Covid-19: HMRC advice on self-employment support scheme

HMRC has issued guidance on how it works out total income and trading profits for the Self-employment Income Support Scheme.

It will assess eligibility for the grant based on total income and trading profits, and the guide details how this is calculated.

To be eligible for the scheme applicants must have trading profits of no more than £50,000 which make up more than half of their total income for either the tax year 2018/19, or the average of the tax years 2016/17, 2017/18 and 2018/19.

HMRC will use the figures provided on tax returns for the total trading income (turnover), then deduct any allowable business expenses and capital expenditure.

Allowable expenses include office costs, such as stationery or phone bills; travel costs including fuel, parking, train or bus fares; clothing expenses such as uniforms; staff costs including salaries or subcontractor costs; stock or raw materials; financial costs such as insurance or bank charges; costs of business premises; advertising and marketing costs; and training courses related to the business. It also includes any business expenses deducted through the trading allowance; capital allowances, used to buy assets used in the business; qualifying care relief; and flat rate expenses.

HMRC says it will not make deductions from trading profits for any losses carried forward from previous years, or for an individual’s personal allowance.

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