The treatment for tax purposes of grants and subsidies from UK
government departments, local authorities or funds under the
auspices of the EU (for example, the European Regional Development
Fund) follow normal principles.
EU grants to induce farmers to switch from dairy farming to
beef production were held to be revenue receipts in White v G &
M Davies [1979] 52TC597 and CIR v Biggar [1982] 56TC254. These and
other farming grant cases are also considered in the guidance on
farming at
BIM55000 onwards.
A grant or subsidy may also be received in relation to
non-trading activities. In this situation, the grant or subsidy is
not taxable income.
Business advisory centres such as Business Link, Business
Connect, Training and Enterprise Councils, Local Enterprise
Companies, Local Authority Companies and Enterprise Agencies may be
providing a service that is not a trade – see
BIM58201. A grant received for this
activity would not be taxable.
