SEISS Grants and accounting dates

People are now starting to complete their 2021 tax returns, which cover the tax year 6th April 2020 to 5th April 2021.

If your accounting year ends on 5th April 2021 then there are no issues – any SEISS grants that you have received in the tax year will align with your accounting year.

However, for those whose accounting year ends before 5th April 2021, there is a complication to be aware of.

While normal income would be expected to fall into your accounting year, and any income received after that falling into the following year’s accounts/return…

For SEISS grants, these are treated differently to usual income and are taxed in the tax year of receipt rather than in your normal accounting year.

So, while your accounting year could end partway through the 2020/21 tax year, ALL SEISS grants received between 6th April 2020 and 5th April 2021 must be reported in the 2021 tax return.

The grant income is reported in a separate box on the tax return from your normal trading income, and there is also a section to tick confirming that you have received SEISS income.

This treatment of SEISS income, perhaps combined with an accounting year ending early in the 2020/21 tax year could result in a temporarily higher income than normal for that one year and perhaps also a move into the higher rates of tax as a result.

The following tax return to 5th April 2022 could therefore have much lower reportable income – payments on account for 2021/22 may need to be adjusted to take account of this.