unable to trade due to the Covid-19 pandemic or associated government restrictions.
If you would like any further help or advice regarding the SEISS grant, don’t hesitate to give us a call on 0191 251 7599 and we will be happy to help.