Co-funded payroll schemes
These schemes provided support for businesses with employees that were required to close due to coronavirus measures.
Government support for businesses
Tax treatment
Businesses who received payments from any of the co-funded payroll schemes must include these amounts as part of their total taxable income.
The wages paid to employees are tax deductible and must be reported in full including wages which have been part funded by the payroll scheme. The employees will declare their gross income on their tax return in the normal way.
Self-employed individuals or partners in a partnership can’t make deductions in respect of their own salary.
Other financial support
In addition to the Co-funded Payroll Schemes, the Government has provided further financial support to businesses during the COVID pandemic.
The schemes are:
-
Fisheries Support Scheme
- Visitor Accommodation Support Scheme
- Visitor Attractions and Events Scheme
- Fixed Costs Support Scheme
Tax treatment
Financial support received from the Government from any of the above support schemes is taxable.
Businesses who are in receipt of Government financial support to cover fixed costs etc, at any level, must include the amounts received as business income. There is no exception or exemption.
Declaring the financial support
The receipt of Government financial support should be treated like any other business income and included in your accounts. The accounting year end date of your business will dictate in which financial period the funds should be reported.
Repayment of financial support
If you've claimed too much financial support through the Co-funded Payroll Scheme, or any of the other Government COVID support schemes, you may be required to pay the subsidy back.
Tax treatment
The refund of any subsidy you pay back to the Government should be treated as a business expense. The repayment of the subsidy should be included, like any other outgoing, as a deduction from your business profits. Your accounting year end date and the date of the repayment will dictate in which financial period the refund should be reported.
Business Disruption Loan Guarantee Scheme
The Business Disruption Loan Guarantee Scheme was established in March 2020 to help businesses seek to access working capital loans to manage COVID-19 related disruption. It allowed banks to extend financing to businesses.
Tax treatment
Loans received under the Business Disruption Loan Guarantee Scheme should be included in the financial accounts of a business, and be treated in the same way as a loan from a bank.
Interest that is paid on a Business Disruption loan can be included as a deduction in the financial accounts of the business.
Insurance pay outs
Sums received from insurance in respect of loss of income or stock due to the disruption of the business are to be treated as normal trading receipts.
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