With tax season in full flow, we thought it would be useful to give a few reminders about how businesses account for Covid support from the Government.
As usual, its not straight forward and there are one or two pitfalls. The rules are different for Sole Traders, Partners and Limited Companies.
What Support Does This Apply To?
- SEISS – Self Employment Income Support Scheme
- CJRS – Coronavirus Job Retention Scheme (“furlough”) as paid to Employers
- Other Support – for most businesses this will be the grants linked to business premises and includes Small Business Grant; Retail, Hospitality and Leisure Grant; Additional Restrictions Grant; Local Restrictions Grant; Restart Grant (probably in 2021-22). Other support also includes Eat Out to Help Out (EOTHO).
Note, if you were Furloughed as an Employee the furlough pay you received does not have to be separately reported – you just enter your gross pay on your Self Assessment.
Sole Traders
You need to separate out the Government support you received from your overall business turnover.
If you are completing the Full Self Employment Supplement (SA103F) to your Self Assessment, then:
- CJRS and Other Support goes into box 16
- SEISS goes into box 70.1
If you are using the Short Self Employment Supplement (SA103S) to your Self Assessment, then:
- CJRS and Other Support goes into box 10
- SEISS goes into box 27.1
Its important to be aware that if you received SEISS and don’t enter it correctly into the separate boxes, say you include it in turnover or other income, then HMRC will amend your return to add the figure to box 70.1 or 27.1 as appropriate, and you will be double taxed on these amounts.
SEISS grants 1 to 3 go on to 2020-21 returns on a tax year basis, even if your business year end is different. SEISS grants 4 and 5 will go onto 2021-22 returns.
Partnerships and Partners – Including LLPs
On the Partnership Return SA800:
- If your partnership turnover is less than £85,000 you can include your business turnover and Government support other than SEISS in box 3.24
- If your partnership turnover is over £85,000, you enter turnover in box 3.29, and Government support other SEISS in box 3.50
- SEISS does not go onto the Partnership Return.
On each partners personal Self Assessment, regardless of whether it is the Short or Full Partnership Supplement (SA104F / SA104S)
- SEISS goes into box 9.1
Again, if it is entered into Partnership Turnover, or on the Partnership Return, then HMRC will amend individual returns leading to double taxation.
SEISS grants 1 to 3 go on to 2020-21 returns on a tax year basis, even if your business year end is different. SEISS grants 4 and 5 will go onto 2021-22 returns.
Companies
SEISS, of course, did not apply to Companies. CJRS and other support did.
On the Company Tax Return CT600
- Turnover excluding CJRS and Government Support should be in box 145
- Trading Profits including CJRS and Government Support should be in box 165
You then need to complete Boxes 471 to 474:
- 471 CJRS and JSS received
- 472 CJRS and JSS entitlement
- 473 CJRS and JSS overpayment already assess or disclosed
- 474 EOTHO or JSS overpayments
JSS = Job Support Scheme. The Government withdrew this scheme before it started.
For most businesses box 471 and 472 will be the same, the CJRS you claimed and received. For most business 472 and 473 will be nil, unless you have overpayments on CJRS or EOTHO
Summary
The reporting for these schemes is not straight forward and there are pitfalls for the unwary.
If you use an accountant, ourselves or someone else, they should take care of this for you. But please make sure they have all the information in good time and sufficient detail.
if you don’t use an accountant, take care completing your returns and make sure the results are as expected.
We’ve written some previous articles on these topic which may be useful:
- HMRC Guidance on Amending Self Assessment Returns for SEISS Errors 08/07/2021
- Accounting for SEISS grants 19/05/2021
- Tax returns forms updated for Covid grants 28/04/2021
