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HMRC look at your trading profits and non-trading income on your Self Assessment tax returns to check if you meet the eligibility criteria for the fifth grant.

We also use your average trading profits to work out how much grant you鈥檒l get.

Trading profits

This is shown on your tax calculation as profits from either:

• self-employment
• partnerships

We鈥檒l work out your total trading profit after deducting any allowable expenses such as:

• deductions
• capital allowances
• flat rate expenses

If your annual gross trading income, from one or more trades or businesses is more than 拢1,000 you may have used the tax-free allowances, instead of deducting any expenses or other allowances.

We鈥檒l work out your trading profit after deducting any tax-free allowances.

We鈥檒l not deduct from your trading profits:

• any losses brought forward from previous years
• your personal allowance

Profits from self-employment

We鈥檒l work out your trading profit after allowable business expenses by adding any losses brought forward from previous years to the amount shown on your tax return as 鈥榯otal taxable profits from this business鈥�.

Profits from partnerships

We鈥檒l work out your share of the partnership鈥檚 profit after adjustments by adding any losses brought forward from previous years to the amount shown as 鈥榶our share of the total taxable profits from the partnership鈥檚 business鈥�.

Any non-trading income, such as investment income, will be deducted from the partnership鈥檚 total income before we work out your share of the profits.

Paper short return

Your trading profit after allowable business expenses is shown on your tax return as 鈥榩rofit鈥�.

Trading profit if you have claimed the trading allowance

If you have more than one trade in the same tax year

We will add together all profits and deduct any losses for all these trades to work out your trading profit.

Non-trading income

This is the amount recorded as 鈥榯otal income received鈥� on your online or paper tax calculation, less your trading income.

This figure does not include losses.

We鈥檒l work out your non-trading income by adding together all your:

• income from earnings
• property income
• dividends
• savings income
• pension income
• overseas income
• miscellaneous income (including taxable social security income)

How we work out your trading profit and non-trading income eligibility

How we work out your eligibility may depend on how many years you have been trading.

If you have different circumstances it can also affect your eligibility.

To be eligible for a grant, your trading profits must be both of the following:

• no more than 拢50,000
• equal to or more than your non-trading income

If you started trading in 2019 to 2020

We鈥檒l only use your trading profit and non-trading income from your 2019 to 2020 tax return to work out if you鈥檙e eligible.

If you have traded for longer

We鈥檒l work out your eligibility based on your tax returns for either:

• the tax year 2019 to 2020
• an average of the tax years 2016 to 2017, 2017 to 2018, 2018 to 2019 and 2019 to 2020 - if you are not eligible based on 2019 to 2020 alone

If you have a gap in the years you鈥檝e traded, we鈥檒l only use your most recent tax returns after the gap, to work out your eligibility.

Example 鈥� if you鈥檙e not eligible based on your 2019 to 2020 tax return

In your 2019 to 2020 Self Assessment tax return you made a loss of 拢10,000 and your non-trading income was 拢15,000.

You would not be eligible based on your 2019 to 2020 tax return alone because your non-trading income is greater than your trading profits.

We鈥檒l look at your previous returns to work out if you鈥檙e eligible.

In this example, you would still be eligible because:

• your average trading profit for the 4 tax years is 拢31,500 - which is no more than 拢50,000
• the sum of your trading profits for the 4 tax years is 拢126,000 - which is more than the sum of your non-trading income of 拢61,000 for those years

How we work out partnership eligibility

If a partnership started trading in the tax year 2019 to 2020 and made 拢100,000 in trading profits, and the profits are distributed as follows:

Example

Partner A would be eligible for the grant, as the trading profits received are no more than 拢50,000.

Partner B would not be eligible for the grant, as the trading profits received are more than 拢50,000.

If partnership rules require Partner A to pay the grant into the partnership pot, the partnership should give the full grant back to Partner A.

How we work out your average trading profits and grant amount

If you鈥檙e eligible, we鈥檒l use an average of your trading profits from up to 4 years鈥� of tax returns to work out your grant.

If you have a gap in the years you鈥檝e traded, we鈥檒l only use your most recent returns after the gap, to work out the grant.

The fifth SEISS grant is worked out at either:

• 80% of 3 months鈥� average trading profits, capped at 拢7,500
• 30% of 3 months鈥� average trading profits, capped at 拢2,850

If you started trading in 2019 to 2020

If you only traded in the tax year 2019 to 2020, we鈥檒l only use those trading profits to work out your grant.

If you have traded for all 4 tax years

To work out your average trading profits we add together profits and losses for all 4 tax years, then divide by 4.

Example

If you did not trade in the tax year 2016 to 2017

To work out your average trading profits we add together all profits and losses for the tax years 2017 to 2018, 2018 to 2019 and 2019 to 2020, then divide by 3.

Example

If you did not trade in the tax year 2017 to 2018

We鈥檒l work out your average trading profits based on the tax years 2018 to 2019 and 2019 to 2020, even if you traded in the tax year 2016 to 2017.

Example

If you did not trade in the tax year 2018 to 2019

We鈥檒l work out your average trading profits based on the tax year 2019 to 2020, even if you traded in the tax years 2016 to 2017 and 2017 to 2018.

Example

If you did not trade in 2 consecutive tax years

We鈥檒l work out your average trading profits based on your most recent returns.

Example 1

Example 2