Business Clinic: Can we claim coronavirus income support grant?

Whether it’s a legal, tax, insurance, management or land issue, Farmers Weekly’s experts can help.

Andy Ritchie, head of rural at Baldwins, explains how farmers may be able to claim government income support grants if their businesses are affected by coronavirus.

Q I farm in partnership with my wife and son. Will we qualify for the self-employment grant that has been announced due to the impact of coronavirus and, if so, how is a claim made?

The self-employment income support scheme was launched by the UK government to provide financial grants and will open in May. 

Sole traders or members of farming partnerships could be eligible to claim grant assistance, but must be able show that they will have lost or will lose trading profits due to coronavirus. 

Many who have been affected through increased costs or reduced market prices will be eligible.  Dairy, fruit and vegetable farmers will certainly see higher costs and possible price reductions in the case of milk. Some livestock farmers will have suffered lower auction prices for beef and lamb.

See also: How farm partner mental capacity affects BPR eligibility

The scheme will allow self-employed farmers and contractors to claim a taxable grant worth 80% of their trading profits, up to a maximum of £2,500 a month. 

In the case of a farming partnership, the grant is available for each partner so it is the individual rather than the business who claims it. Initially, the grant will cover a period of three months to May 2020 but may be extended by the government. 

Calculations

HMRC has clarified the basis of calculating trading profits for the grant. Profits will be based on previous taxable profits, but before the use of farmers’ averaging and any brought-forward losses.

For farming businesses trading through the tax years 2016-17, 2017-18 and 2018-19, the trading profits will be based on an average of those three tax years. For those who have been self-employed for a shorter period, it will be based on an average calculation.

Any person with average profits higher than £50,000, and those who have more than half their taxable income from non-trading income, will not qualify. 

This could include self-employed farmers who also receive the majority of their taxable income through pension or diversified income, such as furnished holiday lets or property rental income.

HMRC will be contacting taxpayers by mid-May to invite them to make a claim. If successful, the grant will be paid in one instalment direct into the bank of the individual.

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