Income Tax (Trading and Other Income) Act 2005 section 105

Industrial development grants

Section 105 deals with the income tax treatment of industrial development grants received by a person carrying on a trade, and sets out when such grants must be brought into account as trading receipts.

• Grants received under the Industrial Development Act 1982 or the Industrial Development (Northern Ireland) Order 1982 are generally treated as taxable trading receipts
• Three exceptions apply: grants designated towards specified capital expenditure, grants as compensation for lost capital assets, and grants covering corporation tax liabilities
• Where the trade is calculated on the cash basis, the capital expenditure exception does not apply, meaning the grant is taxable as a receipt
• This section applies only to trades and does not extend to professions or vocations