HMRC Property Income, treatment of grants and contributions

With the recent local and national government grants for COVID, HMRC have revised part of their property income manual covering the treatment of grants and subsidies from UK government departments, private amenity groups and local authorities.

For property income purposes, grants and subsidies are normally treated as taxable income. Receipts from insurance policies for non-payment of rent is also taxable income.

Insurance claims for repairs or replacements should not be treated as taxable income unless the amount received is more than the cost. For bookkeeping purposes when the insurance claim and repair costs are different, you can post the difference as income or cost depending which is greater or post both full amounts.

From a VAT perspective a grant, contribution or insurance claim is not normally part of Vatable income.

This information is correct as at 10 December 2020. It has been provided by Spicer’s Accounting Services for information purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax or accounting advisor before taking any decision.