PART 4Income and capital
SECTION 4Self-employed earners
Calculation of net profit of self-employed earners29
1
For the purposes of regulation 20 (calculation of income on a weekly basis) the earnings of a claimant to be taken into account shall be—
a
in the case of a self-employed earner who is engaged in employment on his own account, the net profit derived from that employment;
b
in the case of a self-employed earner whose employment is carried on in partnership, his share of the net profit derived from that employment, less—
i
an amount in respect of income tax and of social security contributions payable under the Act calculated in accordance with regulation 30 (deduction of tax and contributions of self-employed earners); and
ii
one-half of the amount calculated in accordance with paragraph (10) in respect of any qualifying premium.
2
For the purposes of paragraph (1)(a) the net profit of the employment shall, except where paragraph (8) applies, be calculated by taking into account the earnings of the employment over the assessment period less—
a
subject to paragraphs (4) to (7), any expenses wholly and exclusively incurred in that period for the purposes of that employment;
b
an amount in respect of—
i
income tax; and
ii
social security contributions payable under the Act,
calculated in accordance with regulation 30 (deduction of tax and contributions of self-employed earners); and
c
one-half of the amount calculated in accordance with paragraph (10) in respect of any qualifying premium.
3
For the purposes of paragraph (1)(b), the net profit of the employment shall be calculated by taking into account the earnings of the employment over the assessment period less, subject to paragraphs (4) to (7), any expenses wholly and exclusively incurred in that period for the purposes of the employment.
4
Subject to paragraph (5), no deduction shall be made under paragraph (2)(a) or (3), in respect of—
a
any capital expenditure;
b
the depreciation of any capital asset;
c
any sum employed or intended to be employed in the setting up or expansion of the employment;
d
any loss incurred before the beginning of the assessment period;
e
the repayment of capital on any loan taken out for the purposes of the employment; and
f
any expenses incurred in providing business entertainment.
5
A deduction shall be made under paragraph (2)(a) or (3) in respect of the repayment of capital on any loan used for—
a
the replacement in the course of business of equipment or machinery; and
b
the repair of an existing business asset except to the extent that any sum is payable under an insurance policy for its repair.
6
The relevant authority shall refuse to make a deduction in respect of any expenses under paragraph (2)(a) or (3) where it is not satisfied given the nature and the amount of the expense that it has been reasonably incurred.
7
For the avoidance of doubt—
a
a deduction shall not be made under paragraph (2)(a) or (3) in respect of any sum unless it has been expended for the purposes of the business;
b
a deduction shall be made thereunder in respect of—
i
the excess of any value added tax paid over value added tax received in the assessment period;
ii
any income expended in the repair of an existing business asset except to the extent that any sum is payable under an insurance policy for its repair;
iii
any payment of interest on a loan taken out for the purposes of the employment.
8
Where a claimant is engaged in employment as a child minder the net profit of the employment shall be one-third of the earnings of that employment, less—
a
an amount in respect of—
i
income tax; and
ii
social security contributions payable under the Act,
calculated in accordance with regulation 30 (deduction of tax and contributions of self-employed earners); and
b
one-half of the amount calculated in accordance with paragraph (10) in respect of any qualifying premium.
9
For the avoidance of doubt where a claimant is engaged in employment as a self-employed earner and he is also engaged in one or more other employments as a self-employed or employed earner any loss incurred in any one of his employments shall not be offset against his earnings in any other of his employments.
10
The amount in respect of any qualifying premium shall be calculated by multiplying the daily amount of the qualifying premium by the number equal to the number of days in the assessment period; and for the purposes of this regulation the daily amount of the qualifying premium shall be determined—
a
where the qualifying premium is payable monthly, by multiplying the amount of the qualifying premium by 12 and dividing the product by 365;
b
in any other case, by dividing the amount of the qualifying premium by the number equal to the number of days in the period to which the qualifying premium relates.
11
In this regulation, “qualifying premium” means any premium which is payable periodically in respect of F1... a personal pension scheme and is so payable on or after the date of claim.