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Swimathon Covid 19 Grant

Is a Covid 19 Grant received by a swimming teacher taxable?

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A self employed swimming teacher runs a swim school which has been severely affected by the shutdowns and has missed out on all of the Government support, other than a bounce back loan. She has however received a £500 Covid 19 Relief Fund Grant from Swimathon. I have told her that I consider this grant to be taxable business income but she has asked Swimathon who have told her the grant is not taxable. I can understand the grant not being taxable if paid to a swimming club but when paid to a self employed teacher I see no reason why it would not be taxable. It actually makes no differnce in this case as the losses will be carried back to last year reducing income to just below the personal allowance, but I would be interested to know if I am wrong in considering the grant to be taxable. Thank you for any comments.

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By jonharris999
17th Jun 2021 14:38

BIM41810, and all who sail in it, are the best you can do for the time being; the general principle being that voluntary payments are not taxable.

I didn't know that Swimathon gave grants to swimming teachers - but, in close comparison, the Actors' Benevolent Fund and the Theatre Artists' Fund did do so to lots of actors.

There is considerable confusion about this out there, not least between HMRC and other govt depts. For example, in parliament the Trade minister stated expressly that the grants from the Arts Council's Emergency Response Fund for Individuals were not taxable; subsequently HMRC said they were. Equity's request for clarification on this one is still outstanding.

I am mainly treating donations from charities to sole traders which were made last summer with the character of an emergency, and where the recipients used them for their essential living costs in the same way that they would have done had they had no business at all, as not taxable for the time being.

I am so far unaware of an absolute clarification on this.

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By PD
17th Jun 2021 16:42

Thank you for your comments Jon.

It appears that the Swimathon grants are available to swimming organisations rather than to swimming teachers, not that this is any difference when paid to a swim school run as a sole trade.

I was unaware of the mixed messages in respect of the Arts Council funding, but them I don't act for any actors.

BIM41810 is interesting but I would suggest that the most relevant of the bullet points of 'signposts' is the fourth in respect of supplementing business income and therefore taxable. There might be some wriggle room in other points and the amount is very small and there will actually be no tax affect, so I am inclined to treat it as not taxable in this case.

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By Hugo Fair
17th Jun 2021 17:14

Probably a pragmatic solution in the specific circumstances of your client.

But my starting-point would be the other way round - that, by default, a grant is taxable unless specifically granted (poor pun) non-taxable status (like CJRS).
As Jon says, however, there is no definitive statement out there on this type of grant - which is why, if the result wasn't as you say tax-neutral in this case, I would treat it as taxable (and adjust later if guidance is published).

FWIW it might be worth you (or your client) contacting Swimathon to get their view on whether they are handing out taxable or non-taxable grants:
https://swimathonfoundation.org/swimathon-grants/grants-scheme-information

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Replying to Hugo Fair:
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By djn
21st Jun 2021 09:46

Hugo Fair wrote:

Probably a pragmatic solution in the specific circumstances of your client.

But my starting-point would be the other way round - that, by default, a grant is taxable unless specifically granted (poor pun) non-taxable status (like CJRS).
As Jon says, however, there is no definitive statement out there on this type of grant - which is why, if the result wasn't as you say tax-neutral in this case, I would treat it as taxable (and adjust later if guidance is published).

FWIW it might be worth you (or your client) contacting Swimathon to get their view on whether they are handing out taxable or non-taxable grants:
https://swimathonfoundation.org/swimathon-grants/grants-scheme-information


This is the exact way that I look at any grants.
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By PD
17th Jun 2021 17:41

Thanks Hugo. As noted in the original post this was my original position. The client didn't like it when I told her it was taxable and she asked Swimathon. She has now forwarded an email from Swimathon stating that their grants are not taxable, which prompted my question. The Swimathon email is just a simple statement that it is not taxable with no reasoning or explanation as to why not.

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By sammerchant
21st Jun 2021 11:45

I remember an instance when an accountant friend told me that a client who had ceased business, and being a client, sent him a cheque for £1,000 as a 'thank-you'. He apparently asked the ICAEW for advice, to be told that it was an unsolicited gift from an ex-client, his integrity was not likely to be compromised and he should bank the cheque and send the ex-client his thanks. He then asked HMRC (IR at that time) to be told it was not taxable.

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By jonharris999
21st Jun 2021 12:06

These kinds of "former relationship" cases are much more clearly informed by the precedents on the BIM page referred to above, than the OP's case. A charitable handout is completely different to a goodwill gift from a for-profit business.

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