SEISS grants 1 to 4 were claimed and well received. Although Grant 5 was in progress at the time, this article focuses on Grants 1 to 3 (the 2020–21 tax year).
Are SEISS grants taxable? Yes. Grants 1 to 3 must be included in your Self Assessment tax return for 2020–21.
A key area of confusion relates to eligibility — particularly the requirement to show a proven intention to continue trading in the 2020–21 tax year.
HMRC takes this seriously and has been reversing grants where the recipient did not continue trading at any point in 2020–21. In those cases, HMRC may require full repayment by 31 January 2022.
Examples that are not, by themselves, a valid excuse for not continuing the trade include
- Switching from self-employment to a partnership
- Switching from self-employment to a limited company
- Closing the self-employment business and moving into employment
- Not realising the criteria applied
If your business failed before 2020–21 but you can evidence genuine efforts to continue, you may have a case. A common trigger for HMRC review is not completing the self-employment section on the tax return.
If in doubt, seek advice before filing.
