Government Grant, Corporation Tax

happywarmgun

Quick question. My small business received a small government grant (£500) towards an overseas trade visit.

Is this treated as all other income when calculating corporation tax? (in which case it will really have only been a 400 quidish grant) Or is it exempt?

Google is a fail for finding the answer.

Tinker009

Grants that meet revenue expenditure are usually taxable as revenue receipts so in your case then yes, it appears to be treated as other income in accounts and subject to corporation tax.

John_Pierpoint

Surely it was meant to cover your expenses in selling for UK Plc ?
So you have expenses equal to the grant?

happywarmgun

Thanks for the replies. The visit cost me about 3 grand. I got a 500 quid grant to encourage/support me to go. In truth it looks now like the visit wont provide a return on the net 2500 cost. Such is life. Clearly the grant is welcome either way and a bonus but in my head I guess I thought it would be classed as non-taxable income.

John_Pierpoint

What were you trying to sell and to whom?

chrismac1

Definitely taxable in my view as other operating income.

happywarmgun

John_P:

It was to an international tradefair which happened to be in Vegas. Part of the objective was to sign a deal with an Italian company to be the UK distributor for their software (success - but I needn't really have gone to Vegas to do that), the other part was to try and get some US clients who have European presence and need someone they can trust locally in the market (fail).

We're a small niche professional service firm, so it was always going to be a bit of a speculative trip.

No worries, the consensus seems to be it is to be treated as straightforward income, be added to the operating profit, and subject to corporation tax.