SEISS 5 grant and 30% profit reduction calculation.

Jeremy535897

Turnover does not include grants. Although the period looked at is different, SEISS 5 is basically done the same way as SEISS 4, except for the additional turnover reduction test. Any business of significance (and any that is VAT registered) will have had its turnover for 2020/21 established by now. For small businesses that haven't, it should be easy enough to do.

Pennywise

justwhat said:

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....

Not really confusing.  You use the second test (profit test) to see if you are eligible at all.  Then the first test (turnover test) to see how much you're entitled to.  As said above, there'll be further guidance/detail issued at the start of July which presumably will explain what periods you have to compare and how to compare.

Catherine_1980

I'm so worried about how this is going to be calculated. My profits for 2020/21 are reduced by more than 30% compared to the contracts I had signed for the period (which fell due to Covid) and compared to my 3 year average (used in the calculation for previous grants).
But if they only ask me to compare 20/21 to profits for 19/20 then I'm screwed. I took 8 months of maternity leave in that period (which I decimated my savings to fund because 'Hooray! Self Employment!') and so my drop in profits from that year to the next looks much smaller.
The grants for us are already being paid three months behind the period they are supposed to cover, then SEISS five covers five months but will only pay for three, and now this.
I don't know how we're supposed to survive.

MattMattMattUK

Catherine_1980 said:

I'm so worried about how this is going to be calculated. My profits for 2020/21 are reduced by more than 30% compared to the contracts I had signed for the period (which fell due to Covid) and compared to my 3 year average (used in the calculation for previous grants).
But if they only ask me to compare 20/21 to profits for 19/20 then I'm screwed. I took 8 months of maternity leave in that period (which I decimated my savings to fund because 'Hooray! Self Employment!') and so my drop in profits from that year to the next looks much smaller.
The grants for us are already being paid three months behind the period they are supposed to cover, then SEISS five covers five months but will only pay for three, and now this.
I don't know how we're supposed to survive.

The answer is to adapt, which is what those of us who have received little or no help from the government have had to do from the start. 

DjangoUnchained

this is going to be tricky. the first 4 seis grants, hmrc worked it all out for us, now they are asking us to do it?

Jeremy535897

DjangoUnchained said:

this is going to be tricky. the first 4 seis grants, hmrc worked it all out for us, now they are asking us to do it?

It has always been tricky to work out whether there has or will be a significant reduction in trading profit. The extra issue here is whether your turnover has fallen by 30% or not, which directly affects the amount of the grant. HMRC will still calculate the amount of the grant due (that's the easy bit anyway).

Car1980

Still seems mad because whether you need Covid support for May, June and July 2021 depends on how much profit you have made during May, June and July 2021.
The amount of profit or turnover you made during any other period in time is completely irrelevant.

justwhat

its been updated again 

https://www.gov.uk/guidance/claim-a-grant-through-the-coronavirus-covid-19-self-employment-income-support-scheme

So to claim you need 
" significant reduction in your trading profits due to the impact of COVID-19 between 1 May 2021 and 30 September 2021"
AND
 2020/2021 compared to 2019/2020 there needs to be A reduction  in  "TURNOVER" (keeping it simple)

Am i reading it correctly lol ?

Jeremy535897

Those are two of the requirements, yes, unless you started trading in 2019/20 and didn't trade in the previous three years, where they don't look at turnover (as it says in the link).

Car1980

So, you do need to do most of your accounts for this year early in effect! 

There is a major flaw in the plan though - if I buy £5000 worth of print and sell for £7000 my turnover is £7000 but my profit is £2k.

If the same client ordered £1000 worth of print the year before and I invoiced them £3000, my profit was the same £2k but my turnover was only £4000.

There is massive assumption that profit and turnover are consistently linked. My job involves buying and selling print and designing artwork. The latter has a profit margin of 100%, the former doesn't. And it varies greatly year by year.