Small business business grant

Redd6767

Hi. The small business grant is a taxable income. Is it classed as other income, and hence goes on the self assessement tax return, or is it part of the business trading account? Also, what tax year does it apply to? Some people will have received it before 5th April, which to lots if people is end of tax year. Does that mean the grant goes into 19/20 tax year? Or is it proportioned, so that some goes into 1920 tax year, and some 20/21 tax year?

Grumpy_chap

It will be entered as income but not turnover.

Redd6767

Thanks, as I thought, but what tax year?

Grumpy_chap

The date of receipt into the business bank account.

Jeremy535897

I think logically it has to be the year of receipt.

Growingold

There are 2 types of accounting for businesses and which can be used in filing your self employment pages of your tax return .  Cash basis and traditional accounting where adjustments are made at accounting year end for prepayments and accruals.  Definitely for cash basis I think this small business grant would relate to the financial year in which it was received but for traditional accounting I'm not so sure.  This grant was paid out by the councils which administer business rates.  Maybe this grant should be apportioned to reflect the business rate year  and therefore could span 2 accounting years (pro rata according to a business years accounting date and when the grant was received)  
Hopefully someone can clarify this.

Jeremy535897

Despite SEISS relating to March, April and May, the draft legislation provides that it is all taxable in 2020/21. It is silent on the timing of taxation of the small business grant, but it seems most unlikely that it will be taxable other than at the point of receipt, no matter which accounting basis is used, because it doesn't relate to any specific period at all. I don't think the business rate year has anything to do with it.