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HMRC is reminding Self-Assessment taxpayers that they must declare COVID-19 grant and support payments in their tax return for the 2021-22 tax year.
Most COVID support scheme grants are treated as taxable income in the same way as other taxable receipts and need to be reported to HMRC. This means that if you received a taxable support payment during the 2021-22 this needs to be reported on your tax return. This applies to self-employed, partnerships and businesses.
Many of the grants fell into the previous tax year but more than 2.9 million people claimed at least one Self-Employment Income Support Scheme (SEISS) payment in the 2021-22. These grants are taxable and should be declared on tax returns for the 2021-22 tax year before the deadline on 31 January 2023.
The SEISS application and payment windows during the 2021-22 tax year were:
HMRC’s guidance is clear that whether or not any tax is paid will depend on the business profits of the grant recipient (taking into account the grant and other business income and expenditure under normal tax rules), any other taxable income they may have and their personal and any other allowances to which they are entitled.
HMRC also has the power to recover payments and charge penalties where claimants have made support grant claims to which they were not entitled. There is no requirement to report COVID welfare payments made by a council such as those that were made to help with council tax payments and housing benefit.
HMRC may be able to help those who are unable to pay their tax bill in full by arranging an affordable payment plan, known as a Time to Pay arrangement. Most taxpayers can apply online to make this arrangement.