LITRG warning self-employed not to be caught out by SEISS grant myths

With HMRC waiving penalty fees for those late filing and paying their tax return, the LITRG is concerned that the millions who claimed SEISS grants may be misinformed about repayments.

HMRC estimated in December 2021 that £28.1 billion has been paid in SEISS (Self-Employment Income Support Scheme) grants in total (up to the 28^th of October 2021). Across the five grants, 2.9 million individuals have received a grant and 10.4 million total grants have been claimed.

The LITRG (Low Incomes Tax Reform Group) is keen to provide the self-employed with clarity by addressing the SEISS myths, such as:

• SEISS grants are not taxable – False. The grants are taxable income. Most people will need to report the first three SEISS grants, if claimed, on their 2020/21 self-assessment tax return.
• ‘My circumstances changed after I claimed the SEISS grant, so I will have to pay it back’ – False. The important thing to remember is that you needed to have met the eligibility conditions AT THE TIME you made the claim.
• ‘My grant claim was correct, so I can ignore any letters from HMRC about the grants’ – False. The LITRG warns not to put off replying to HMRC as it could be that your claims were valid, but are just being fact checked.

• ‘HMRC haven’t written to me about my grant, so I know I won’t need to pay any of it back’ – False. HMRC have already contacted some people about their SEISS grant claims, but they will continue to check claims. Just because you have not received a letter so far does not mean HMRC agree that you were eligible for your SEISS grants.
• ‘I don’t need to declare my SEISS grant for tax credits or universal credit’ – False. SEISS grants count as income for both tax credits and universal credit.

Claire Thackaberry, LITRG Technical Officer, commented, “We worry about how engaged taxpayers are with SEISS because the first three grants were applied for a long time ago and often by people in a stressful financial situation.

“There is a lot of misinformation regarding the SEISS grants and whether people may now need to repay them – we are trying to help people understand their correct tax position if they received any of these grants.”

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