Hello,
My SEISS grant has been calculated by looking at trading profits from the previous three tax years. I have only been fully self-employed for two years and have submitted one tax return based on that partial year - 18/19. That return showed trading profits of £25k.
The previous tax returns (16/17 and 17/18) were submitted as I was freelancing on the side of my normal job where I was employed and PAYE. The returns were £6k and £6.5k respectively. I was earning around £32k PAYE during those periods.
My understanding is that the calculation will only use tax returns where your profits constituted 50% or more of your earnings which 16/17 and 17/18 didn't but the HMRC have included all three years. Here are the returns and the SEISS calculation:
18/19 - £25k
17/18 - £6.5k
16/17 - £6k
=£37.5k / 3 = £12.5k
80% of £12.5k = £10k
£10k / 12 = £833.33 x 3 = £2.5k
So I've ended up with £2.5k to cover three months. The calculation is correct but I believe they should have only looked at the tax year of 18/19 which would have given me closer to £5k.
I entered a review but they came back with the same calculation and didn't seem to look at my point. I've now raised a complaint but I can't seem to appeal anything currently. Is anyone aware of a next best course of action? I was hoping to get this resolved before the next round of grants.
Many thanks
Replies (9)
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"The calculation is correct but I believe they should have only looked at the tax year of 18/19 which would have given me closer to £5k."
Please could you tell me why you believe that the calculation should only include 18/19?
www.gov.uk/guidance/how-hmrc-works-out-total-income-and-trading-profits-...
I understand your confusion but I'm afraid you are confusing *eligibility* - for which they use only 18/19 in your case; and *calculation* which is always based on all 3 years if you have them.
I do realise it feels arbitrary and unfair in your case but HMRC will correctly reject an appeal because they have correctly followed the govt's rules, so I'm afraid your complaint is with Mr Sunak not Mr Taxman.
'My understanding is that the calculation will only use tax returns where your profits constituted 50% or more of your earnings'
Your understanding is wrong. HMRC are right. End of matter.
If there is a gap in self employment years then they should only use the years since that gap . So if you were PAYE then latterly self employed and before that gap they should not average the 4 years but only use 2018/19 . This is clear in the guidelines and some people on here are totally wrong in my view . Raise the appeal on the basis there was a gap in the self employment and they should only be using the later year .