COVID-19 – Is there VAT on COVID-19 government funding?
The government’s business support package for COVID19 includes a number of grants and rebates of business rates etc. It must be remembered, payments of this kind are outside the scope of UK VAT. VAT does not need to be paid on them and the income does not need to be included in VAT returns. For businesses which are not registered for VAT and receive these grants, this income does not count towards the VAT registration threshold.