As businesses become accustomed to operating within a Covid environment the focus remains on survival and close monitoring of cash flows that includes claiming furlough grants from HMRC.
However, some of our clients have turned their attention to how they should account for furlough receipts within their accounting record and the question we now often hear is ‘How do I account for furlough payments?’
Our answer to this question is:
These receipts from government for furloughed employees are in the form of a grant and the accounting for these are covered in:
In simple terms this grant is intended to cover costs and therefore should be recognised in the profit or loss in the same period in which the related expense is incurred.
If you have any questions or need further clarification on accounting for furlough payments please contact us.