Covid-related grants to include on tax returns

A reminder that self-assessment clients must declare any Covid-related grants, including SEISS grants, on their 2020/21 tax returns

The taxation of all coronavirus support payments is legislated in S.106 of Finance Act 2020 and was explained in an article in the June 2020 issue of In Practice.

SEISS grants are fully taxable and clients must declare them on their 2020/21 tax returns, due to be filed before the deadline on 31 January 2022. HMRC has some updated information on its latest Agent Update 91 and has guidance in the Self-assessment Return Guidance Notes on how to complete the relevant boxes for clients’ tax returns.

Members can refer to the guidance on our Covid hub on the various SEISS grants that were available for their clients to claim.

Additional guidance on what members should do when completing tax returns for clients who have claimed SEISS grants has been developed and is available as part of the guidance under members’ obligations under Profession Conduct in Relation to Taxation (PCRT) – ‘Interim guidance for CJRS and SEISS’.

The factsheets can be obtained by following the links at the top of the PCRT page shown above for the Interim Guidance on CJRS and SEISS and includes guidance on the action members need to take depending on their assessment of the claims process. It also includes guidance on the boxes relevant for declaring the SEISS grants – this is important as HMRC will compare the return with the SEISS claims made and may raise an enquiry if these boxes are not correctly completed.

As a reminder, our latest guidance on AML obligations and factsheets can be accessed from our AML hub.

If taxpayers received other support payments during the pandemic, including Coronavirus Job Retention Scheme (CJRS) grants, they may need to report this on their tax return if they are self-employed, in a partnership, or a business. You should refer to the CJRS factsheet on the PCRT page for further guidance.

Guidance on accounting for Covid grants is available in our Technical Factsheet on accounting for Covid-19 grants and reliefs – this is available on our Covid hub for UK members, and includes guidance on how to deal with BBLS and CBILS loans. Note that for accounting purposes, grants should not be netted off against the relevant expenditure.