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Self employment payment grants

Self employment payment grants

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COVID 19 payments to a 50:50 partnership.

Simple question:Included as part of partnership turnover: or not included as part of partnership turnover but instead disclosed separately on respective tax returns.

Given the accounting dates//basis periods are the same what is right considering the personal tax consequences are the same?

Does the answer depend on the partnership agreement//whether the grants were paid to the partnership bank account//personal bank accounts or something else??

Thank you.

 

 

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By SXGuy
27th May 2021 11:48

You don't say what type of grant it was, but I believe with partnerships it forms other income, on the partnership return covering the accounting period it was received in, which is different to self employment.

But id wait to see whether others agree first.

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By Hugo Fair
27th May 2021 12:30

https://assets.publishing.service.gov.uk/government/uploads/system/uploa...

"If exceptionally any partner was required by the partners to account for
a payment received under the Self-Employment Income Support Scheme
(SEISS) or any other applicable coronavirus support scheme payment to the
partnership, include the amount as turnover in either box 3.24 or box 3.29.
The partner’s share of the payment should be included in the partner’s share
of profit (or loss).
Generally, a partner will not be required to account for a SEISS or any other
applicable coronavirus support scheme payment to the partnership, so do
not include the payment in this return. The partner should include the
payments in the relevant boxes of their Self Assessment Tax Return."

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By stephenkendrew
27th May 2021 12:32

It depends on whether the money was retained by the partner (in which case they need to show it as income on their own tax return) or paid into the partnership (in which case it is partnership income and split between the partners: -

https://www.gov.uk/hmrc-internal-manuals/business-income-manual/bim40458

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By Geoff56
27th May 2021 12:41

The crucial factor per the legislation, is whether the grant was distributed amongst the partners, rather than being retained by the individual partner.

I had a case recently where, although an SEISS grant was paid into the partnership bank account, it was not treated as partnership income and shared with the other partners through the profit allocation. The partner retained ownership of it. In that instance, it was just capital introduced and will be declared by the individual partner on his own return.

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Replying to Geoff56:
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By Southwestbeancounter
27th May 2021 14:13

Yes we had exactly the same Geoff.

One partner has his grant paid into the partnership bank account but the other partner (who has other sources of S/emp income too) had it paid elsewhere so we treated it as CI just like you did.

The two individual SATRs will then show the relevant SEISS payments accordingly.

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By Martin B
27th May 2021 15:18

Self employment payment grants

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