Grants received under Coronavirus relief and their tax implications

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As we enter April 2021, having witnessed one of, it not the most, trying years we have experienced to date, it is time to consider what we need to do about any of the grants we have received in the way of Coronavirus support.

Although, unlike a loan, you do not have to repay a grant, you do have to declare the grant income on your tax returns as the grant income is subject to both tax and Class 4 National Insurance Contributions.

The grants are taxable in the year in which they are received, so the first three Self-employed Income Support Grants need to be included on your 2020/2021 tax return, this is for the tax year from the 6th April 2020 to the 5th April 2021 for sole traders and partnerships.

Other grants, such as the Local Authority Grants paid under both the Small Business Grant Fund and the Retail, Hospitality and Leisure Grant also need to be declared on your tax return.

The Coronavirus Job Retention Scheme Grants available to employers will also need to be included on your tax return.

If you have received a SEISS grant to which you were not entitled, or received more money than you should have, you should report this to HMRC within 90 days and arrange to pay the money back, otherwise you may be subject to penalty charges.

Should you have questions related to your specific circumstances please do not hesitate to contact Koreen – e-mail koreen@synergyaccounting.co.uk or call her mobile number 07531741287

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About the Author:

Koreen is a Member in Practice of The Association of Accounting Technicians, which means that she is both licensed and regulated by the AAT. However Koreen is also a Fellow Member which is an acknowledgement by the AAT of her senior status in terms of knowledge and experience.
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