SEISS 5 grant and 30% profit reduction calculation.

topoftherock

Hi all, I know it’s too early to speculate, however, I’m wondering how the government will determine if your profits have fallen by more than 30% for determining whether you will get 80% (like SEISS 4) or 30% (if profits have reduced less than 30%) of your average monthly trading profits. For example, let’s say I claim SEISS 5 in late July, but I haven’t submitted by tax return for tax year 20/21 (which will be quite common I imagine, as the deadline is January 2022). In this case, how will they work out if your profits have decreased by more than 30%? And if you have submitted your tax return 20/21 by the time you claim, will they use this and compare it to tax return 19/20? Kind regards 

Jeremy535897

All we have so far is here. Note the test is turnover, not profit:

What about the fifth grant?

The eligibility conditions for the fifth grant will be different. According to GOV.UK (though the policy paper has now been withdrawn), the amount of the fifth grant, which can be claimed from late July 2021, will depend on the extent of the reduction of your turnover (sales) between April 2020 and April 2021. There are few details available yet but if your sales have fallen by:

• 30% or more, then the fifth grant will be 80% of three months’ average profits (up to a maximum claim of £7,500);
• less than 30%, then the fifth grant will be 30% of three months’ average profits (up to a maximum claim of £2,850).

The fifth grant is intended to ‘cover’ the period from May 2021 to September 2021, but the grant will only be calculated based on 80% of three months’ average trading profits. This has led some to comment that the fifth grant has two ‘missing months’.

topoftherock

Jeremy535897 said:

All we have so far is here. Note the test is turnover, not profit:

What about the fifth grant?

The eligibility conditions for the fifth grant will be different. According to GOV.UK (though the policy paper has now been withdrawn), the amount of the fifth grant, which can be claimed from late July 2021, will depend on the extent of the reduction of your turnover (sales) between April 2020 and April 2021. There are few details available yet but if your sales have fallen by:

• 30% or more, then the fifth grant will be 80% of three months’ average profits (up to a maximum claim of £7,500);
• less than 30%, then the fifth grant will be 30% of three months’ average profits (up to a maximum claim of £2,850).

The fifth grant is intended to ‘cover’ the period from May 2021 to September 2021, but the grant will only be calculated based on 80% of three months’ average trading profits. This has led some to comment that the fifth grant has two ‘missing months’.

Hi, many thanks for the info! 

Car1980

I'm still massively confused by this. The blurb above doesn't actually answer the OP's question.

I've submitted tax returns for
April 2018-April 2019 and April 2019-April  2020.

I don't have to submit my return for April 2020-April 2021 until January 31st 2022 if I don't want to.

So what figures are they comparing next month?

Jeremy535897

The latest press release is here:
https://www.gov.uk/government/publications/self-employment-income-support-scheme-fifth-grant/self-employment-income-support-scheme-fifth-grant

MattMattMattUK

Car1980 said:

I'm still massively confused by this. The blurb above doesn't actually answer the OP's question.

I've submitted tax returns for
April 2018-April 2019 and April 2019-April  2020.

I don't have to submit my return for April 2020-April 2021 until January 31st 2022 if I don't want to.

So what figures are they comparing next month?

I do not thing that "they" will be comparing any figures next month, just as with the previous grants the applicant will have to declare the impact. Just as with previous grants some people will be asked for supporting documentation, others will be audited more closely, there may also be comparisons made when tax returns are processed. Make the claim for the grant you are entitled to, any attempt to game the system would be unwise at best. 

Percy1983

Surely you have the figures (or a very good idea if not finalised) so can safely make the declaration with confidence.

On another front just because you don't need to submit your tax return until January 2022 that doesn't mean you have to leave it to January 2022.

Personally I submitted my 20/21 tax return last month so they have all the figures.

ProMonkey

its just crazy! 

justwhat

The published rules/guidelines are far to sketchy and  some statements  seem  to contradict themselves.

You cannot be forced to do a tax return before you are legally obliged to do it. Even WTC and UC allow you to estimate earnings.

The comparisons between month or years have not yet been written in stone regarding qualifying for the grant.  

Jeremy535897

The guidance has been updated:
https://www.gov.uk/government/publications/self-employment-income-support-scheme-fifth-grant/self-employment-income-support-scheme-fifth-grant

Guidance on calculations for the turnover reduction test will be published in early July.

justwhat

i just find the statement below confusing in many ways.

 "The amount of the fifth grant will be determined by how much your turnover has been reduced in the year April 2020 to April 2021."

It mentions turnover NOT profit.  And  refers to turnover from a period that is not legally required to be calculated yet.

However you are eligible IF

• 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 from May 2021 to September 2021

Maybe they mean  "turnover" including  the grants. Also reduced trading profits compared to what? . Most people last year had a bad year, "May 2021 to September 2021" will not be any worse than last year.

Surely the only real comparison is a pre-covid one....