How to report COVID supports in tax returns and updated CJRS guidance features this week. Now that the CJRS has ended, the guidance on CJRS overclaims has also been updated. In addition, HMRC is also writing to taxpayers who received SEISS grants but have not submitted their 2019/20 self-assessment tax return.
Reporting coronavirus grants on tax returns
HMRC is reminding taxpayers that grants to support businesses and self-employed people during the pandemic are taxable. If a taxpayer claimed CJRS or SEISS grants, these also need to include these as income on the relevant tax return. Depending on their business type, they’ll need to report this as income on the corporation tax return, the partnership return or the self-employment pages of the individual tax return. Guidance on how to include a grant or payment on the tax return is available.
If taxpayers are partners and claimed under the SEISS, how their grants are treated for tax purposes depends on who received the grants. For most partners, HMRC paid the SEISS grant directly into their individual bank account, meaning it is not recorded as partnership income in the partnership accounts. Taxpayers who received SEISS grants in this way should report the grant as an addition to their partnership income on the partnership supplementary pages. Grants paid on or before 5 April 2021 should be included on their 2020/21 return, using box 9.1 on the partnership supplementary pages (SA104S or SA104F). Their SEISS grants should not be included on the partnership tax return (SA800).
If the grant was paid to the partnership and treated as partnership income, included in the partnership accounts and distributed to all partners in line with the partnership agreement, taxpayers should include the grant amount within the turnover boxes on the partnership tax return (SA800). SEISS grants should not be included on the individual’s partnership supplementary pages (SA104S or SA104F) as they would already be reflected in the amount of income received from the partnership. Taxpayers should take care not to report the grant again on the SA104S or SA104F, as they may be taxed twice.
All SEISS grants received before 6 April 2021 are taxable in the 2020/21 tax year, regardless of the recipient’s accounting period. This is because SEISS grants are intended to provide broadly real time support for businesses during the pandemic. Taxing SEISS grants in this way ensures fairness, in that all recipients report and pay tax on the grant at the same time, regardless of their accounting date. For most taxpayers, the first, second and third SEISS grants were paid on or before 5 April 2021.
If a taxpayer claimed a grant but does not fill in the box for SEISS grants on their return, or if the amount in the box is different to HMRC’s records, HMRC will update their return and contact them (and their authorised agent). The taxpayer should check the changes made and follow the instructions on GOV.UK.
CJRS guidance updated
The following pages remain live and have been updated:-
- Steps to take before calculating your claim using the Coronavirus Job Retention Scheme ;
- Calculate how much you can claim using the Coronavirus Job Retention Scheme;
- Find examples to help you calculate your employees' wages;
- Pay Coronavirus Job Retention Scheme grants back; and
- Download a template if you're claiming for 16 or more employees through the Coronavirus Job Retention Scheme.
The following pages are new:
- Check a previous Coronavirus Job Retention Scheme claim; and
- Make a late Coronavirus Job Retention Scheme claim.
The following pages have been withdrawn (this means they can’t be searched on GOV.UK but they will be linked to from the new pages along with a link to the National Archive):
- Check if your employer can use the Coronavirus Job Retention Scheme;
- Check if you can claim for your employees' wages through the Coronavirus Job Retention Scheme;
- Check which employees you can put on furlough to use the Coronavirus Job Retention Scheme;
- Claim for wages through the Coronavirus Job Retention Scheme;
- Reporting employees' wages to HMRC when you've claimed through the Coronavirus Job Retention Scheme;
- Changes to the Coronavirus Job Retention Scheme from July 2021; and
- Other types of employees you can claim for.
The “Get Help with CJRS” page has also been updated.
HMRC SEISS letters
HMRC is currently in the process of writing to taxpayers who received SEISS grants but have not submitted their 2019/20 self-assessment tax return which should have been submitted by 31 January 2021.
The letter is being sent to anyone who claimed one of the first three SEISS grants if the taxpayer has either not submitted their 2019/20 return or the return has been submitted but did not report income from self-employment or a partnership.
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