SEISS recalculation?

[Deleted User]

Jeremy535897 said:

dave8989 said:

selfemployedPT said:

Will those who have received all SEISS grants to date get the same figure as the last 80% grant or will the 2019/20 tax return alter it?
thanks

If your net profit was under £ 50,000 for the tax year 2019/2020 then the grant will be based on that year's figure alone. If you're net profit was over £ 50,000 for 19/20 then "we will then look at the tax years 2016 to 2017, 2017 to 2018, 2018 to 2019 and 2019 to 2020." (I'm sure there will be many other eligibility issues other than the £ 50k threshold.)

You are confusing eligibility with quantum. The eligibility tests are based first on 2019/20 (step 1) (under £50,000 profit, income at least 50% from self employment). If the claimant fails one or both of these tests, HMRC look at the same tests for 2016/17 (step 2) (or later if the trade started later), 2017/18, 2018/19 and 2019/20 all together. If the claimant passes both tests at step 1, or failing that, step 2, then providing all other eligibility criteria are met, the quantum of the grant is 80% of three months' average profits for the 4 years 2016/17 to 2019/20, or from the tax year the trade started, if later.

Hi Jeremy,

Thanks for the message. I’m not confusing eligibility and quantum, I’m going off the advice given by my accountant who is convinced that if you are eligible based on your  2019/2020 tax return then that year is used solely to calculate the 3 months average. I’m not saying he is 100% correct but I am choosing to believe him and his professional insight  and the official gov website quote that I supplied in my previous post supports his theory. (IMO) 

I’d appreciate it if you can post evidence to support your quote so that I can discuss this further with my accountant.  Where is the following information you wrote sourced from? I accept that 99% of people online agree with you but I haven’t seen any actual evidence other than the gov website quote (I’ve quoted this in my earlier post) which I think 99% of people have misunderstood. 

“the quantum of the grant is 80% of three months' average profits for the 4 years 2016/17 to 2019/20, or from the tax year the trade started, if later.” - where online is this written clearly so that it states that step 1 eligibility will then continue onto step 2 (using the 3/4 years quantum idea you mention) ? I haven’t seen that anywhere online, all i see is the official gov website saying the 2019/20 tax return will be used to confirm eligibility and that 2016-2020 tax returns will be used if your not eligibile based solely on the 2019/20 tax return. 

Jeremy535897

You start with whether you are eligible at all, by checking whether in 2019/20 (2018/19 for SEISS 1,2 and 3) your trading profits were at least equal to your other taxable income, and were under £50,000. If they weren't, you look at the four years 2016/17 to 2019/20 (3 years 2016/17 to 2018/19 for SEISS 1,2 and 3) and apply the same tests. (I am ignoring the loan charge rules and cases where you started to trade after 2016/17.) If you pass either of these tests, you go on to quantum. Quantum for SEISS 1,2 and 3 was based on the average for 2016/17 to 2018/19, whether you passed the old test for 2018/19 or the old test for 2016/17 to 2018/19. I can think of no reason why this method would change for SEISS 4 and 5, but we don't have the full details. Although it is not 100% clear, this implies that the average profits will be used to calculate the quantum of the grant, whichever eligibility test is passed:
https://www.simplybusiness.co.uk/knowledge/articles/2021/03/seiss-grant-how-to-apply/

It would not be logical for the quantum of the grant to be affected by which of the alternative eligibility tests was passed.

[Deleted User]

Jeremy535897 said:

You start with whether you are eligible at all, by checking whether in 2019/20 (2018/19 for SEISS 1,2 and 3) your trading profits were at least equal to your other taxable income, and were under £50,000. If they weren't, you look at the four years 2016/17 to 2019/20 (3 years 2016/17 to 2018/19 for SEISS 1,2 and 3) and apply the same tests. (I am ignoring the loan charge rules and cases where you started to trade after 2016/17.) If you pass either of these tests, you go on to quantum. Quantum for SEISS 1,2 and 3 was based on the average for 2016/17 to 2018/19, whether you passed the old test for 2018/19 or the old test for 2016/17 to 2018/19. I can think of no reason why this method would change for SEISS 4 and 5, but we don't have the full details. Although it is not 100% clear, this implies that the average profits will be used to calculate the quantum of the grant, whichever eligibility test is passed:
https://www.simplybusiness.co.uk/knowledge/articles/2021/03/seiss-grant-how-to-apply/

It would not be logical for the quantum of the grant to be affected by which of the alternative eligibility tests was passed.

Hi Jeremy, thanks for your reply. Do you have any evidence to support your quantum theory from an official HMRC statement or the gov website just simplybusiness.co.uk ?

I agree it would be illogical for the quantum of the grant to change for the 4th SEISS/5th SEISS. It’s in my favour for it to change having been excluded from all gov help so far and I’m choosing to believe in this potential change to the eligibility and grant calculations. You haven’t supplied any meaningful evidence to suggest otherwise. Thanks 

Dazed_and_C0nfused

This is a very reputable source.

See Anita example,

https://www.litrg.org.uk/tax-guides/coronavirus-guidance/self-employment-income-support-scheme/coronavirus-seiss-fourth-and

unholyangel

dave8989 said:

Jeremy535897 said:

dave8989 said:

selfemployedPT said:

Will those who have received all SEISS grants to date get the same figure as the last 80% grant or will the 2019/20 tax return alter it?
thanks

If your net profit was under £ 50,000 for the tax year 2019/2020 then the grant will be based on that year's figure alone. If you're net profit was over £ 50,000 for 19/20 then "we will then look at the tax years 2016 to 2017, 2017 to 2018, 2018 to 2019 and 2019 to 2020." (I'm sure there will be many other eligibility issues other than the £ 50k threshold.)

You are confusing eligibility with quantum. The eligibility tests are based first on 2019/20 (step 1) (under £50,000 profit, income at least 50% from self employment). If the claimant fails one or both of these tests, HMRC look at the same tests for 2016/17 (step 2) (or later if the trade started later), 2017/18, 2018/19 and 2019/20 all together. If the claimant passes both tests at step 1, or failing that, step 2, then providing all other eligibility criteria are met, the quantum of the grant is 80% of three months' average profits for the 4 years 2016/17 to 2019/20, or from the tax year the trade started, if later.

Hi Jeremy,

Thanks for the message. I’m not confusing eligibility and quantum, I’m going off the advice given by my accountant who is convinced that if you are eligible based on your  2019/2020 tax return then that year is used solely to calculate the 3 months average. I’m not saying he is 100% correct but I am choosing to believe him and his professional insight  and the official gov website quote that I supplied in my previous post supports his theory. (IMO) 

I’d appreciate it if you can post evidence to support your quote so that I can discuss this further with my accountant.  Where is the following information you wrote sourced from? I accept that 99% of people online agree with you but I haven’t seen any actual evidence other than the gov website quote (I’ve quoted this in my earlier post) which I think 99% of people have misunderstood. 

“the quantum of the grant is 80% of three months' average profits for the 4 years 2016/17 to 2019/20, or from the tax year the trade started, if later.” - where online is this written clearly so that it states that step 1 eligibility will then continue onto step 2 (using the 3/4 years quantum idea you mention) ? I haven’t seen that anywhere online, all i see is the official gov website saying the 2019/20 tax return will be used to confirm eligibility and that 2016-2020 tax returns will be used if your not eligibile based solely on the 2019/20 tax return. 

Good job, because then you'd both be 100% wrong. 

From gov.uk:

The fourth grant will provide a taxable grant calculated at 80% of 3 months’ average trading profits. The fourth grant will be paid out in a single instalment and capped at £7,500 in total.

How can it be "average trading profits" if (according to you) it's only taking into account the 19/20 year? 

The current SEISS is exactly the same. The 50k & 50% relate to eligibility rather than the calculation of the grant. 

Have a look at this page. The eligiblity is determined in accordance with paragraphs 4 & 5. While the amount of the payment is calculated under paragraph 6. 

6. SEISS payment
6.1 The amount of the SEISS payment is the lower of:
(a) £7,500, and
(b) 3 × (TP / 12 × 80%)
6.2 In paragraph 6.1, TP is:
(a) except where the person is subject to the loan charge, determined by the first to apply of the following paragraphs:
(i) if the person carried on a trade in the tax years 2016-17, 2017-18 and 2018-19, the average trading profits of those tax years,
(ii) if the person did not carry on a trade in the tax year 2016-17, the average trading profits of the tax years 2017-18 and 2018-19, and
(iii) if the person did not carry on a trade in the tax year 2017-18, the trading profits of the tax year 2018-19, 

Jeremy535897

I can't prove a negative, and until we have the Treasury Direction, we won't know for sure. All I can say is that I am 100% certain that if you are eligible based on 2019/20, your claim will be calculated in the same way as a claim will be calculated if you are eligible based on 2016/17 to 2019/20. It is conceivable that the claim could be calculated just on 2019/20, but I feel sure I have seen some statement from the government that it means an average of four years' trading profits rather than three, and certainly not one year.

Jeremy535897

From ICAEW today:

The fourth SEISS grant covers February to April 2021. It has been set at 80% of three months’ average trading profits and is capped at £7,500. Average trading profits is over the four years 2016/17 - 2019/20, where available.

HMRC will contact potentially eligible taxpayers in mid-April and applications will be open from late April to the end of May 2021. Many will be disappointed that claims cannot be made until late April, but HMRC needs that time to check the 2019/20 tax return data and to carry out pre-verification checks. 

DjangoUnchained

Jeremy535897 said:

From ICAEW today:

The fourth SEISS grant covers February to April 2021. It has been set at 80% of three months’ average trading profits and is capped at £7,500. Average trading profits is over the four years 2016/17 - 2019/20, where available.

HMRC will contact potentially eligible taxpayers in mid-April and applications will be open from late April to the end of May 2021. Many will be disappointed that claims cannot be made until late April, but HMRC needs that time to check the 2019/20 tax return data and to carry out pre-verification checks. 

is what i believe too, i had this email from hmrc

Fourth SEISS grant

The UK Government will pay a taxable grant which is calculated based on 80% of three months’ average trading profits, paid out in a single payment and capped at £7,500 in total. The value of the grant is based on an average of your trading profits for up to four tax years between 2016 to 2020, where available.

selfemployedPT

dave8989 said:

selfemployedPT said:

Will those who have received all SEISS grants to date get the same figure as the last 80% grant or will the 2019/20 tax return alter it?
thanks

If your net profit was under £ 50,000 for the tax year 2019/2020 then the grant will be based on that year's figure alone. If you're net profit was over £ 50,000 for 19/20 then "we will then look at the tax years 2016 to 2017, 2017 to 2018, 2018 to 2019 and 2019 to 2020." (I'm sure there will be many other eligibility issues other than the £ 50k threshold.)

Huh? It doesn’t say that? 

It clearly states the under 50k profit is a separate step to determine if you are eligible as in yes or no, not for determining the amount paid. 

‘The value of the grant is based on an average of your trading profits for up to four tax years between 2016 to 2020, where available.’

If your accountant is telling you that I’d suggest finding a new one.

[Deleted User]

unholyangel said:

dave8989 said:

Jeremy535897 said:

dave8989 said:

selfemployedPT said:

Will those who have received all SEISS grants to date get the same figure as the last 80% grant or will the 2019/20 tax return alter it?
thanks

If your net profit was under £ 50,000 for the tax year 2019/2020 then the grant will be based on that year's figure alone. If you're net profit was over £ 50,000 for 19/20 then "we will then look at the tax years 2016 to 2017, 2017 to 2018, 2018 to 2019 and 2019 to 2020." (I'm sure there will be many other eligibility issues other than the £ 50k threshold.)

You are confusing eligibility with quantum. The eligibility tests are based first on 2019/20 (step 1) (under £50,000 profit, income at least 50% from self employment). If the claimant fails one or both of these tests, HMRC look at the same tests for 2016/17 (step 2) (or later if the trade started later), 2017/18, 2018/19 and 2019/20 all together. If the claimant passes both tests at step 1, or failing that, step 2, then providing all other eligibility criteria are met, the quantum of the grant is 80% of three months' average profits for the 4 years 2016/17 to 2019/20, or from the tax year the trade started, if later.

Hi Jeremy,

Thanks for the message. I’m not confusing eligibility and quantum, I’m going off the advice given by my accountant who is convinced that if you are eligible based on your  2019/2020 tax return then that year is used solely to calculate the 3 months average. I’m not saying he is 100% correct but I am choosing to believe him and his professional insight  and the official gov website quote that I supplied in my previous post supports his theory. (IMO) 

I’d appreciate it if you can post evidence to support your quote so that I can discuss this further with my accountant.  Where is the following information you wrote sourced from? I accept that 99% of people online agree with you but I haven’t seen any actual evidence other than the gov website quote (I’ve quoted this in my earlier post) which I think 99% of people have misunderstood. 

“the quantum of the grant is 80% of three months' average profits for the 4 years 2016/17 to 2019/20, or from the tax year the trade started, if later.” - where online is this written clearly so that it states that step 1 eligibility will then continue onto step 2 (using the 3/4 years quantum idea you mention) ? I haven’t seen that anywhere online, all i see is the official gov website saying the 2019/20 tax return will be used to confirm eligibility and that 2016-2020 tax returns will be used if your not eligibile based solely on the 2019/20 tax return. 

Good job, because then you'd both be 100% wrong. 

From gov.uk:

The fourth grant will provide a taxable grant calculated at 80% of 3 months’ average trading profits. The fourth grant will be paid out in a single instalment and capped at £7,500 in total.

How can it be "average trading profits" if (according to you) it's only taking into account the 19/20 year? 

The current SEISS is exactly the same. The 50k & 50% relate to eligibility rather than the calculation of the grant. 

Have a look at this page. The eligiblity is determined in accordance with paragraphs 4 & 5. While the amount of the payment is calculated under paragraph 6. 

6. SEISS payment
6.1 The amount of the SEISS payment is the lower of:
(a) £7,500, and
(b) 3 × (TP / 12 × 80%)
6.2 In paragraph 6.1, TP is:
(a) except where the person is subject to the loan charge, determined by the first to apply of the following paragraphs:
(i) if the person carried on a trade in the tax years 2016-17, 2017-18 and 2018-19, the average trading profits of those tax years,
(ii) if the person did not carry on a trade in the tax year 2016-17, the average trading profits of the tax years 2017-18 and 2018-19, and
(iii) if the person did not carry on a trade in the tax year 2017-18, the trading profits of the tax year 2018-19, 

Thanks, I have just read a reputable source (recommended above) refer to a single year as ‘Trading profitS’ is it uncommon for a single tax year to be referred to as the trading profitS?

https://www.gov.uk/government/publications/self-employment-income-support-scheme-grant-extension/self-employment-income-support-scheme-grant-extension

"To be eligible for the fourth grant you must be a self-employed individual or a member of a partnership.

To work out your eligibility we will  first look at your 2019 to 2020 Self Assessment tax return.  Your TRADING PROFITS must be no more than £50,000 and at least equal to your non-trading income.

If you’re not eligible based on your 2019 to 2020 Self Assessment tax return, we will then look at the tax years 2016 to 2017, 2017 to 2018, 2018 to 2019 and 2019 to 2020."

The Gov site is referring to the sole 2019/20 tax year as trading profitS, if they solely used 3 months average of that year’s trading profitS (their words) then that would be an 3 months average of trading profitS even though it is based on a single 2019/20 tax year....?

The page you recommend and quote from was last updated in November 2020 so I don’t believe that is a particularly reliable source anymore.