The government has published draft legislation which introduces the rules on taxation of Coronavirus support grant payments. The consultation closes on the 12 June.

The legislation, if passed, will apply to all individuals, businesses, members of partnerships and employers who receive payments from Self Employment Income Support Scheme (SEISS), Coronavirus Job Retention Scheme (CJRS), Small Business Grant Fund (SBGF), Retail, Hospitality and Leisure Grant Fund (RHLGF), Discretionary Grant Fund (DGF), other payments made by public authorities in response to Covid-19 or Treasury support schemes.

As the payments replace income, they will be taxed as income and be subject to either Income Tax or Corporation Tax.

Whether tax is paid, will depend on the business profits, any other taxable income and personal or other allowances to which they are entitled.

HM Revenue & Customs (HMRC)  will also have the power to raise Income Tax assessments to recover amounts from the recipient of a SEISS or CJRS payment to which they are not entitled or where a CJRS payment has not been used to pay furloughed employee costs. HMRC will also be able to charge a penalty in cases of deliberate noncompliance.

Those wishing to respond to the consultation should email before 12 June.

Useful links:

Covid-19 Business Support

Consultation: Taxation of coronavirus support payments