Share this content

Business Rates Refunds - Covid

What should the tax treatment be for the refunds of the Business rates?

Didn't find your answer?

What should the tax treatment be for the refunds of the Business rates in the 20/21 tax return/accounts?

Replies (20)

Please login or register to join the discussion.

By williams lester accountants
26th Jan 2022 14:22

Have you asked your accountant? They will be able to tell you what to do with this.

Thanks (2)
avatar
By ahannon050875
26th Jan 2022 14:51

I'm preparing the tax return for a friend ( I used to work in practice) but since covid I have a new job so was looking for guidance in this area as never covered before? thank you

Thanks (0)
Replying to ahannon050875:
By williams lester accountants
26th Jan 2022 14:59

Perhaps your 'friend' should ask their accountant......

Thanks (1)
avatar
By AndyC555
26th Jan 2022 14:57

Just a wild guess here but if you'd claim paying business rates as a tax deductible expense, getting them refunded is going to be taxable income.

Thanks (1)
avatar
By Paul Crowley
26th Jan 2022 14:59

Refund of business rates OR council Covid grants
Very different treatment

Thanks (0)
avatar
By ahannon050875
26th Jan 2022 15:43

Thanks all, if no one knows the answer do you maybe know where I could look to establish this? Thanks

Thanks (0)
Replying to ahannon050875:
avatar
By Hugo Fair
26th Jan 2022 15:51

It's not that no-one "knows the answer" ... but, as per Paul's comment immediately above yours, no-one is sure what your question means - and therefore cannot safely provide a definitive answer.

Thanks (2)
Replying to Hugo Fair:
avatar
By ahannon050875
26th Jan 2022 15:57

All I wanted to know is whether the refund is subject to income tax for a sole trader?

Thanks (0)
Replying to ahannon050875:
avatar
By Wanderer
26th Jan 2022 16:18

It's HIGHLY UNLIKELY to be a REFUND.
It's likley to be one of several grants.
Or a reduction in rates payable.
That's why no one can properly answer your question but yes, it is likely to be taxable.
Also it may not be strictly taxable in 2020/2021, it may be strictly taxable in 2019/2020 depending on which of the above it is & what your 'client's' year end is and/or the basis on which they prepare their accounts.
Stop 'helping a friend' & advise them to get proper, paid for, advice.

Thanks (2)
Replying to Wanderer:
avatar
By ahannon050875
26th Jan 2022 16:47

Thanks for the reply, a few pointers to get me looking in the right places

But their really is no need to be so unpleasant in the way you answer, I'm clearly looking to do the right thing or I wouldn't be on a site such as this asking an accounting type question on an accounting website! Not at one point have I said that I am submitting anything to the revenue only looking for advice, so not sure why a few of you are shooting down my question with all the sarcastic comments.

Thanks (0)
Replying to ahannon050875:
avatar
By Hugo Fair
27th Jan 2022 17:31

"not sure why a few of you are shooting down my question with all the sarcastic comments?"
Well whether or not the sarcasm (which has been fairly mild) is warranted ... the reason (since you ask) lies in what you said "I'm preparing the tax return for a friend ( I used to work in practice)".
The inferences being drawn are twofold ... you don't currently hold a practising cert - and your friend is therefore unrepresented but appears to need professional support. The combination of those two leaves an unpleasant taste in the mouth.

Thanks (1)
Replying to ahannon050875:
avatar
By Wanderer
27th Jan 2022 17:47

You said "I'm preparing the tax return ...." but you clearly don't have the experience to do this.
You say "I'm clearly looking to do the right thing ....", the right thing to do is suggest your friend engages with a suitably qualified accountant.

Thanks (0)
avatar
By SXGuy
26th Jan 2022 16:40

Its not clear from your question whether this is a non domestic rates refund due to being charged rates but subsequently finding out that they were eligible for rate relief or whether this is something else.

Thanks (1)
Replying to SXGuy:
avatar
By ahannon050875
26th Jan 2022 16:45

Thanks I'll look into that

Thanks (0)
avatar
By ahannon050875
26th Jan 2022 16:44

.

Thanks (0)
avatar
By bernard michael
27th Jan 2022 11:54

I'll give you a nice easy answer for part of your query
If it is a local authority Covid rates grant it is taxable (don't forget to show it in the SAR)

Thanks (1)
Replying to bernard michael:
avatar
By ahannon050875
27th Jan 2022 12:49

Thank you for this - Much appreciated :)

Thanks (0)
Replying to bernard michael:
avatar
By Hugo Fair
27th Jan 2022 16:05

Although we don't know whether friend's business is incorporated or not ... but that type of Grant is certainly always taxable (and reportable - using the prescribed boxes unless you're happy for HMRC to re-allocate it and scr8w up the tax calcs).

Thanks (1)
Replying to Hugo Fair:
avatar
By paulwakefield1
27th Jan 2022 17:33

OP does mention that it is a sole trader in one of their responses.

Thanks (0)
Replying to Hugo Fair:
avatar
By Hugo Fair
27th Jan 2022 17:36

Correction: I see that OP has mentioned (in one of the responses not the original scenario) that friend is a a sole trader. So SATR it is - but my comment regarding the need to use the boxes specified by HMRC still apply.

EDIT: Thanks Paul, I'd just spotted it (so posts crossed in the ether). Don't you just love the format of these chains!

Thanks (0)
Share this content