Government Grants

Natsmomma

Hi Everyone

I have a client which is a new Limited Company. They received a £500 start up grant in their first year which was given to assist with the costs of setting up their company - not specific to capital investment.

I've trawled SSAP4 and lots of websites and am aware that the grant should be shown in the P & L for the first year - ie when it was spent. There's no deferred income in this instance as it's all been used in the first year, but how should I account for it?

Many thanks for taking the time to read this.

Steve Collings

DR cash at bank
CR grant income (within "other income")

Regards
Steve

Natsmomma

Thanks Steve.

Apart from mentioning it in a note to the accounts, is that all I need to declare?

Steve Collings

Yes I think so. The note should mention the effect the government grant has had on the financial statements in the year. In your case it will be the effect on the P&L account.

Cheers
Steve

Paul C

I always check that grants have been spent in line with any written guidance issued (spent on the correct things). Just in case there is any risk that some or all needs to be repaid "next year". It sounds quite general here though.