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Accounts treatment of Covid grants

2020/2021 tax year

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I will shortly be working on a self employed traders accounts for the year to 30 April 2020 (his basis period for 2020/2021).  He has received JRS and SEISS grants since 30 April so they won't feature in his accounts. However, I understand that these grants are to be subject to tax and NI in 2020/2021.  So will they have to be separately reported on the 2020/2021 tax returns to cater for clients such as this one?

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By SXGuy
29th Jun 2020 13:01

No one knows yet, how they will be shown in the 20/21 tax return. But they are taxable, so shouldn't affect your tax calculations.

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By paul.benny
29th Jun 2020 13:09

Did client receive CJRS for March/April?

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Replying to paul.benny:
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By John Stone
29th Jun 2020 13:17

Yes but not until May.

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Replying to John Stone:
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By paul.benny
29th Jun 2020 13:35

So shouldn't that income be accrued into the period to which it relates?

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By Paul Crowley
29th Jun 2020 18:47

My understanding is that SEISS will be on the return for ye 2021. Accounts dates irrelevant.
CJRS are in the accounts and on an accrual basis

Edit
Accounts for all other Covid grants as well

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By fawltybasil2575
29th Jun 2020 13:45

@ John Stone (OP).

The rules re CJRS and SEISS are totally DIFFERENT.

(1) CJRS. The Furlough claim received in May 2020 (assuming it was correct - if not, then amend that figure to what it should have been) should be included as a Debtor in the Accounts for the year to 30 April 2020, and shown as a separate Income item.

(2) SEISS. It has already been announced that the 2020/21 Tax Return will include a separate section for SEISS Grants received in the year (or conceivably "receivable" if very exceptionally they are received after 5 April 2021). It has also been announced that they will be subject to Class 4 National Insurance.

If, as they probably should be, the SEISS Grants are included as income in the Accounts for the year t0 30 April 2021, then of course they should be deducted from the Net Profit in the Tax Computation for that year.

Basil.

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Replying to fawltybasil2575:
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By lionofludesch
29th Jun 2020 14:45

Agree with Basil.

The CJRS grants need to be included on an accruals basis.

SEISS needs to go on the 2020/21 return. Exactly where we don't know yet but my prediction is a Brand New Box.

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Replying to lionofludesch:
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By Paul Crowley
29th Jun 2020 15:12

Agree
My understanding is new box on a tax year basis for SEISS

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Replying to fawltybasil2575:
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By John Stone
29th Jun 2020 15:30

Thanks Basil. So the JRS claim for May and subsequent months will come into the accounts to 30.4.21 and therefore be taxed in 21/22?

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Replying to John Stone:
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By lionofludesch
29th Jun 2020 15:42

Yes. It matches the wages to which it refers.

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By John Stone
29th Jun 2020 17:11

Some of my clients (not this one ) have received the £10k grant re small company's rate relief. Is this to go in a new box on the 20/21 return like SEISS?

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Replying to John Stone:
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By Paul Crowley
29th Jun 2020 18:46

No
because most recipients will be Ltd companies

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