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Payments on account include SEISS?

Is tax on grants considered when calculating payments on account?

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I have recently prepared a tax return, for a client with only self-employment income. The tax for the year is coming out around £2,000, which would of course normally require payments on account to be paid for the current tax year. However, the software (taxcalc) tax payment summary is only asking for the balancing payment for 2020-2021 and no further installments. 

My client did recieve SEISS and also rates grants, and if I took either one of these out of the return the tax for the year would fall below the £1,000 installment threshold. Therefore I think the grants may be the reason behind no installments being due for the current year (i.e. being non-recurring), but I wanted to see if anyone else had come across this first to ensure that it isn't a system glitch. 

I have had a look online but didn't come across any answers, so if anyone is able to confirm it would be much appreciated. 

Thanks. 

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By lesley.barnes
27th Jul 2021 10:03

I've just checked a clients return that had a grant and SEISS included. I should say this was on HMRC software. The only thing taken out for the payment up front is the NI Class 2 payment. I've checked that I've shown the grant/SEISS in the correct boxes to make sure and its calculated correctly. Logically the grant/SEISS is taking the place of income or helping to pay expenses such as rent so it should be included. If the client is due to earn less this year there is the option to reduce payments on account.

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By Angharad Atkins
27th Jul 2021 10:16

Thank you, I was thinking along the same lines as your logic regarding the SEISS replacing normal income, but perhaps I thought the rates grants don't come into the calculation. I will have a play around with the figures in my software and see if that confirms what I suspect. Thanks.

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