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The tax implications of COVID support schemes


Published: 25 May 2021 Update History

As HMRC confirms delays in processing self assessment returns with incorrectly reported SEISS grants, the Tax Faculty has published guidance for all ICAEW members on the tax issues arising from the UK’s coronavirus support schemes.

The government’s COVID-19 financial support schemes, namely the Coronavirus Job Retention Scheme (CJRS) and Self-employment Income Support Scheme (SEISS) give rise to a number of tax issues, separate from the rules that apply to the schemes themselves.

To support members and their clients, ICAEW’s Tax Faculty has published TAXguide 12/21 which provides practical support on key issues, such as how to report grants on tax returns and how to report overpaid grants.

The guide, which is freely available to all ICAEW members, starts by outlining the tax treatment of grants. For example, CJRS grants are subject to income or corporation tax and follows accounting treatment required by GAAP, meanwhile SEISS grants are subject to income tax and class 4 national insurance contributions, generally in the year in which they are received.

The faculty also outlines the tax charges for grants that have been claimed by recipients that are not entitled to them, and the obligations on taxpayers to notify and repay grants.

The guide also highlights the professional conduct considerations for agents making CJRS claims on behalf of clients. It links to ICAEW’s suggested engagement letter schedules for such work and includes links to relevant parts of the Professional Conduct in Relation to Tax standard.

The guide ends with links to additional ICAEW support to help members with CJRS and SEISS, including a helpsheet from ICAEW’s Technical Advisory Service on ethical issues and a joint publication with the Financial Reporting Faculty on accounting and tax consequences.

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This guidance is created by the Tax Faculty, recognised internationally as a leading authority and source of expertise on taxation. The Faculty is the voice of tax for ICAEW, responsible for all submissions to the tax authorities. Join the Faculty for expert guidance and support enabling you to provide the best advice on tax to your clients or business.