Reporting grants received to HMRC

Most COVID support grants are treated as taxable income in the same way as other taxable receipts and need to be reported to HMRC. The grants are treated as income where the business is within the scope of either Income Tax or Corporation Tax. This

Most COVID support grants are treated as taxable income in the same way as other taxable receipts and need to be reported to HMRC. The grants are treated as income where the business is within the scope of either Income Tax or Corporation Tax.

This treatment extends to support measures including the following:

  • the Self Employment Income Support Scheme (SEISS)
  • test and trace or self-isolation payments
  • the Coronavirus Job Retention Scheme (CJRS)
  • Eat Out to Help Out
  • Coronavirus Statutory Sick Pay Rebate
  • Coronavirus Business Support Grants

HMRC’s guidance is clear that whether or not any tax is paid will depend on the business profits of the grant recipient (taking into account the grant and other business income and expenditure under normal tax rules), any other taxable income they may have and their personal and any other allowances to which they are entitled.

HMRC also has the power to recover payments and charge penalties when claimants have made support grant claims to which they were not entitled. There is no requirement to report COVID welfare payments made by a council such as those to help with council tax payments and housing benefit.

Loans, such as Bounce Back Loans or those from the Coronavirus Business Interruption Loan Scheme (CBILS), are not COVID-19 support payments.

Source: HM Revenue & Customs Tue, 05 Oct 2021 00:00:00 +0100

Latest INSIGHTS

Check out our latest Insights for useful accounting tips and information.

Payments received after company is dissolved

Any assets or rights (but not liabilities) remaining in a company at the date of dissolution will pass to the Crown as ownerless property. This happens under what is known as ‘bona vacantia’ which literally means vacant goods. The bodies that deal

Read More

Haulage company charged with loan fraud

An interesting case has seen a haulage company based in the West Midlands have their operator licence revoked. This followed a public inquiry into the company by the traffic commissioner for the West Midlands.

The traffic commissioner found that

Read More

VAT Margin Scheme bad debt relief

The VAT bad debt relief rules allow businesses to claim bad debt relief and reclaim the VAT they have paid to HMRC. This can happen when an invoice has been issued to a customer and no payment has been received after an extended period (usually 6

Read More