Pension contributions and Self-Employment Income Support Scheme grant

UJan

Hello.

I'm self-employed. Since COVID my self-employed income has dramatically fallen. I'm fortunate in that I have received the Self-Employment Income Support Scheme (SEISS) grant. If my self-employment income recovers later this tax year I will want to make some contributions to my private pension policy later this tax year if I can. I'm a lower rate tax payer and know that I can only make pension contributions in any tax year up to an amount equivalent to my net profits from self-employment (but capped at £40,000).

My question is if, in the event I will be able to make some contributions to my private pension policy later this tax year, how will the maximum amount I can contribute to my pension this tax year be calculated? I.e. if, hypothetically, my net profits for this tax year were £5,000 and the SEISS grant I received this tax year was £3,000, could I make pension contributions of £5,000 or £8,000 this tax year.?

Thanks in advance if you know the answer or where I can find out.

Brynsam

The grant counts towards your (potentially) taxable income and counts towards pensionable income. You could make pension contributions of £8K gross (i.e. including basic rate tax relief claimed by the provider on your behalf).

UJan

Many thanks for your post Brynsam.

Retyre

Thank you Brynsam and UJan for the question.  This seems to make logical sense but I have struggled to find it formalised on any gov or pension provider website. 

Has anyone else had success at this please?

Dazed_and_C0nfused

As I understand it the SEISS income will form part of your business turnover and therefore form part of the calculation of your business profit for tax purposes, the amount classed as pensionable earnings for pension contribution purposes.

So I don't think it is a case of £3,000 + £5,000 but the end result may be the same, you will have a higher turnover which will result in a higher profit (or smaller loss  )

The third document on this page of gov.uk is probably what you're after.

https://www.gov.uk/government/consultations/draft-legislation-taxation-of-coronavirus-covid-19-support-payments

Dh6

My accountant informed me that the SEISS grant does not count towards your turnover. I’d appreciate if anyone could confirm whether or not she’s incorrect? Thanks 

NottinghamKnight

Try and contact hmrc?

Dazed_and_C0nfused

Dh6 said:

My accountant informed me that the SEISS grant does not count towards your turnover. I’d appreciate if anyone could confirm whether or not she’s incorrect? Thanks 

Maybe you should suggest she reads the info on gov.uk regarding the legislation.

The preamble starts with this,

We are inviting views on the technical effectiveness of this measure, which ensures that grants within the legislation are subject to tax. These grants are treated as income where the business is within the scope of either Income Tax or Corporation Tax.

Dh6

Thanks I’ll point her towards that document 

Dh6

I’ve received clarification, the SEISS grant does not count towards your turnover for VAT purposes but it is classed as taxable income which I was already aware of. Thanks 

Retyre

Many thanks Dazed and Confused and Dh6. 
I think the third document on the link posted by Dazed and Confused seems pretty definitive but it is denoted as draft. 
Would be grateful if anyone finds further confirmation of this.
Best regards to all and thank you again.