Taxpayers are being reminded that COVID-19 support grants or payments should be declared on company tax returns as they are taxable.
HM Revenue & Customs (HMRC) has issued a reminder that the filing deadline for 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.
HMRC says that Coronavirus Job Retention Scheme (CJRS) grants, Eat Out to Help Out (EOHO) payments, or any other support payments made by local authorities or Government, must also be reported as income when calculating taxable profits.
Company tax return
If you received a CJRS grant or an EOHO payment, you will need to do both of the following:
- Include it as income when calculating your taxable profits in line with the relevant accounting standards
- Report it separately on your Company Tax Return using the CJRS and EOHO boxes.
You should record all other taxable COVID-19 payments as income when you calculate your taxable profits.
If you have already filed a return and have not declared your Coronavirus support grants or payment as taxable income, you will need to submit an amended return.
CJRS grants or EOHO payments must be reported separately in the boxes provided on the CT600 corporate tax return. These boxes were added on 6 April 2021.
It is important to update third-party software by downloading the latest version to be able to complete the relevant boxes in the company tax return.
Taxable grants include:
- Test and trace or self-isolation payments in England, Scotland and Wales
- Coronavirus Statutory Sick Pay Rebate
- Coronavirus Business Support Grants (also known as local authority grants or business rate grants).
When furloughed employees were paid through real-time information (RTI), the employer was responsible for making the usual PAYE, National Insurance contributions (NIC) and automatic enrolment deductions.
Employers must treat the grant as taxable income for Corporation/Income Tax purposes but can deduct employment costs as normal when calculating their taxable profits.