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HMRC internal manual

Business Income Manual

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Specific receipts: grants and subsidies: industrial development grants

S105 Income Tax (Trading and Other Income) Act 2005, S102 Corporation Tax Act 2009 (CTA 2009)

Where a person carrying on a trade receives a grant under:

  • S7 or S8 of the Industrial Development Act 1982, or
  • Article 7, 9 or 30 of the Industrial Development (Northern Ireland) Order 1982,

the payment must be brought into account as a receipt in calculating the taxable profits of the trade.

This rule does not apply to professions or vocations.

The rule also doesn’t apply to grants designated as made towards the cost of specified capital expenditure, unless the grant is made to a business with an election under S25A ITTOIA 2005 to use the cash basis (see BIM70020), or as made by way of compensation for the loss of capital assets. Nor does it apply to grants made for all or part of a Corporation Tax liability (including one that has already been paid). This final exclusion relates to CT relief grants in Northern Ireland, for which see CTM02110.

A similar rule applies to companies with investment business under S1252 CTA 2009. Grants made to such companies are taxed as miscellaneous income.