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The Employment and Support Allowance Regulations (Northern Ireland) 2016

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Calculation of net profit of self-employed earners

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83.—(1) For the purposes of regulation 77 (calculation of earnings of self-employed earners), the earnings of a claimant to be taken into account are to be—

(a)in the case of a self-employed earner who is engaged in employment on that self-employed earner’s 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 or is that of a share fisherman within the meaning of the Social Security (Mariners’ Benefits) Regulations (Northern Ireland) 1975(1), that self-employed earner’s share of the net profit derived from that employment less—

(i)an amount in respect of income tax and of National Insurance contributions payable under the Contributions and Benefits Act calculated in accordance with regulation 84 (deduction of tax and contributions for self-employed earners); and

(ii)one half of any contribution paid in the period that is relevant under regulation 77 (calculation of earnings of self-employed earners) in respect of a personal pension scheme.

(2) For the purposes of paragraph (1)(a) the net profit of the employment, except where paragraph (8) applies, is to be calculated by taking into account the earnings of the employment over the period determined under regulation 77 less—

(a)subject to paragraphs (4) to (6), any expenses wholly and exclusively defrayed in that period for the purposes of that employment;

(b)an amount in respect of—

(i)income tax, and

(ii)National Insurance contributions payable under the Contributions and Benefits Act,

calculated in accordance with regulation 84; and

(c)one half of any contribution paid in the period that is relevant under regulation 77 in respect of a personal pension scheme.

(3) For the purposes of paragraph (1)(b), the net profit of the employment is to be calculated by taking into account the earnings of the employment over the period determined under regulation 77 less, subject to paragraphs (4) to (6), any expenses wholly and exclusively defrayed in that period for the purpose of that employment.

(4) Subject to paragraph (5), a deduction is not to 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 period determined under regulation 77;

(e)the repayment of capital on any loan taken out for the purposes of the employment;

(f)any expenses incurred in providing business entertainment.

(5) A deduction is to 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;

(b)the repair of an existing business asset except to the extent that any sum is payable under an insurance policy for its repair; and

(c)the purchase of land under the Northern Ireland Land Act 1925(2).

(6) The Department must refuse to make a deduction in respect of any expenses under paragraph (2)(a) or (3) where it is not satisfied that the expense has been defrayed or, having regard to the nature of the expense and its amount, that it has been reasonably incurred.

(7) A deduction—

(a)is not to 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)is to be made under paragraph (2)(a) or (3) in respect of—

(i)the excess of any Value Added Tax paid over Value Added Tax received in the period determined under regulation 77;

(ii)any income expended in the repair of an existing 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 is to be one third of the earnings of that employment, less—

(a)an amount in respect of—

(i)income tax; and

(ii)National Insurance contributions payable under the Contributions and Benefits Act,

calculated in accordance with regulation 84; and

(b)one half of any contribution paid in respect of a personal pension scheme.

(9) Notwithstanding regulation 77 and the foregoing paragraphs, the Department may assess any item of a claimant’s income or expenditure over a period other than that determined under regulation 77 as may, in the particular case, enable the weekly amount of that item of income or expenditure to be determined more accurately.

(10) Where a claimant is engaged in employment as a self-employed earner and that claimant is also engaged in one or more other employments as a self-employed or employed earner, any loss incurred in any one of the claimant’s employments is not to be offset against the claimant’s earnings in any other of the claimant’s employments.

(11) Where the claimant is a self-employed earner in the Republic of Ireland the amounts to be deducted for income tax and National Insurance contributions under this regulation are to be such amounts as, in the opinion of the Department, would have been deducted had the claimant been employed in Northern Ireland.

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