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Profits of £50k ring-fenced for sole traders and self-employed

Profits of £50k ring-fenced for sole traders and self-employed

Saturday 30 January 2021

Profits of £50k ring-fenced for sole traders and self-employed


Some businesses who receive financial support from the payroll co-funding scheme will be able to ring-fence profits of up to £50,000 as 'personal income'.

It follows the announcement that the States will this time be recovering public money that is paid out to businesses, if they are able to repay it.

The Policy & Resources Committee has included a clause that will be triggered if businesses in receipt of financial assistance make a profit this year.

The Committee has since agreed that the first £50,000 of profit for self-employed and sole-traders will be considered as personal income.

Policy & Resources Committee

Pictured: Businesses will not be able to get around P&R's new payroll support clause by claiming deductions for capital expenditure, such as the purchase of a new works vehicle or equipment. 

"We've listened to the concerns that businesses have shared with us and we hope that this clarification will provide some reassurance," said P&R's Treasury lead Mark Helyar.

"We want businesses to prosper and the support recovery clause is about providing support where it is genuinely needed. With public finances under significant pressure, no-one in the community would want financial support to be handed out where it is not needed.

"We must do what is right and appropriate to support local businesses, directing support where it is needed most." 

Payroll support will open from Monday 1 February, with payments backdated to the beginning of lockdown on 23 January. Repayments will be requested in 2022 at the earliest, following the submission of tax returns for 2021.

charity-fundraising.jpg

Pictured: Charities and not-for-profit organisations will not have to repay any funds received from the States. 

Payroll co-funding payments made during 2020 were not subject to this new clause and the requested repayment of any support received last year is entirely voluntary. 

The list of eligible sectors, as well as details for businesses who want to apply for payroll co-funding, can be found HERE.

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