Taxation of coronavirus (COVID-19) support payments

Produced by Tolley
  • (Updated for Budget 2021)
  • (Updated for Coronavirus (COVID-19))
Taxation of coronavirus (COVID-19) support payments

The following Owner-Managed Businesses guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • Taxation of coronavirus (COVID-19) support payments
  • Which business support grants are within the scope of these provisions?
  • How are the support payments taxed?
  • Recovery provisions where the schemes are incorrectly used

Measures setting out the taxation treatment of coronavirus (COVID-19) support payments were included in FA 2020 and further changes were announced in Budget 2021. For more details of coronavirus support payments, see the What coronavirus (COVID-19) support payments are available? guidance note.

In summary, these measures:

  1. ensure that the grants are treated as income where the business is within the scope of income tax or corporation tax

  2. enable HMRC to recover payments to which the recipient was not in fact entitled, and

  3. enable HMRC to charge a penalty for deliberate non-compliance

For more details see Simon’s Taxes B2.210A and B2.210B. For HMRC guidance, see BIM40456 onwards.

Which business support grants are within the scope of these provisions?

The provision applies to ‘coronavirus support payments’ (CSP), which include:

  1. the coronavirus job retention scheme (CJRS), see the Coronavirus job retention scheme (CJRS) guidance note

  2. the self-employment income support scheme (SEISS), see the Self-employment income support scheme (SEISS) guidance note

  3. the small business grant fund, see the Other coronavirus (COVID-19) support payments guidance note

  4. the retail, hospitality and leisure grant fund, the local authority discretionary grants fund, see the Other coronavirus (COVID-19) support payments guidance note, and

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