Individuals who were required to self-isolate due to Covid-19 may have received a lump sum payment of £500 under the Test and Trace Support Payment Scheme in England, the Self-Isolation Support Scheme in Wales or the Self-Isolation Grant in Scotland. These payments are taxable, but they are not liable to Class 2 or Class 4 National Insurance.
Where a self-isolation payment has been received by an individual who is required to file a self-assessment tax return, the payment must be included on the return as income.
A payment that is received by an employee should be included in the ‘Other benefits (including interest-free and low-interest loans)’ box of the ‘Benefits from your employment’ section of the employment pages of the return (SA102).
The self-employed should include the grant in their profits reported on the self-employment or partnership pages of the return. However, they will also need to make an adjustment to exclude the payment from profits for the purposes of working out the Class 2 and Class 4 National Insurance liability. The adjustment is made in box 102 of the self-employment pages (SA103F) or in box 27 of the partnership pages (SA104F or SA104S).
Written by the Tax Advice Network