Businesses reminded to declare Covid-19 grants on tax returns

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A sign advertises the "Eat Out to Help Out" discount at a restaurant on August 05, 2020 in London, United Kingdom. (Photo by Leon Neal/Getty Images)

HM Revenue and Customs (HMRC) has reminded businesses to declare Covid-19 support grants or payments on their company tax returns as these are taxable.

The deadline for customers or agents filing company tax returns (CT600) is 12 months after the end of the accounting period it covers. The deadline to pay Corporation Tax will depend on any taxable profits and when the end of the accounting period occurs.

The taxable Covid-19 grants should be recorded as income when calculating taxable profits, the agency added.

Taxable grants include test and trace or self-isolation payments in England, Scotland and Wales; Coronavirus Statutory Sick Pay Rebate and Coronavirus Business Support Grants, also known as local authority grants or business rate grants.

In the case of Coronavirus Job Retention Scheme (CJRS) grants or Eat Out to Help Out payments, companies need to include it as income when calculating their taxable profits in line with the relevant accounting standards and then report it separately on their company tax return using the CJRS and Eat Out to Help Out boxes.

“We want to make sure companies are getting their tax returns right, first time, including any Covid-19 support payment declarations. Support and guidance is available on GOV.UK, just search ‘file my company tax return’,” Myrtle Lloyd, HMRC’s director general for customer service, said.

Guidance on which support payments need to be reported to HMRC and any that do not is available here.

The deadline for Self Assessment customers to complete their 2020/21 tax return and pay any tax owed is 31 January 2022. Last week, HMRC announced they would waive penalties for one month for late filing of tax returns and late payments.