Tax Free Bursaries

Hi

A self-employed worker has started a new business for which it won a Workforce Development Bursary of £2,500 to be paid in three installments. They have had confirmation from HMRC that this is tax free.

I am looking to confirm the correct treatment of this income for accounting procedures and on their tax return.

I would have thought that for accounting procedures, the income would be shown in the income statement with the expenditure (which will be training and similar) and then when the taxable income is being calculated, the bursary would be deducted from profit thus allowing a taxable deduction on the related expenditure.

Does this appear to be the correct treatment?