Trading Income Allowance vs SEISS Grant?

Can the £1,000 be offset where a client has received only SEISS income for the year?

Didn't find your answer?

A client of mine received nil self-employment income for the year, and incurred very few expenses (£200 or so). The client has received £4,715 in SEISS grants; is it possible to claim the £1,000 Trading Income Allowance?

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By Duggimon
27th Apr 2021 14:14

I would be surprised, the SEISS income isn't trading income. Your client would be better off with the trading loss based on his actual expenses and setting that off against the SEISS grants.

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By jonharris999
28th Apr 2021 08:28

+ 1

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By Tax Dragon
27th Apr 2021 14:25

Like Duggimon, it's not a question I have thought about, but by way of a different view... IIRC para 1 (or maybe 2) of Sch16 to FA2020 makes the grants a profit of the business. So, while you'd need to check the wording of the disparate provisions to make sure it did tie up, my immediate reaction is that I would be surprised if not.

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By Duggimon
27th Apr 2021 15:16

I went and read your helpful citation and now I think I agree, despite how it's treated on the tax return, SEISS is a receipt of the business and the trading allowance could and probably should apply.

As to how you get it in to the tax software, I will cross that bridge if I come to it though I think I'm probably hoping to take the tunnel and avoid that bridge entirely.

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By SXGuy
27th Apr 2021 16:40

As far as I can see tax calc allows you to add the 1k trading allowance and reduces the profit on seiss.

However tax calc did have some issues with calculating losses until its recent update so it may have been an error. I'll need to check again now it's updated

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By DaveyJonesLocker
27th Apr 2021 17:00

Precisely, I wouldn't currently trust what Taxcalc does when it comes to SEISS.

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By DaveyJonesLocker
27th Apr 2021 17:00

Precisely, I wouldn't currently trust what Taxcalc does when it comes to SEISS.

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By DaveyJonesLocker
27th Apr 2021 17:01

Precisely, I wouldn't currently trust what Taxcalc does when it comes to SEISS.

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By legerman
27th Apr 2021 17:38

SXGuy wrote:

As far as I can see tax calc allows you to add the 1k trading allowance and reduces the profit on seiss.

However tax calc did have some issues with calculating losses until its recent update so it may have been an error. I'll need to check again now it's updated

I've just tried it in taxfiler and the trading allowance doesn't kick in on SEISS, only if I add income.

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By fawltybasil2575
27th Apr 2021 17:54

@ Thorsten Orr (OP).

There is no reason why the Trading Allowance should not be available, where the Turnover is Nil as long as, importantly, the business is being carried on.

Hence if for example goods are being manufactured with a view to sale, but for whatever reason no goods are sold, then that is OK.

The greater problem potentially however is that, if there is no Turnover on a Tax Return, HMRC might contend that there has been no trading and/or no intention to continue to trade and, on those grounds, contend that the SEISS income has been claimed improperly.

Basil.

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By legerman
28th Apr 2021 10:40

fawltybasil2575 wrote:

@ Thorsten Orr (OP).

The greater problem potentially however is that, if there is no Turnover on a Tax Return, HMRC might contend that there has been no trading and/or no intention to continue to trade and, on those grounds, contend that the SEISS income has been claimed improperly.

Basil.

If SEISS has been claimed but no income received it may well be legitimate. One of my clients is a Quiz Host/DJ for pubs. He's only just returned to work since the lifting of the restrictions on 12th April, where he's done the odd garden evening. When I do his tax return for 20-21 there will only be SEISS.

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By cathygrimmer
27th Apr 2021 17:58

I don't think you can claim the Trading Allowance against it.
The legislation in FA 2020, Schedule 16, para 4(4) and 4(5) says:
"No relief under Chapter 1 of Part 6A of ITTOIA 2005 (trading allowance) is given to an individual on an amount of a coronavirus support payment made under the self-employment income support scheme brought into account under paragraph 1(2) as profits of that tax year.
For the purposes of that Part, such an amount is to be ignored when calculating the individual’s “relevant income” for that tax year under Chapter 1 of that Part."

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By Tax Dragon
27th Apr 2021 20:55

That sounds pretty conclusive! :-)

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By DaveyJonesLocker
27th Apr 2021 20:59

And something else for taxcalc to correct

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