Did you know that Covid-19 grants are taxable?

Some people may not have been aware that Covid-19 support grants and payments are taxable, therefore must be declared on tax returns.

HM Revenue and Customs (HMRC) has issued a reminder to ensure that companies include these when submitting tax returns.

If you are unsure whether the grant your company received falls in this category, HMRC has provided a list of the following grants that are taxable:

  • test and trace or self-isolation payments in England, Scotland and Wales
  • Coronavirus Statutory Sick Pay Rebate
  • Coronavirus Business Support Grants (also known as local authority grants or business rate grants)

Payments that fall within these categories should be classified as income for calculating taxable profits, when completing the tax return.

However, companies that received grants related to the Coronavirus Job Retention Scheme (CJRS) or Eat Out to Help Out will also be required to record them on the Company Tax Return using the specified CJRS/ Eat Out to Help Out boxes.

Be aware of the deadlines

For filing company tax returns (CT600), the deadline is 12 months following the end of the accounting period covered.

Whereas for Corporation Tax, the submission deadline is dependent on any taxable profits as well as when the accounting period ends.

Self-Assessment tax returns for the tax year 2020/2021, as well as any tax owed, are due on 31 January 2022.

However, HMRC has recently announced that customers would be granted an extra month to file and pay any tax due before penalties are incurred, in response to the impact of coronavirus.

Further guidance on how to complete and submit your company’s tax return can be found here.

For advice and support, contact our expert team today.

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