Technical update: Coronavirus grants

If you have received, or are due to receive, grants from the government through its Coronavirus support schemes, you will need to ensure that these payments are recorded correctly in your business accounts.

Which schemes does this apply to?

The grant-based schemes include the Coronavirus Job Retention Scheme (CJRS), the Self-Employment Income Support Scheme (SEISS), the Small Business Grants Fund (SBGF) and the Retail, Hospitality and Leisure Grant Fund (RHLGF).

Key points

  • For accounting purposes, any payments received through Coronavirus grant schemes should be recorded as income and not offset against corresponding costs.
  • We recommend setting up a new nominal code and calling it ‘Grant Income’. Any grant payments you receive can then be posted to this code.
  • Don’t forget that all grants are taxable.
  • For annual accounts, grant payments should be categorised as ‘other income.’
  • Lastly, it’s important to remember that grant income is outside the scope of VAT, so it doesn't need to be included in your VAT return.

What about business rate relief?

Unlike grants, which give you additional cash funding, business rate relief represents a reduction in your actual business costs. Any business rate relief you receive should therefore be posted against the business rate cost line/s in both your monthly and annual accounts.

For further information or advice on any of the issues raised, or for help with bookkeeping, cash flow management or payroll during the Coronavirus pandemic, please call us on 01225 325580, email, or contact your usual client director.

Please note that this is only a summary of the main issues and should not be construed as advice. Every effort has been made to ensure factual accuracy at the time of publication (5 May 2020), however, the government response to the Coronavirus situation is changing 24-7, so it should not be relied upon completely.