The Self-Employment Income Support Scheme played a vital role in helping self-employed individuals cope with the disruption caused by the COVID-19 pandemic. With the economic recovery progressing in 2021, the UK government introduced the fifth and final SEISS grant as part of this broader support initiative. Unlike earlier grants, this final phase introduced a more detailed method of assessing eligibility based on recent turnover, making the process more targeted and dependent on accurate financial reporting.
For self-employed people and members of ordinary partnerships who experienced a significant drop in business activity between May and September 2021, this grant offered a final opportunity to receive government financial aid. Understanding the new rules and turnover calculation requirements became essential for successful application and accurate tax reporting.
Timeline and Eligibility Notification
HMRC began contacting potentially eligible applicants in mid-July 2021. This outreach was based on information provided in previous applications and tax return submissions. The official application window opened in late July 2021 and closed on 30 September 2021. During this period, individuals were invited to check their eligibility and submit turnover figures to determine the level of support they could claim.
Those who had benefited from the earlier four rounds of SEISS might have noticed that the eligibility process had changed. For the fifth grant, a detailed turnover test was introduced, making the process more dependent on accurate financial data and recent trading activity. This meant that many applicants had to prepare more documentation than they did for previous claims.
How the Fifth SEISS Grant Worked
The most significant feature of the fifth SEISS grant was the turnover test, which determined the size of the grant based on the percentage drop in income. Two levels of financial support were offered:
- Applicants whose turnover decreased by 30 percent or more were eligible for a grant of up to £7,500.
- Those whose turnover fell by less than 30 percent could claim a reduced grant of up to £2,850.
This approach was intended to ensure that support was proportionate to the level of disruption experienced. It also placed more responsibility on applicants to provide precise and honest figures regarding their turnover during the specified periods.
Core Eligibility Criteria
Several conditions had to be met to qualify for the fifth SEISS grant. First, the applicant needed to be actively self-employed or a member of a trading partnership in both the 2019/2020 and 2020/2021 tax years. This ensured continuity of trade and demonstrated a longer-term reliance on self-employment income.
Secondly, the 2019/2020 Self Assessment tax return had to be submitted by 2 March 2021. This condition ensured HMRC had the necessary financial information to assess eligibility and cross-reference turnover declarations.
The next key requirement involved income thresholds. Trading profits had to be less than £50,000 and make up more than half of total income. This rule ensured the grant supported those whose primary income source was self-employment, rather than those with significant other income sources like pensions, investments, or employment wages.
Applicants also had to declare that they intended to continue trading in the 2021/2022 tax year and that their business had been significantly affected by the coronavirus pandemic between 1 May and 30 September 2021. HMRC provided examples and scenarios to help claimants understand what would qualify as a significant impact. This could include reduced demand for products or services, supply chain issues, staff shortages, or direct health-related disruptions.
Turnover Test: A New Requirement
The defining feature of the fifth SEISS grant was the requirement to provide turnover figures. Applicants had to supply two key numbers:
- Turnover for the period April 2020 to April 2021.
- A reference turnover figure from either the 2019/2020 or 2018/2019 tax year.
This allowed HMRC to assess the impact of the pandemic on the business by comparing the more recent turnover figure to a pre-pandemic period. The percentage difference determined the level of grant payment.
Applicants who started trading in the 2019/2020 tax year and had not traded in any of the previous three years were exempt from providing a reference year figure. This exception recognised that newer businesses lacked sufficient historical data for meaningful comparison.
Calculating April 2020 to April 2021 Turnover
Turnover refers to gross income before expenses. It includes the total value of sales or services provided by the business, whether paid in cash, bank transfer, or other forms. For the purpose of the SEISS application, this figure had to include all income from every self-employed venture the applicant operated during that period.
If an applicant had more than one business, the combined turnover had to be declared. This applied even if one business had thrived while another had suffered. All income counted equally towards the total.
In many cases, applicants could find this figure on their 2020/2021 Self Assessment tax return. If the return had not yet been completed, business bank statements, accounting software, or manual bookkeeping records could be used to calculate the total. The focus was on accurately identifying all business-related income received between April 2020 and April 2021.
Determining the Reference Year Turnover
The reference turnover figure was used to establish a baseline for comparison. Applicants could use either the 2019/2020 or 2018/2019 tax year. The guidance encouraged choosing the year that most accurately reflected a normal trading period, free from extraordinary events such as illness, maternity leave, or other unusual interruptions.
The reference year turnover also referred to gross income and had to include all sources of self-employed income. Again, bank records, previous tax returns, and accounting software could help applicants determine this number. It was important to ensure the reference year chosen was truly representative and comparable to the April 2020 to April 2021 period.
Calculating the Percentage Reduction
Once both turnover figures were obtained, the next step was to calculate the percentage reduction. This was done using a straightforward formula:
- Subtract the April 2020 to April 2021 turnover from the reference year turnover.
- Divide the result by the reference year turnover.
- Multiply by 100 to get the percentage.
For example, if your reference year turnover was £60,000 and your April 2020 to April 2021 turnover was £40,000, the reduction would be calculated as follows:
- £60,000 – £40,000 = £20,000
- £20,000 ÷ £60,000 = 0.333
- 0.333 x 100 = 33.3 percent reduction
In this scenario, the applicant would be eligible for the full £7,500 grant because the turnover dropped by more than 30 percent. If the reduction had been, say, 25 percent, the applicant would receive the lower grant amount capped at £2,850.
Complex Scenarios in Turnover Calculation
Some applicants faced more complicated situations that required further consideration. For example, someone might have started or closed a business during the reference period. If a business closed during the reference year but was trading during the April 2020 to April 2021 period, its income still had to be included.
In cases where a business only operated for part of a year, turnover might need to be annualised or pro-rated. HMRC provided guidance for such scenarios to help applicants adjust their figures appropriately.
If an applicant operated multiple businesses, all turnover had to be reported, even if one business did not experience any negative impact. The total combined turnover determined eligibility. This could sometimes lead to situations where the healthy performance of one business reduced the applicant’s overall perceived loss.
There were also situations involving newly started ventures. If a business began trading during April 2020 to April 2021, its turnover still had to be included in full. This might not reflect a full year of trading but was still considered part of the applicant’s total self-employed income.
Importance of Accurate Record-Keeping
Given the level of detail required, accurate record-keeping was more important than ever. Applicants were expected to provide precise figures, and HMRC retained the right to verify these numbers at a later date. If an error was found, whether intentional or not, it could result in a requirement to repay part or all of the grant. In serious cases, penalties could also apply.
Applicants were encouraged to use a mix of financial records to ensure accuracy. Bank statements, sales records, receipts, accounting software reports, and invoices could all support the turnover figures submitted in the application. Those unsure of their numbers were advised to seek help from an accountant or tax adviser.
Even small mistakes could affect the outcome of the application. A misreported turnover figure might reduce the grant amount or delay approval. Inaccuracies could also create problems during the Self Assessment process, particularly if the declared figures didn’t match those later reported in tax returns.
The Link Between SEISS and Self Assessment
SEISS grants were not loans and did not have to be repaid, but they were taxable. The first three SEISS grants were received during the 2020/2021 tax year and needed to be included in the 2020/2021 Self Assessment return. The fourth and fifth grants, however, were paid in the 2021/2022 tax year and had to be reported on the corresponding return.
For most applicants, this meant adjusting their records and ensuring all relevant SEISS income was correctly allocated to the appropriate tax year. Failure to do so could result in underpayment of tax and possible penalties. HMRC expected the grant to be treated like any other form of self-employment income and to be reported accordingly.
Understanding Turnover and Why It Matters
For the fifth round of the Self-Employment Income Support Scheme, calculating your turnover correctly was essential. This figure directly impacted how much financial support you could claim. The turnover test, introduced specifically for this round, aimed to differentiate between those whose businesses were severely affected by COVID-19 and those who experienced less disruption.
Turnover refers to the total business income you earned before any expenses or deductions. It’s the gross figure from sales or services, not the profit. The turnover comparison allowed HMRC to see how much your earnings had fallen in the pandemic year compared to a typical pre-pandemic year. The percentage decrease then determined whether you were eligible for the full grant amount or a reduced one.
What Periods Should You Compare?
To apply for the fifth SEISS grant, you needed to compare your turnover from two different periods:
- The most recent trading year, which runs from April 2020 to April 2021.
- A reference year, either the 2019/2020 or 2018/2019 tax year.
The April 2020 to April 2021 figure reflects your business performance during the height of the pandemic. The reference year acts as a benchmark, showing what a typical year looked like before COVID-19 disrupted trading. If your turnover in the recent year dropped by 30 percent or more compared to the reference year, you qualified for the full grant. A smaller drop still allowed you to claim, but at the lower grant level.
Applicants who started trading during the 2019/2020 tax year and hadn’t traded in earlier years were not required to provide a reference turnover. In these cases, HMRC didn’t perform a comparison but used other eligibility criteria.
Identifying Your April 2020 to April 2021 Turnover
Your April 2020 to April 2021 turnover should include all gross income from your self-employed business activities. This may include cash payments, invoices settled via bank transfers, or online sales revenue. If you operated multiple businesses, the total income from all ventures needed to be combined into a single turnover figure.
There are several ways to find or calculate this figure:
- Refer to your 2020/2021 Self Assessment tax return if it’s already completed. The relevant section on self-employment income will include total turnover.
- Use accounting software or bookkeeping spreadsheets that track your monthly income.
- Check your business bank account statements and tally all incoming payments related to business activity.
- Review invoices, sales logs, or marketplace account summaries, such as those from eBay, Etsy, or Amazon.
You didn’t need to deduct any expenses or costs when calculating turnover. Only the gross figure mattered. However, accuracy was important because HMRC could review this information later and request supporting evidence.
Selecting Your Reference Year
The reference year could be either the 2019/2020 or 2018/2019 tax year. Choosing the right year was important, especially for businesses that had experienced abnormal trading in one of those years. For instance, if you had maternity leave, illness, or paused your business in 2019/2020, you might have used 2018/2019 instead.
HMRC allowed this flexibility to make the comparison fairer. However, once you chose a reference year, the full turnover for that year had to be declared. If you had more than one business in that year, the turnover from all of them needed to be included. This provided a full picture of your income before the pandemic.
To find your reference year turnover:
- Look at your tax returns for 2018/2019 or 2019/2020. You can access these via your personal tax account or saved copies.
- Use your business records, such as ledgers, spreadsheets, or software reports, from the chosen year.
- Consult your accountant if you’re unsure which year is most accurate or if you’ve changed business structure.
Calculating the Percentage Decrease
Once you have both turnover figures, you can calculate the percentage reduction using a simple formula:
- Subtract the April 2020 to April 2021 turnover from your reference year turnover.
- Divide the difference by your reference year turnover.
- Multiply the result by 100 to get the percentage drop.
Here’s a working example:
- Reference year turnover (2019/2020): £50,000
- April 2020 to April 2021 turnover: £35,000
- Difference: £50,000 – £35,000 = £15,000
- Percentage drop: (£15,000 ÷ £50,000) × 100 = 30%
In this case, the drop is exactly 30 percent, which means you would qualify for the maximum grant. If the percentage had been 29 percent or lower, you’d only be eligible for the lower amount.
Turnover for Multiple Businesses
Many self-employed individuals run more than one business or side hustle. Whether you have a main business and a smaller secondary activity or two full-time ventures, all turnover had to be combined. HMRC assessed your total self-employed income, not each business in isolation.
This meant you had to be especially thorough in collecting data. Failing to include income from a side business could result in underestimating your turnover, which might make it look like your income had fallen more than it actually had. That could lead to an overpayment you’d need to return later.
For example, if your primary business turnover fell by 40 percent but a new online venture saw strong growth, your total combined turnover might only be down by 20 percent. In that case, you would only receive the smaller grant.
Businesses That Started or Closed
Some applicants began a business partway through the reference year or during the pandemic year. Others might have shut down one business but continued operating another. In these cases, turnover calculations could become more complex.
If a business started mid-year, HMRC did not require you to annualise or adjust figures. You simply had to include whatever income was earned during the relevant period, even if it wasn’t for a full 12 months.
If you closed a business during the reference year, its income still counted for that year. For example, if you had a photography business that closed in October 2019, but also ran a graphic design business during the same period, turnover from both was included in your reference year figure.
If you started a new business during the pandemic year, that income was also included in your April 2020 to April 2021 turnover. This was true even if the business had not existed in the reference year. HMRC required full transparency across all trading activity.
Unusual Trading Patterns and Seasonal Businesses
Some businesses experience seasonal income patterns. For example, wedding photographers, holiday lets, or market traders may earn most of their income during a specific few months of the year. These fluctuations could distort the comparison if the selected 12-month periods didn’t align well with your peak seasons.
Despite this, HMRC still required applicants to use full-year turnover figures rather than seasonal snapshots. You could not compare six months of 2021 income with a previous 12-month figure. Even if your business was closed for part of the year due to lockdowns, the requirement was still to provide turnover for the full tax period.
This could mean that your figures didn’t clearly show how bad things really were at specific points in the year. Even so, HMRC used this consistent method to compare everyone fairly across the same timescales.
Using Bank Statements and Other Records
If you had not yet completed your 2020/2021 Self Assessment return at the time of application, you still had to provide accurate turnover information. In that case, bank statements became your primary evidence. Reviewing all incoming business payments from April 2020 to April 2021 and summing them up gave a reliable figure.
Many sole traders also used spreadsheets to log sales and client payments. If you received income through PayPal, Stripe, or other payment platforms, those summaries could also serve as supporting documentation.
Other useful sources included:
- Invoice records
- Sales receipts or till summaries
- Online store income reports (e.g., Shopify, Etsy, Amazon)
- Booking system exports for service providers
Ensuring the completeness of these records was critical. Missing transactions or duplicate entries could skew your turnover figure and lead to incorrect grant payments.
Common Mistakes to Avoid
Applicants sometimes made errors that affected their grant outcome. Common issues included:
- Providing net profit instead of gross turnover
- Excluding income from side businesses
- Using only part of the year when full-year figures were required
- Double counting payments
- Omitting online income or cash payments
Another issue was confusion between accounting periods and tax years. Some businesses operate on a non-standard accounting year, such as July to June. However, for the SEISS application, turnover needed to be for the tax year from April 6 to April 5 or, if simpler, the closest available 12-month period that aligned closely with that range.
To avoid mistakes, it was helpful to reconcile multiple data sources, such as matching invoices with bank payments and reviewing any cash records. Where uncertainty remained, professional advice was advisable.
How to Deal with Estimates
In rare cases, applicants were allowed to use estimates, but only when accurate records were not available, and time constraints made it impossible to retrieve them. HMRC expects you to base estimates on reasonable assumptions and existing data.
You might look at average monthly income and multiply it to cover the full year, adjusting for seasonal variation if needed. Still, relying on estimates increased the risk of HMRC questioning your figures later. It was always better to submit actual figures supported by documentation, where possible.
Final Tips on Record Keeping
Accurate turnover records were not only essential for claiming the SEISS grant but also for staying compliant with tax law. You were expected to retain all relevant documentation in case of future enquiries. This included:
- Copies of submitted turnover figures
- Bank statements showing received payments
- Invoices and receipts
- Online platform reports
- Notes explaining any assumptions or methods used in calculations
HMRC could review your claim and cross-check it against your tax returns. If discrepancies were found, this could lead to demands for repayment or financial penalties.
Overview of SEISS and Taxation Rules
The Self-Employment Income Support Scheme offered essential financial help to millions of self-employed individuals across the UK. While the grants were a welcome lifeline, they were not exempt from tax. Every grant received through SEISS was classed as taxable income and had to be reported on the appropriate Self Assessment tax return. For those who received the fifth grant, understanding when and how to report it was critical.
Tax treatment varied depending on the date the grant was paid. Each round of the scheme was taxable in the year it was received, not necessarily the year it covered. This detail often caused confusion for many self-employed individuals, especially those managing fluctuating income levels and delayed returns. With the fifth grant issued between late July and September 2021, it fell into the 2021/2022 tax year, meaning it had to be included in the Self Assessment return for that year.
When to Report the Fifth SEISS Grant
The fifth SEISS grant, like the fourth, had to be reported on the Self Assessment return covering the 2021/2022 tax year. That tax year started on 6 April 2021 and ended on 5 April 2022. The deadline for filing the return online was 31 January 2023, and it was essential that anyone who received a SEISS payment during that period included it as taxable income.
The first three SEISS grants were all paid within the 2020/2021 tax year and therefore had to be reported in the return submitted for that year. This made the fourth and fifth grants separate from the earlier payments not only in how they were calculated, but also in how they were taxed. Reporting the wrong grant in the wrong year could lead to inaccurate tax calculations and the possibility of HMRC intervention.
Where to Report the Grant on Your Tax Return
When completing your Self Assessment tax return, you were required to declare SEISS grants under a specific section created for COVID-19 support payments. This section was separate from the standard income and expenses section. For self-employed individuals using the full SA103 form (Self-employment), there was a designated box for reporting these grants. If using the short SA103S version, the process was similar.
You should not include the SEISS grant as part of your business turnover. Instead, it was treated as a separate line item under “Other income” or the relevant COVID-19 grants box. Mixing it in with your trading income could distort your total turnover and affect things like future tax credits, Universal Credit assessments, or future grant eligibility.
For most individuals filing online, HMRC included a pre-populated figure for SEISS payments received. However, it was your responsibility to ensure the amount was correct. If it wasn’t, you had the option to amend the figure manually and provide the accurate amount. Retaining your grant confirmation emails or payment statements was advisable in case you needed to prove the actual amount received.
What Happens If You Forget to Report the Grant
If you submitted your Self Assessment return without including the SEISS grant, you risked an inaccurate tax return. HMRC could cross-check your return against their payment records and raise a query. In some cases, they would issue an adjustment automatically. In more serious cases, especially where omission seemed intentional, penalties or investigations could follow.
Failing to report the grant could also affect how much tax you were charged overall. Because the SEISS grant was treated as income, it had the potential to push your total taxable earnings into a higher tax band or affect your eligibility for other allowances. Leaving it out could result in an underpayment of tax, which HMRC would seek to recover.
If you realised after submission that you had missed a SEISS grant, you had the opportunity to amend your return within 12 months of the filing deadline. This gave you time to correct mistakes and report the grant properly. If more time had passed, you would need to write to HMRC and follow their guidance on making corrections to previous tax returns.
National Insurance on SEISS Grants
SEISS grants were also subject to Class 4 National Insurance contributions, in addition to Income Tax. Class 4 contributions applied if your profits exceeded the lower threshold for the tax year. Since SEISS payments were added to your taxable profits, they contributed toward this calculation.
Class 2 National Insurance contributions were not affected in the same way. These were generally paid as a flat weekly amount and were not dependent on total profits. However, total taxable income, including SEISS payments, could still influence whether Class 2 payments were due, depending on how your earnings compared to the small profits threshold.
Understanding the National Insurance implications was important because it helped you accurately predict your total tax liability. Some individuals focused only on the Income Tax aspect of SEISS, only to be surprised later by additional National Insurance demands.
Keeping Supporting Documentation
Even though the SEISS grant may have been pre-filled on your tax return, you were still responsible for keeping accurate records. HMRC could request evidence of the amount received, especially if there were discrepancies or errors in reporting. This could include:
- The confirmation email from HMRC when your grant was approved
- Bank statements showing the payment
- Screenshots or downloads from your personal tax account
- Notes or correspondence relating to your turnover calculation
Keeping these documents for at least five years after the 31 January submission deadline was recommended. This ensured you had proof of eligibility and accuracy if HMRC contacted you about your return at a later date.
If your turnover calculation was particularly complex or based on estimates, having notes on your calculation method could also prove useful. For example, if you used average income for part of the year due to lost records or emergencies, explaining this in writing at the time of the claim helped clarify your position later.
Impact on Other Benefits and Allowances
Since SEISS grants were classed as taxable income, they could impact your entitlement to other benefits. Universal Credit, for instance, considered SEISS payments as part of your earnings. Depending on the amount received, this could reduce your monthly payments or temporarily disqualify you from claiming.
Similarly, SEISS payments could influence your tax credit calculations, student loan repayments, or Child Benefit if your total income exceeded £50,000. These secondary effects made it important to factor the grant into your wider financial picture, not just your Self Assessment tax return.
Planning ahead for these implications could help you avoid surprises. For example, if the grant pushed your income above the Child Benefit threshold, you might have chosen to opt out temporarily or prepare to pay the High Income Child Benefit Charge through your tax return.
Handling Overpayments or Ineligible Claims
Some individuals received SEISS grants they later discovered they were not eligible for. This might have happened because turnover was overestimated, the impact of COVID-19 was not as severe as first believed, or the wrong reference year was used. In these cases, HMRC expected the grant to be repaid.
You could voluntarily return part or all of your SEISS grant by using HMRC’s online repayment service. It was better to report an overpayment yourself rather than wait for HMRC to find the discrepancy, as voluntary disclosures usually reduced the chance of penalties.
If HMRC later determined that a grant was claimed fraudulently or carelessly, they had the right to reclaim the full amount, along with charging interest and penalties. These could range from 30 percent to 100 percent of the grant amount in serious cases. Accurate record-keeping and fair reporting protected you from these risks.
Amending Your Return to Fix SEISS Errors
Mistakes on your tax return involving SEISS grants could be corrected. If you realised the wrong amount was included, you had until the end of the amendment window to fix it. This was typically 12 months from the 31 January deadline following the end of the tax year.
To make an amendment, you could log into your online HMRC account, open the submitted return, and make the changes. Alternatively, if you used commercial tax software, the amendment could be made through the software platform. For paper filers, a written letter outlining the correction might be required.
When correcting the SEISS entry, it was helpful to explain why the change was needed. This reduced the chance of a compliance check and ensured HMRC understood the nature of the correction.
Planning for Future Tax Liabilities
For many self-employed individuals, the SEISS grant created an unusual tax position. A single lump sum might have significantly increased taxable income for the year it was received. This could result in a higher tax bill than expected, especially if no payments on account were made.
Planning for this was critical. If you knew a large portion of your income came from a SEISS grant, it was wise to set aside part of the funds to cover the additional tax. This avoided financial pressure when the tax deadline arrived.
Those who received the fifth grant in the summer or autumn of 2021 and had other rising income during the year might have triggered payments on account for the 2022/2023 tax year. This meant their tax bill in January 2023 included not only the tax due for 2021/2022 but also an advance payment toward the following year.
Seeking Professional Support
Given the complexity of the fifth SEISS grant, many individuals chose to seek advice from a professional accountant or tax adviser. This was especially helpful for those with multiple income streams, changes in trading activity, or uncertainty over turnover figures. An experienced professional could provide guidance on how to report the grant, calculate the correct tax, and plan for future financial commitments.
While the grant itself didn’t have to be repaid unless claimed in error, the tax implications could affect your business cash flow. Advice from a professional helped you avoid errors, reduce your risk of penalties, and maintain confidence in your compliance with HMRC rules.
Conclusion
The fifth round of the Self-Employment Income Support Scheme introduced a more complex but targeted way of delivering financial support to self-employed individuals. Unlike the earlier grants, it required applicants to take an active role in demonstrating the financial impact of COVID-19 by calculating and reporting their turnover. This additional requirement made it crucial to understand what qualifies as turnover, how to compare income periods accurately, and how to apply the results of that comparison correctly within the eligibility framework.
From collecting bank records and invoices to navigating the reference year rules, applicants had to be precise in their financial reporting. Mistakes or omissions could lead to delays, incorrect payments, or even the need to repay part or all of the grant. Many found that seeking professional advice was a worthwhile investment to ensure compliance and accuracy.
Once received, the SEISS grant had to be treated like any other self-employment income for tax purposes. It was subject to Income Tax and National Insurance and needed to be declared on the correct Self Assessment return. Understanding how the grant impacted your overall tax bill, as well as any knock-on effects on benefits or allowances, was an important part of managing your finances in the wake of government support.
Ultimately, the fifth SEISS grant served as both a financial safety net and a test of good record-keeping and reporting habits. For many self-employed people, it reinforced the value of maintaining accurate accounts, understanding their business performance in detail, and preparing for the tax implications of emergency financial support. Whether or not future schemes are introduced, the lessons learned from this final grant round will remain useful for navigating future uncertainty with confidence.