Self-employed business owners in the UK who have received a grant through the Self Employment Income Support Scheme (SEISS) are being urged to remember that they can be taxed on this money.
This warning has come from the Low Incomes Tax Reform Group (LITRG), which is expressing its concern that many of those who are eligible for these grants are unaware that they may have to pay tax or national insurance contributions (NICs) on them. As LITRG points out, some of the SEISS recipients may have to pay back up to one third of the grants in this way next year.
The organisation is worried that the description of the SEISS payments as ‘grants’ is deceiving some self-employed people into thinking that tax and NICs do not apply. In turn, that could leave them with a tax bill that they have not prepared for and cannot pay by the January 31st, 2022 deadline.
The LITRG’s head, Victoria Todd, told Accountancy Daily that a lot of them will spend these grants on meeting the costs of living during the lockdown or paying off bills, before adding:
“We urge HMRC to do as much as they can to publicise that the grants are chargeable to income tax and national insurance, to reduce the risk of people being surprised by higher-than-expected 2020-21 tax bills.”
Those self-employed business owners who pick up on this warning may opt to consult an accountant who provides tax return services in South Yorkshire, or whatever part of the country they are based in.