Bookkeeping Bites – Loss? In or Out?

Well, in the end it is…. IN.

“What the devil is they on about?” We hear you all shout…..

Putting it simply – you know that dosh Big G (The Government) has been saying it will splash out for the self employed?

You know the one – a taxable grant paid in cash, a maximum of Β£2500 a month, based on 80% of your average self employed income over the past three years (catchingly called the ‘Self-employment Income Support Scheme’)?

Well, a big question has been whether Big G will include any trading losses to calculate that average income… And the answer is a big, fat, resounding YES.

Big G usefully published some guidance yesterday which give some really useful examples of how the average will be calculated…. You can see this via the link below:

https://www.gov.uk/guidance/how-hmrc-works-out-total-income-and-trading-profits-for-the-self-employment-income-support-scheme

And it is clear from example 3, that if you have any losses in any of the 3 years, it WILL be included in calculating your average monthly income.

So, putting it another way:

“LOSS INCLUDED = LOWER MONTHLY AVERAGE = LOWER PAYOUT”

There will be many differing sides of discussion about this decision….

Now, we areΒ  fairly realistic, level headed kinda gals, so we cannot say we are surprised. Why not include it? It is the law of averages that you can’t just miss out the numbers you don’t like to create the final average (sounds like a dodgy approach to a Maths GCSE if you ask us 😊)…

Whereas others will view of purely from the angle of impact on income… The loss being included may have a massive impact on the final income support you receive. Especially if you are a new business with only two years trading, and the first year saw a whopping loss (as most businesses do with set up costs 😳).

To be honest, we get both sides, we really do…….. Both the rational and emotional side…

If you are worried about how this will impact you, then ACT. NOW.

If you haven’t already, you can contact the Universal Credit helpline to see if that is another way of restoring your income.

If you haven’t already (and why oh why not? πŸ™), get your 2018/19 tax return filed, so those figures can be included in your monthly average calculations…… You have until April 23rd to do this….

There is help out there, sometimes it is just about navigating it. Just ask us if you are not sure.

If you want more information on the Self-employed Income Support Scheme, check out our earlier blog on our website…… There are others there too that might be of interest.

https://nowbookkeeping.co.uk/2020/03/27/bookkeeping-bites-free-money-get-your-free-money-here/

Stay safe people 😊