SEISS, formally known as the Self-Employment Income Support Scheme, has been designed to offer support amid the COVID-19 crisis. The scheme was established earlier in 2020 and offered two grants to cover a proportion of trading profits. However, with the effects of the pandemic ongoing, two further grants have been offered by Chancellor Rishi Sunak.
As a result, this must be reported on a person’s 2020/21 Self Assessment tax return.
But because of this, it may be a while until a self-employed individual actually has to pay the tax back.
The expected deadline for 2020/21 Self Assessment is January 31, 2022, giving people the time to get their affairs in order.
For those who are hoping to plan ahead, there is a way to estimate the potential tax bill one may incur.
Recently, Simon Warne, partner at Crowe UK, spoke about the SEISS extension.
Mr Warne said: “SEISS will prove to be a lifeline for many who cannot otherwise trade due to COVID restrictions.
“However, applicants will need to remember grants are taxable.
“There are also other elements of help which include the recently extended Bounce Back Loan Scheme, tax deferrals for Income Tax and Value Added Tax, targeted business support grants and rates relief.”
To claim the third grant from today onwards, self-employed people must have traded in 2018/19 and have submitted their Self Assessment tax return on time, as well as trading in the 2019/20 tax year.
Trading profits must be no more than £50,000 and at least equal to a person’s non-trading income.