SEISS Grants and Tax Returns

The SEISS grants 1 through 4 have been claimed and well received. Grant 5 is in the works but we will not discuss that in this short article.

Questions are still being asked about whether grants 1-4 are taxable, in short, the answer is yes.  For this article, let us focus on grants 1-3 which fall under the 20-21 tax year. They must be included in your next self-assessment tax returns.

There is however some misunderstanding with regards to the eligibility rules for these grants.

One in particular needs addressing, that being:

  • Proven intention to continue trading in 20-21 tax year

HMRC takes this criteria very seriously and they are reversing a lot of grants paid out already. If you received an SEISS grant but did not continue a self-employment trade at any point in 20-21 tax year, you will be asked to fully reimburse all grants paid out. And you will be expected to refund all amounts on the 31st of January 2022. The following list (not exhaustive) are not excuses for not carrying on a self-employment business in 20-21:

  1. Switched from self-employment to a Partnership
  2. Switched from self-employment to a Limited company
  3. Closed the self-employment business and got an employment
  4. Did not realise this criteria was applicable

If the business failed before 20-21 and you can demonstrate efforts to stay in business, you may have a valid case for not having to refund the grants. It is key to remember that not ticking the self-employment section in your self-assessment tax returns is the trigger for HMRC to further investigate the validity of the grants paid out. If in doubt, speak to your accountant or contact HMRC for clarification.

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