The general rule is that grants are taxable unless you are advised otherwise. The income is normally set against the expenditure for which they were intended to contribute. Where grants are made as a contribution towards specific expenditure on fixed assets, they should be included in the accounts over the useful life of the item concerned.
For example, if you receive a grant for advertising, which is a type of revenue expense, the amount received will be deducted from the advertising costs in your accounts. This will increase your profits, which in turn will increase the amount of tax due. On the other hand, if the grant is for a new piece of machinery, that is a type of capital expenditure and is treated differently. The cost of the capital item is reduced by the amount of grant received for the purposes of calculating capital allowances.
Some grants may be tax-free and you should always read the small print or conditions carefully, or get your professional advisor to do so for you, before you proceed.