Taxation of coronavirus support payments
The following update is for those employers who are not clear on the status of the receipt from HMRC of grants in respect of the furlough of employees during the lockdown. These payments are made under the Coronavirus Job Retention Scheme (CJRS), the Self Employment Income Support Scheme (SEISS) and other business supporting schemes.
For the avoidance of doubt, the grants are taxable. They will be treated as the receipt of income by the business which for a limited company will be subject to Corporation Tax and if paid to a sole trader, partnership or Limited Liability Partnership (LLP) will be taxed as income on the individual sole trader, partners and LLP members as profits from trading activities.
For further information on the tax implications of the receipt of COVID-19 support, see:
A word of caution: the legislation give HMRC powers to recover payments to recipients where these was no entitlement to either SEISS or the CJRS schemes or when an employer fails to use a grant to pay employees, makes pension contributions, or pay PAYE or National Insurance contributions. These powers will include the raising by HMRC of income tax assessments or requiring taxpayers to submit a self-assessment tax return declaring the sum of the grants received. HMRC will also have the power to levy a penalty charge in cases where deliberate non-compliance is established.
For further information on the tax implications of the receipt of COVID-19 support, see:
