With the 2021 self-assessment tax return deadline on 31 January, HMRC has been busy reminding taxpayers to declare any Covid-19 grant payments they might have received. This is the first year grant payments need to be included.
Most self-employed taxpayers will have received Self-Employment Income Support Scheme (SEISS) grants during the Covid-19 pandemic and now must include the following related grants and payments in their tax returns:
- Business support grants (from local authorities or devolved administrations);
- Furlough payments;
- Eat Out to Help Out;
- Coronavirus statutory sick pay (SSP) rebates; and
- Test and trace/self-isolation payments.
All grants are taxable.
There is a separate entry on the self-assessment tax return to report SEISS grants. All other grants and payments should be shown in the “any other business income” box.
The tax-return process is a bit more complicated for partnerships; other grants and payments go on to the partnership tax return, with each partner’s respective SEISS grants included on their personal returns.
If you have already submitted your 2021 tax return and omitted any Covid-19 grants or payments, then amend the return as soon as possible.
Which SEISS grants?
Include the first three SEISS grants in your tax return, with the fourth and fifth grants not due to be reported until next year. The payment windows for these three grants were:
|First||13 May to 13 July 2020|
|Second||17 August to 19 October 2020|
|Third||29 November 2020 to 29 January 2021|
If you cannot pay
If you cannot pay your self-assessment tax bill in full by 31 January, you can use HMRC’s self-serve time to pay facility. This online payment plan lets a taxpayer create a bespoke monthly payment plan based on how much tax is owed and the length of time needed to pay.
The facility can only be used if the tax owed does not exceed £30,000, the 2021 tax return has already been filed, you are within 60 days of the 31 January payment deadline, and you can pay off the debt within 12 months.
On owing tax that does not exceed £30,000, HMRC recently outlined that taxpayers will no longer be liable for late penalties if bills are paid in full or set up a Time to Pay arrangement by 1 April. In the same announcement, HMRC said taxpayers who cannot file their return by the 31 January deadline would not receive a late filing penalty if they file online by 28 February.
You will need to call the self-assessment helpline should you owe more than £30,000 or need longer to pay.
You can find HMRC guidance on reporting Covid-19 grants and payments here.