Beware the tax on Covid-19 support!

covid support

 

 

Over the past year, elgibile businesses may have accessed various forms of government support to help reduce the financial implications of the pandemic. Whilst support is welcomed, businesses need to make sure they understand the tax implications of any support provided. 

 

 

The following government assistance is classed as taxable income and will normally need to be reported in the business accounts:

 

  • Self-employed income support scheme (SEISS)
  • Local authority business grants

 

The timing of reporting the SEISS income for self-employed individuals is as follows:

 

  • Grants 1,2,3 – taxable in the 20/21 tax year
  • Grant 4 – taxable in the 21/22 tax year

 

Where partners are in receipt of SEISS income, this will normally need to be reported on their self-assessment tax return in accordance with the treatment above, unless the partnership requires this to be treated as business income to be shared amongst the partners, in such circumstances, the income will need to be reported in the partnership accounts. 

 

Where job retention scheme income has been received by a business for furloughed staff, this should be recorded in the accounts against the costs for the associated months.

 

Any assistance received from government backed loans, such as the bounce back or business interruption loans, are not classed as taxable income. Tax relief will be available on any interest charges, but no tax relief is available on the capital repayments.

 

Lentells are able to provide support on all aspects of business and personal tax. For further advice of information please contact your local Lentells office; 

Chard - 01460 64441, chard@lentells.co.uk 

Seaton - 01297 20584, seaton@lentells.co.uk 

Taunton - 01823 286274, taunton@lentells.co.uk 

 

 

Blog post uploaded 22 Apr 2021