The Low Incomes Tax Reform Group (LITRG) has urged HMRC to publicise the tax
implications for recipients of payments under the SEISS. Grants made under the scheme
are taxable and will need to be included in claimants’ 2020/21 self-assessment
tax returns. LITRG notes that recipients might need to consider budgeting for
income tax and class 4 NIC to take into account payments received under the
scheme and to reduce the risk of unwelcome surprises for taxpayers in January
2022. In some cases, taxpayers may decide to reduce their payments on
account for 2020/21, based on an expected fall in profits compared to 2019/20.
In these circumstances, SEISS grant payments should be factored in, to avoid a
heavier than expected balancing payment.
The Low Incomes Tax Reform Group (LITRG) has urged HMRC to publicise the tax
implications for recipients of payments under the SEISS. Grants made under the scheme
are taxable and will need to be included in claimants’ 2020/21 self-assessment
tax returns. LITRG notes that recipients might need to consider budgeting for
income tax and class 4 NIC to take into account payments received under the
scheme and to reduce the risk of unwelcome surprises for taxpayers in January
2022. In some cases, taxpayers may decide to reduce their payments on
account for 2020/21, based on an expected fall in profits compared to 2019/20.
In these circumstances, SEISS grant payments should be factored in, to avoid a
heavier than expected balancing payment.
