ICAEW.com works better with JavaScript enabled.


SEISS grants four and five confirmed in Budget


Published: 09 Mar 2021 Update History

The criteria for the fourth and fifth SEISS grants will include 2019/20 self assessment tax return data and widen the scheme to hundreds of thousands more taxpayers, but close it to others. Ahead of legislation and HMRC guidance ICAEW’s Tax Faculty explains what we know so far.

It had been hoped that the delay in announcing the eligibility criteria for the fourth self-employment income support scheme (SEISS) grant would allow the government and HMRC to use data from 2019/20 tax returns to widen the scheme, including to some who started self-employment in that year, and so it proved.

HMRC estimates that up to 300,000 taxpayers who started self-employment in 2019/20 may now qualify for the remaining two grants, alongside a further 300,000 who were previously ineligible because they failed either the £50,000 income cap or the test which checks that their trading income was less than half their total income (the 50% test).

However, ICAEW’s Tax Faculty believes that these estimates should be treated with caution and warns that some taxpayers who were eligible for the earlier grants will not be eligible for the fourth and fifth grants if they now fail the £50,000 or 50% tests.

The inclusion of 2019/20 data will also mean that, in individual cases, the grant available may be more or less than previous grants.

To qualify for the fourth and fifth SEISS grants taxpayers must have filed their 2019/20 self assessment tax return by 2 March 2021. This applies to all claimants and with more than 1m returns still outstanding on 28 February some who claimed the earlier grants may be disappointed if they failed to file their 2019/20 tax return in time.

The criteria are otherwise unchanged, and the government resisted calls to change the £50,000 income limit and 50% test or to extend support to those trading through limited companies.

HMRC has published a factsheet pending more detailed guidance.

The tests of eligibility are first applied to 2019/20. If the tests are failed, they are then applied to the four years 2016/17 - 2019/20, where available.  There is no confirmation as to how the rules will work for those that did not trade in all four years.


The fourth SEISS grant covers February to April 2021. It has been set at 80% of three months’ average trading profits and is capped at £7,500. Average trading profits is over the four years 2016/17 - 2019/20, where available.

HMRC will contact potentially eligible taxpayers in mid-April and applications will be open from late April to the end of May 2021. Many will be disappointed that claims cannot be made until late April, but HMRC needs that time to check the 2019/20 tax return data and to carry out pre-verification checks


The fifth grant covers May to September 2021. It has been set at 80% of three months’ average trading profits capped at £7,500 for those whose turnover has reduced by 30% or more.

Those with a turnover reduction of less than 30% will receive a grant based on 30% of three months’ average trading profits, capped at £2,850. Average trading profits will be calculated as for SEISS 4.

Details of how the turnover test will work may not be available for some time, but the Tax Faculty understands that the comparison is likely to be tax year 2020/21 compared with 2019/20 (this may need to be varied where taxpayers do not prepare accounts to 31 March or 5 April).

The grants are based on three months trading profits despite covering a five-month period. HMRC has indicated that this approach is intended to tailor support as the economy opens up. It also notes that employers will be required to contribute to furloughed employees’ income in July, August and September, and that the self-employed can work and claim whereas no claim under the Coronavirus Job Retention Scheme is possible for hours worked. 

The SEISS applications portal is expected to open for the fifth grant in late July

Tax treatment

Finance Bill 2021 will include a measure to change the tax treatment of SEISS grants which will be subject to taxation in the tax year in which the amount was received.

The current position is that all SEISS grants are taxable in 2020/21 but given the extension of the scheme this needs to change. 2020/21 and 2021/22 returns will include boxes for SEISS grants to allow them to be reported separately and crosschecked by HMRC. HMRC is still exploring how it might pre-populate tax returns or give agents access to information of the amounts claimed by their clients.

A measure to allow HMRC to recover SEISS grants where an individual is no longer eligible following a change in circumstances is also to be included in Finance Bill 2021.

The Tax Faculty understands that this is primarily intended to cover the situation where a tax return is amended after a claim has been made and based on the amended return the taxpayer would either not be eligible for a grant or would be entitled to a lower grant.

The faculty does not expect that HMRC will pay higher grants where an amendment would result in a higher amount due and that is likely to be perceived as unfair.

More support on tax

ICAEW's Tax Faculty provides technical guidance and practical support on tax practice and policy. You can sign up to the Tax Faculty's free enewsletter (TAXwire) which provides weekly updates on developments in tax.

Sign up for TAXwireJoin the Tax Faculty
Tax Faculty

This guidance is created by the Tax Faculty, recognised internationally as a leading authority and source of expertise on taxation. The Faculty is the voice of tax for ICAEW, responsible for all submissions to the tax authorities. Join the Faculty for expert guidance and support enabling you to provide the best advice on tax to your clients or business.