Where are SEISS payments included on the tax return?

Grants 1, 2, and 3 from the Self-Employment Income Support Scheme (SEISS) are reported as income on the 2020/21 tax return, regardless of the accounting period in which they were received. The amount reported on the tax return is the total amount received from the beginning of the tax year through April 5, 2021.

This is good advice. You don’t have to worry about the fourth grant until 2021/22, so don’t stress about it just yet. This means that the amount of SEISS grant reflected in the accounts and on the tax return will be different unless the client’s accounting date corresponds with the tax year-end.

Where to enter SEISS grants in the accounts is a point of contention among professionals. We know that some companies regard them as other income in their profit and loss statements, while others treat them as capital introduced. It’s up to you where you incorporate SEISS grants in the client’s accounts, but if it’s in the profit and loss account, you’ll have to modify it for tax purposes.

HMRC compliance activity will check the SEISS money indicated on the tax return with the amounts paid out by HMRC; thus, having the figures accurate will decrease the likelihood of an investigation.

Partnerships

Partnerships are an exception. If an SEISS grant is claimed by one partner and distributed to all partners, the grant is recorded as trading profits on the partnership return, and the profit share is distributed to each individual partner.

If the individual partner who claimed the SEISS money maintains all of it, you should put it in a separate SEISS box on the partnership statement for the individual partner’s tax return.

When grant money is distributed to all partners and reported as part of partnership turnover, HMRC systems will indicate no SEISS grant on the individual partner’s return, causing a discrepancy. Be careful that HMRC may (incorrectly) amend the partner’s return, resulting in a double taxation of a SEISS grant.

HMRC guidance in the SA850 notes (see Follow up ) differs from the Treasury Direction in terms of language. According to the guidance, any partner must account for a SEISS grant to other partners; the Treasury Direction merely states that SEISS grants must be distributed to other partners.

Other sources of income include SEISS.

Software defaults may translate a SEISS grant as other income on the tax return if it is listed in accounting as “other income.” For HMRC compliance checks and the amount stated, this would result in an erroneous result (unless the accounting date is 31 March or 5 April).

Advice.

To avoid this, you can regard SEISS grants as capital introduced if the system cannot be rectified.

Boxes for tax return

For SEISS grants, utilise Box 70.1 instead of Box 16 on the lengthy self-employment pages. Box 27.1 is for the condensed form of the pages. Use Box 9.1 for sums kept by the individual partner on the partnership page of the main tax return (SA104f) (and not shared with the other partners).