Will non-business employers have to pay tax on Government grants?

While it is great news that HMRC have confirmed that domestic employees can be furloughed under the government’s Job Retention Scheme it is not clear whether all employers will be taxed on the grants received, say tax and advisory firm Blick Rothenberg

Heather Self, a partner at the firm said: “A big question is whether the grant received by the employer will be taxable. HMRC have confirmed that grants received by businesses are taxable, but what about non-business employers?

She added: “On general principles, the grant would probably be taxable – but many will not realise this unless HMRC make it clear. It seems more likely that the intention is that the grant should not be taxable (as it is money which is just to be passed on to the employee) but clear guidance – and preferably legislation – is needed

Heather said: “It is good news that domestic employees, such as a nanny, can be furloughed but they must be paid under PAYE and have been on the payroll on 28 February. And once they are furloughed, they cannot do any work at all for their employer.

She added: “It’s too late to put them on the payroll now so anyone who has just been paid in cash can’t claim. If your gardener or cleaner is self-employed, they may still be able to claim under the self-employed scheme, but will have to make sure their 2018/19 self-employed tax return is with HMRC by 23 April.

Heather said: “The most common type of domestic employee on PAYE is likely to be a nanny. But it will also cover others, such as carers for the disabled who are employed directly under personal care packages, although they are less likely to be furloughed in practice.