HMRC explains how CJRS grants are treated for tax purposes.
Payments you’ve received under the Coronavirus Job Retention Scheme (CJRS) are to offset the deductible revenue costs of your employees. You must include them as income when you calculate your taxable profits for Income Tax and Corporation Tax purposes.
Businesses can deduct employment costs as normal when calculating taxable profits for Income Tax and Corporation Tax purposes.
Individuals with employees that are not employed as part of a business (such as nannies or other domestic staff) are not taxable on grants received under the scheme. Domestic staff are subject to Income Tax and National Insurance contributions on their wages as normal.
The scheme is described as providing a ‘grant’ and this is likely to be treated as outside the scope of UK VAT on the basis that there is no underlying supply from the claimant to the Government.
The CJRS grants are not classed as state aid.