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Notional deductions for income tax .................................................... Appendix 1
Notional deductions for National Insurance contributions .................. Appendix 2

Chapter S3: JSA, self-employed earners and share fishermen

Self-employed earners

S3001 General « S3961 « S3961 « S3961

This Chapter deals with the calculation and treatment of the earnings of S/E earners
and share fishermen.

S3002 « S3961

S3003 Who is a self-employed earner « S3961 « S3961 « S3961

A S/E earner is a person who is gainfully employed
1. in
GB
and :
2.in employment that is not employed earners employment (1).
Note:
A person may also be employed as an employed earner. This does not stop
the person being S/E.

1 JSA Regs 13, reg 2(2); SS CB Act 92, s 2(1)(b)

S3004 « S3961

A S/E earner enters into a contract for services to a customer :
1.on a sole trader basis or :
2.in partnership with others.

S3005 « S3961

S/E earners are responsible, to the full extent of their personal fortune, for the debts
of the business and are entitled to either :
1.in the case of a sole trader, all the profits or :
2.if in a partnership (see S3400), the agreed share of the net profits.

S3006 « S3961

A person may be S/E and also have other work as an employed earner. If so the
earnings from each employment should be calculated separately.

S3007 « S3961

To determine if a claimant is, or has been a S/E earner, the DM should have regard
to a number of factors. A determination should be made after weighing up the
answers to the following :
1.is the claimant's work supervised? A lack of supervision may point towards
self-employment. :
2.does the claimant have the powers of appointment and dismissal and can
they employ a substitute? A power to appoint a substitute may point towards
self-employment. :
3.in what form does remuneration take? Taxation paid at source may suggest
that the employment is not S/E. :
4.how long in duration are the contracts of work? Short contracts may point
towards self-employment. :
5.does the claimant provide their own equipment? Provision of own equipment
may point towards self-employment. :
6.where does the claimant work? Working from home may point towards self-
employment. :
7.is the person who engages the claimant for work obliged to provide work? If
there is no obligation then this may point towards self-employment. :
8.does the claimant have discretion to the hours of work? The greater the
discretion, the more likely that the work is self-employment.

S3008 Claims from self-employed earners « S3961 « S3961 « S3961

Where the DM is considering whether the claimant and / or partner is a S/E earner
then it is important to keep that determination separate from the issue of
remunerative work (see ADM Chapter R2).

S3009 « S3961

In order to deal with claims where the question of self-employment arises, DMs
should apply the following four questions in this order (1): Is the claimant :
1.still employed as a S/E earner i.e. still trading
1.1 if the answer is no then they will not be in employment and earnings
from past employment can be disregarded (2) or
1.2 if the answer is yes the DM considers question 2 :
2.carrying out activities connected to the self-employment or in a period of non-
activity which is a normal incident of the cycle of work
2.1 if the answer is no the DM considers question 4
2.2 if the answer is yes the DM considers question 3 :
3.in remunerative work (3) i.e. is the work 16 hours or more a week
3.1 if the answer is yes the claimant is not entitled to JSA
3.2 if the answer is no the DM considers question 4 :
4.in receipt of earnings that are to be taken into account (4) and in respect of what
period are the earnings to be taken into account (5).
Note 1: See S3020 for guidance on whether the claimant is still trading.
Note
2: A claimant could be in remunerative work if they are carrying out activities
or it is a period of non-activity which is a normal incident in the cycle of work so they
are treated as engaged in work. See ADM Chapter R2 for guidance on remunerative
work.
Note
3: To calculate the assessment period in order to determine the weekly
earnings of a S/E earner, see the guidance at S3051 et seq.
1 JC v SSWP (JSA) [2008] UKUT 40 (AAC), R (JSA) 1/09; 2 JSA Regs 13, Sch, para 4;
3 reg 42(1); 4 reg 60(1);5 reg 55(1)(a) & (b)

S3010 Directors of limited companies « S3961 « S3961 « S3961

A limited company is a legal person (1) and is different from a sole trader or
partnership because :
1.the company belongs to its shareholders, who share in any distributed profits
according to the size of their individual holding and :
2.the liability of each shareholder is limited to the number of shares taken, or
the amount that the shareholder has stood as personal guarantor for. The
shareholder is not liable for any amount above the amount unpaid on shares
(if any) or the amount guaranteed and :
3.if 2. does not apply, liability for debts is limited to the company's capital.

1 R(SB) 57/83

S3011 « S3961

A limited company, of whatever size, is separate from its employees, officers and
shareholders (1). This means that the profits of the company do not belong to the
directors. A director of a limited company is an office holder in the company (2) and is
an employed earner.
1 R(SB) 57/83; 2 McMillan v Guest 1942, AC 561

S3012 Earnings of self-employed earners « S3961 « S3961 « S3961

In S/E cases, earnings are the gross receipts (see S3125) of the employment (1).

1 JSA Regs 13, reg 60(1)

S3013 « S3760 « S3961 « S3961

S/E earnings do not include :
1.charges paid to the S/E earner in return for providing BL accommodation (1)
(see S3014) or :
2.any payment made to the claimant with whom a person is accommodated by
virtue of arrangements made under relevant legislation (2) or :
3.any payment made to the claimant for a person who is not normally a
member of the claimant's household but is temporarily in the claimant's care by
3.1 the NHS Commissioning Board (3)
3.2 an LA (but excluding payments of HB)4
3.3 a voluntary organisation (5)
3.4 the person concerned under relevant legislation (6)
3.5 a clinical commissioning group (7)
3.6 in Wales, a Local Health Board (8) or
4. any sports award (9).
1 JSA Regs 13, reg 60(2)(a); 2 reg 60(2)(b); Children Act 1989, s 22C(2), (3), (5), (6)(a), 6(b);
Children (Scotland) Act 1995, s 2 6; Looked After Children (Scotland) Regulations 2009, reg 33 or
reg 51; Children Act 1989, s 59(1)(a); 3 JSA Regs 13, reg 60(2)(c)(i); 4 reg 60(2)(c)(ii); 5 reg 60(2)(c)(iii);
6 reg 60(2)(c)(iv); NHA Act 48, s 26(3A); 7 JSA Regs 13, reg 60(2)(c)(v); National Health Service Act 2006,
s 14D; 8 JSA Regs, reg 60(2)(c)(vi); National Health Service (Wales) Act 2006, s 11; 9 JSA Regs 13, reg 60(2)(d)

S3014 Board and lodging accommodation « S3013 « S3381 « S3961 « S3961 « S3961 « S3961 « S3961

BL accommodation is accommodation (1) :
1.where the charge for the accommodation includes some cooked or prepared
meals that are both
1.1 cooked or prepared by someone who is not
1.1.a
the person provided with accommodation or
1.1.b a member of the family of the person provided with
accommodation and
1.2
eaten in that accommodation or associated premises or :
2.provided to a person in a
2.1 hotel or
2.2 guest house or
2.3 lodging house (see S3015) or
2.4 similar establishment or :
3.that is
3.1
not provided by a close relative (see S3016 - S3017) of
3.1.a
the person provided with accommodation or
3.1.b a member of the family of the person provided with
accommodation or
3.2 provided on a commercial basis.

1 JSA Regs 13, reg 60(3)

S3015 « S3014 « S3961 « S3961

A lodging house :
1.is not a private house in which rooms are rented, even if services such as the
provision of and washing of bed linen are provided and :
2.is a place where accommodation is offered on a long-term basis and :
3.is the kind of establishment that may have a sign outside offering
accommodation.

S3016 « S3014 « S3017 « S3961 « S3961 « S3961

A close relative is (1)
1. a parent, parent-in-law, son, son-in-law, daughter, daughter-in-law, step-
parent, step-son, step-daughter, brother, half-brother, sister, half-sister and
2. the partner of any of those persons in 1..

1 JSA Regs 13, reg 2(2); R(SB) 22/87

S3017 « S3014 « S3961 « S3961

For the purposes of S3016, a child who is adopted becomes :
1.a child of the adoptive parents and :
2.the brother or sister of any other child of those parents.
The child stops being the child of, or the brother or sister of any children of the
natural parents. Whether an adopted person is a close relative of another person
depends upon the legal relationship and not the blood relationship (1).
1 R(SB) 22/87

S3018

S3019

S3020 Deciding if a person is still a self-employed earner « S3009 « S3021 « S3022 « S3023 « S3023 « S3023 « S3024 « S3440 « S3440 « S3451 « S3451 « S3454 « S3757 « S3776 « S3776 « S3776 « S3779 « S3786 « S3961 « S3961 « S3961 « S3961 « S3961 « S3961 « S3961 « S3961 « S3961 « S3961 « S3961 « S3961 « S3961 « S3961 « S3961 « S3961 « S3961 « S3961 « S3961 « S3961 « S3961

To determine whether a person is still trading and therefore still employed as a S/E
earner, the DM should consider the following :
1.if there is a reasonable prospect of work in the near future and :
2.if the business is a going concern and regarded as such by
2.1 the person or
2.2 the business's bankers or
2.3 any creditors or
2.4 others and :
3.if the person is genuinely available for and actively seeking alternative work
and :
4.if the person hopes or intends to restart work in the business when economic
conditions improve and :
5.if the person is undertaking any activities in connection with the self
employment and :
6.if there is work in the pipeline and
7. if the person is regarded as S/E by HMRC and :
8.if the person claims to be anxious for work in the S/E occupation, trade or
business. Is the person making it known that the business can take on
work?1. For example,
8.1 by advertising or
8.2 by visiting potential customers and :
9.if the interruption in question is part of the normal pattern of the
9.1 person' s work or
9.2 work that the person is seeking.
Not all of these questions will be relevant to whether a person is still employed as a
S/E earner and the ones that are may not carry equal weight. It will depend on the
facts of the particular case. These questions will also be relevant when considering
the separate question of remunerative work if it is determined that self-employment
continues (2).
1 Vandyk v. Minister of Pensions & National Insurance [1955] IQ (29);

2 JC v SSWP (JSA) [2008] UKUT 40 (AAC), R (JSA) 1/09

S3021 « S3961

All nine factors in S3020 should be considered in all cases where a person who has
been working as a S/E earner is now without work. This includes :
1.people unable to work because of sickness :
2.seasonal workers :
3.sub-contractors and :
4.share fishermen.

S3022 « S3961

Some of the factors in S3020 may point toward the fact that a person is trading as
S/E. Others may not. No one factor is decisive. The DM should consider the weight
to give each relevant factor.

S3023 « S3024 « S3440 « S3440 « S3451 « S3451 « S3454 « S3776 « S3776 « S3776 « S3786 « S3961 « S3961 « S3961 « S3961 « S3961 « S3961 « S3961 « S3961 « S3961 « S3961 « S3961 « S3961 « S3961 « S3961

The DM should make a determination on gainful employment based on a balanced
view of the evidence. These are matters of individual judgement for the DM
concerned.

Example 1

Hugh claims JSA. He is the sole owner of a small roofing firm. Work has stopped
temporarily because of the bad weather. He states that
1. he and his bank regard his business as a going concern
2. he has orders in the pipeline, for which he is arranging the order of materials
3. he is still regarded as S/E by HMRC
4. he is still advertising for work
5. stoppages during the winter months are a normal feature of his business.
The DM then considers the guidance at S3020 - S3023 and determines, in this
case, that Hugh remains gainfully employed as a S/E earner because he is still
trading.

Example 2

Ira claims JSA. He runs a business that supplies and fits doors and windows.
Because of the competition in the area the business has received fewer and fewer
orders, until now there are none. Ira states that
1. he has been unable to pay the rent on his shop and the landlord is
threatening eviction
2. his business has debts and the bank has advised that the business should be
wound up
3. he can not find a way of boosting his trade
4. there is no work in the pipeline
5. at present he is still regarded as S/E by HMRC :
6.he still has an advertisement in the Yellow Pages.
The DM considers the guidance at S3020 - S3023 and determines, in this case,
that Ira is not gainfully employed and no longer trading.

Example 3

S3024 Sickness « S3961 « S3961 « S3961

If a S/E earner is unable to work in the business due to sickness, the DM should
consider :
1.the guidance at S3020 - S3023 and :
2.if the S/E earner remains gainfully employed as a S/E earner.

S3025 « S3757 « S3961 « S3961

A S/E earner will experience occasional minor illnesses like anyone else. The DM
should regard the periods of minor illness as part of the normal pattern of the self
employment.

S3026

S3032

S3033 Earnings from self-employment that has ceased « S3961 « S3961 « S3961

If a person has been engaged in :
1.remunerative work as a S/E earner or
2. P/T self-employment
and that employment has ceased (that is, ceased outright), any earnings derived
from that employment are fully disregarded unless the earnings are royalties,
copyright payments or Public Lending Rights payments (see S3073 - S3081)1.
1 JSA Regs 13, Sch , para 4

Example

James was S/E. He last worked on 11.06.13. His business completely ceased to
trade on 11.06.13. He received earnings on that day. He claims JSA on 12.06.13.
The DM determines that James has ceased to be a S/E earner. The earnings
received on 11.06.13 are disregarded.

S3034

S3050

S3051 Assessment period for self-employed earners « S3009 « S3073 « S3961 « S3961 « S3961 « S3961 « S3961

The normal weekly earnings of a S/E earner should be calculated by using the
1. gross receipts (see S3125) and
2. expenses paid out (see S3190)
during the assessment period. Different rules apply for royalties, copyright payments
and Public Lending Rights payments.

S3052 Business trading for less than a year « S3961 « S3961 « S3961

If the business has been trading for less than a year, the assessment period should
be a period that will allow the DM to calculate the earnings most accurately (1).
1 JSA Regs 13, reg 55(1)(b)

Example

S3053 Business trading for more than a year « S3063 « S3961 « S3961 « S3961 « S3961

If the business has been trading for more than a year and there is no change likely
to affect the normal pattern of business, the assessment period should be a year (1)
(but see S3167 - S3168).

1 JSA Regs 13, reg 55(1)(a)

S3054 « S3961

The year does not need to be the year immediately before the claim or the date the
claim is looked at. If profit or loss accounts are available for the last trading year the
DM can use these as the assessment period. The profit and loss accounts should
be converted to a cash flow basis (see S3101 - S3111).

S3055 « S3961

A year means a period of :
1.365 days or :
2.366 days if the assessment period includes the February of a leap year.

S3056

S3059

S3060 Change likely to affect the normal pattern of trading « S3961 « S3961 « S3961

If there has been a change that is likely to affect the normal pattern of trading, the
assessment period should be a period that will allow the DM to calculate the
earnings most accurately (1). The period does not need to be made up of complete
weeks.

1 JSA Regs 13, reg 55(1)(b)

S3061 « S3961

The assessment period should :
1.normally start on the date the change affecting the pattern of the business
occurred (but see S3064) and :
2.end on the date that the most recent figures regarding earnings and expenses
are available, for example, the next week or month.

S3062 « S3071 « S3961 « S3961

The earnings would then be averaged over that period and apportioned on a weekly
basis until the figures for the following week or month become available. The
assessment period would then be extended. The assessment period would :
1.start on the date the change affecting the pattern of business occurred and :
2.end on the date that the new figures became available.
The DM should supersede if the new figures affect entitlement to JSA. Where
entitlement is not affected, a decision not to supersede should be made if the
claimant asked for earnings to be looked at again. For further guidance on
supersession including the effective date rule, see ADM Chapter A4.

S3063 « S3961

This procedure should continue until the assessment period has been extended to
one year and the earnings can be averaged over that year (see S3053). In most
cases this procedure will provide the most accurate determination of a S/E earners
earnings (but see S3064).

Example

Carlo is S/E, he buys and sells Italian wine. On 9.8.13 Carlo's business goes into
receivership. He continues to trade but he lost some of his suppliers and customers.
On 1.11.13 Carlo claims JSA.
The DM determines
1. Carlo is gainfully employed but not in remunerative work
2. that the receivership is a change that has affected the normal pattern of trading
3. that the assessment period is from 9.8.13 (the date the change affecting the
pattern of business occurred) to 31.10.13 (the date that the most recent
figures for gross receipts and expenses are available).
The earnings for the assessment period are averaged for that period and
apportioned on a weekly basis until 30.11.13 when the figures for the following
month become available.
At this point the DM supersedes the JSA award and extends the assessment period.
The assessment period is now 9.8.13 to 30.11.13. The earnings for this period are
averaged and apportioned on a weekly basis until 31.12.13 when the figures for the
following month become available.
The DM continues with this procedure until the assessment period has been
extended to one year.

S3064 « S3061 « S3063 « S3961 « S3961 « S3961

When considering the assessment period the DM should consider the facts of each
case carefully. A period that does not start with the first day of the interruption may
sometimes give a more accurate determination of the S/E earner's earnings. If so,
that period should be used instead.

S3065 « S3961

The DM should be satisfied that any change :
1.has affected or :
2.is likely to affect
the normal pattern of trading.

Example 1

Barry owns and runs a small garage, he has been S/E for four years. Barry claims
JSA because two months prior to his claim there was a fire in the garage workshop
that badly damaged equipment. This meant that Barry was not able to offer a repairs
or maintenance service to his customers.
The DM determines that
1. there had been a change that had affected the normal pattern of business
and
2. the assessment period is from the date of the fire up to the week before the
JSA claim.

Example 2

Omar works P/T as a S/E draughtsman providing technical drawings for builders.
Most of his work comes from one particular building firm. Omar claims JSA because
six months before the claim the building firm went into receivership.
The DM determines that :
1.there had been a change that had affected the normal pattern of business
and
2. the assessment period starts from the date Omar lost his major customer.

Example 3

Dougal is a S/E roofer. The business has been trading for five years. Dougal claims
JSA because a period of snowy weather stopped him from working. The period he
was unable to work was ten days.
The DM determines that, although the bad weather might be a change, it was not
one that would affect the normal pattern of business. The normal pattern of business
would include times in the winter when roofing work could not be done.
Note: Weather conditions that are exceptional for the area could be regarded as a
change affecting the normal pattern of business.

Example 4

Morris is a S/E shop keeper. He has been in business for nine years. Morris claims
JSA because a recent storm has blown off part of his shop roof. He is unable to
trade until his roof is mended because there are too many leaks.
The DM decides that the bad weather is a change that has affected the normal
pattern of business. The DM decides the assessment period starts from the date of
the storm.

S3066

S3068

S3069 New businesses « S3961 « S3961 « S3961

A person may start up a new business :
1.at the same time as claiming JSA or :
2.whilst in receipt of JSA.
The DM should consider if that person has started remunerative work.

S3070 « S3961

If the work is not remunerative work no income should be taken into account until
the S/E earner starts to receive actual earnings. When the first payment of earnings
is received the DM should use the assessment period :
1.starting on the first day of the benefit week in which the person started S/E
and :
2.ending on the last day of the benefit week in which actual earnings are
received.

S3071 « S3961

The assessment period should be extended every week or month until a yearly
assessment is possible (see S3062). In most cases this procedure will provide the
most accurate determination of a S/E earner's earnings (but see S3072).

Example

S3072 « S3071 « S3073 « S3961 « S3961 « S3961

When determining the assessment period for new businesses the DM should
consider the facts of each case carefully. A period that does not start with the first
day of self-employment may sometimes give a more accurate determination of the
S/E earner's earnings. If so, that period should be used instead.

S3073 Royalties, copyright payments and Public Lending Right payments « S3033 « S3471 « S3961 « S3961 « S3961 « S3961 « S3961

Earnings as described in S3074 paid during an award of benefit have a different
assessment period to that in S3051 - S3072.

S3074 « S3073 « S3961 « S3961

This paragraph applies to (1) :
1.royalties or other sums paid as a consideration for the use of, or the right to
use, any copyright, design, patent or trademark or :
2.any payment in respect of any
2.1 book registered under the Public Lending Right Scheme 1982 or
2.2 work made under any international public lending right scheme that is
similar to the Public Lending Right Scheme 1982
where the claimant is the first owner of the copyright, design, patent or trademark, or
an original contributor to the book or work covered by 2.2 above.

1 JSA Regs 13, reg 55(3)

S3075 « S3077 « S3077 « S3961 « S3961 « S3961

Each payment should be taken into account for the number of weeks (including part
of a week) calculated by dividing the amount of the payment by :
1.the amount of JSA that would have been paid if the earnings had not been
received and :
2.the correct disregard (see S3470)1.

1 JSA Regs 13, reg 55(4), Sch

S3076 « S3077 « S3077 « S3961 « S3961 « S3961

The attribution period should begin on the first day of the benefit week in which the
payment is received.

Example

S3077 « S3961

If at the end of the period calculated under S3075 :
1.a further claim for JSA is made and :
2.another payment of royalties or copyright has been received during that period
the further payment should be treated separately as in S3075. If the period extends
beyond that calculated for the first payment, the second payment should be taken
into account from the end of that period.

Example

(See the example at S3076).
Libby receives a further payment of royalties of £600 on 5.12.13 that is taken into
account as follows
600
39.30
1. number of weeks is
= 7
80.10
80.10
2. the payment is taken into account for
2.1 seven weeks at £80.10 per week (the first four weeks overlap with the
last four weeks in S3076) - no JSA is payable during the period 3.12.13
to 20.1.14 and
2.2 one week at £39.30 but £5.00 is disregarded - JSA of £40.80 (£75.10
£34.30 (£39.30 - £5.00)) is payable on 27.1.14.

S3078

S3079

S3080 Expenses deducted from royalty, copyright payment or Public Lending Right payment « S3961 « S3961 « S3961

The S/E earner may have to pay expenses on receipt of the royalty, copyright
payment or Public Lending Right payment. These expenses are deductible if they
are :
1.wholly and exclusively for the purpose of that employment and :
2.paid out in the attribution period of the payment (1).
1 JSA Regs 13, reg 55(4); reg 61(1)(a); reg 61(3)(a)

Example 1

Gore writes a book between June and December 2013 and it is on sale from 1.1.14.
The first copyright payment is received on 3.6.14. There are no expenses paid out in
the attribution period of the payment. The DM decides that no expenses should be
deducted from the payment.

Example 2

S3081 Income tax, NI contributions and qualifying premium payments deducted from a royalty, copyright payment or Public Lending Right payment « S3033 « S3471 « S3961 « S3961 « S3961 « S3961 « S3961

The DM should consider deductions for :
1.income tax (see S3270 et seq) and :
2.NI contributions (see S3297 et seq) and :
3.half of any premiums for personal pensions (see S3326)
from the royalty, copyright payment or Public Lending Right payment (1).
Note:
The DM should take care not to duplicate any deduction for a personal
pension. A deduction for such a premium may already be deducted from another
assessment period.
1 JSA Regs 13, 61(3), 61(1)(a) & 61(3)(b) & (c)

S3082

S3099

S3100 Calculation of normal weekly earnings « S3961 « S3961 « S3961

S3101 - S3244 provide guidance on the calculation of earnings of most S/E
earners. Specific guidance is given for :
1.child minders (see S3350) :
2.crofts or small holdings (see S3361) :
3.farmers (see S3370) :
4.hotels, guest houses, bed and breakfast establishments etc (see S3380) :
5.local exchange trading schemes (see S3385) :
6.partnerships (see S3400) :
7.renting out property (see S3425) :
8.seasonally S/E (see S3440) :
9.share fishermen (see S3754)
10. sub-contractors (see S3450)
11. actors and entertainers (see S3452).

S3101 Evidence - cash flow « S3054 « S3100 « S3961 « S3961 « S3961 « S3961 « S3961

To calculate the amount of earnings the DM will need evidence of :
1.the gross receipts (see S3125) actually received, not money owed to the
business and :
2.expenses defrayed, that is, actually paid for, not unpaid bills
for the assessment period. This is known as cash flow and evidence should be
presented on a cash flow basis.

S3102 « S3103 « S3961 « S3961

On a new or repeat claim to JSA, the onus is on the S/E earner to provide the
evidence necessary to support the claim. A claimant who is S/E or whose partner is
S/E should be asked to submit details of :
1.the business and :
2.actual gross receipts and expenditure
during the assessment period.

S3103 « S3961

The figures provided in S3102 2. should be accepted as accurate unless :
1.there is reason to doubt or :
2.they are unrepresentative of the current trading position.
Supporting evidence of every item of expenditure, or receipt, is not always required.
Totals for the assessment period are acceptable provided that each type of
expenditure, or receipt is separately detailed and 1. or 2. does not apply.

S3104 « S3961

S3105 Accounts « S3961 « S3961 « S3961

A person may submit a set of accounts as evidence of S/E earnings. Accounts
provide some, but not all, of the information required by the DM to decide the
amount of the gross receipts and expenses paid for.

S3106 « S3961

A set of accounts consists of two main statements :
1.the balance sheet: that is, a statement of the financial position of a business
at a given date and :
2.the profit and loss account: that is, a summary of the results of a business's
transactions for a period ending on the date of the balance sheet.

S3107 « S3961

Accounts are prepared using accounting principles. Accounts may include
anticipated receipts and expenses for the accounting period. The anticipated
amounts are not :
1.gross receipts as they have not been received by the business or :
2.allowable expenses as they have not been paid for.

S3108 « S3109 « S3961 « S3961

If accounts are submitted as evidence the S/E person should be asked to provide
evidence of actual amounts received and expenses paid so that the evidence can
be converted into a cash flow basis. The S/E person can do this by providing :
1.accounts that are calculated on a cash flow basis or :
2.evidence of the gross receipts and expenses paid.

S3109 « S3961

The figures provided in S3108 1. and 2. should be accepted as accurate unless
1. there is reason to doubt them or :
2.they are unrepresentative of the current trading position.
Supporting evidence of every item of expenditure, or receipt, is not always required.
Totals for the assessment period are acceptable provided that each type of
expenditure, or receipt is separately detailed and 1. or 2. does not apply.

S3110 « S3961

The S/E person should be asked any questions that cannot be resolved. It may be
necessary for the S/E person to provide further supporting evidence, for example
1. bank receipts
2. purchase receipts
3. expenses for a different assessment period.

S3111 « S3054 « S3961 « S3961

As profit and loss accounts are prepared using normal accounting principles, they
include certain entries that would not be included in a cash flow account. For
example :
1.the value of stock at the start and end of the accounting period :
2.money owed to the business by debtors :
3.money owed by the business to creditors :
4.depreciation of assets of the business.
As the DM is considering the S/E person's cash flow, these will not be allowable
expenses.

S3112

S3115

S3116 Income tax certificate « S3961 « S3961 « S3961

The DM should not accept as conclusive evidence of the weekly net profit an :
1.income tax certificate or :
2.accountant's statement of the net profit figure that is acceptable for tax
purposes.

S3117 Method of calculation « S3961 « S3961 « S3961

To calculate the earnings of a S/E earner the DM :
1.should establish the gross receipts of the business during the assessment
period (see S3125) and :
2.deduct from the gross receipts the allowable expenses that have been paid
out during the assessment period (see S3206) and :
3.deduct from any remaining figure amounts for
3.1 notional income tax (see S3270 et seq) and
3.2 notional NI contributions (see S3297 et seq) and
3.3 half of any premium paid for a personal pension scheme (see S3326)
and :
4.deduct the correct disregard(s) (see S3470).
The figure that is left is the earnings that should be taken into account.

S3118 « S3961

The whole process can be summarized as follows gross
less allowable
less
notional income tax
less
notional NI contributions
Less
half of any personal pension scheme
divided by
the number of days in the assessment period
multiplied by
7 to give a weekly figure
equals
the weekly net profit
less
any disregards that apply
equals
the weekly earnings to be taken into account

S3119

S3124

S3125 Gross receipts « S3012 « S3051 « S3101 « S3117 « S3759 « S3961 « S3961 « S3961 « S3961 « S3961 « S3961 « S3961 « S3961

Any payment of income actually received by the business during the assessment
period, regardless of when it is earned should be included as a gross receipt (1).

S3167 « S3053 « S3166 « S3961 « S3961 « S3961 « S3961 « S3961

provides guidance for payments received that relate to a period different to
the assessment period.

1 JSA Regs 13, reg 61(4)

S3126 « S3961

The gross receipts of a business include :
1.any payments for goods and services provided (see S3127) :
2.earnings payable abroad (see S3128)
3. any business subsidies or payments of compensation (see S3138)
4. personal drawings (see S3139) :
5.income from letting or sub-letting (see S3154) :
6.sale of certain business assets (see S3155)
7. tips and gratuities (see S3156) :
8.payments in kind (see S3158) :
9.any VAT receipts (see S3160).

S3127 Payments received for goods and services provided « S3126 « S3961 « S3961 « S3961 « S3961

All
1. cash and
2. cheque and
3. credit card payments
received in return for goods and services supplied, should be included as a gross
receipt of the business.

S3128 Earnings payable abroad « S3126 « S3961 « S3961 « S3961 « S3961

Money that is due to be paid to a business in a country outside the UK should be
included as a gross receipt only when it is received by the business, for example
when it is paid
1. to any branch or official representative of the business or
2. into any business account.

S3129 « S3961

Where the payment is made in a currency other than sterling, any
1. bank charge or
2. commission
payable for converting the payment into sterling should be disregarded (1).

1 JSA Regs 13, Sch , para 10

S3130 « S3961

Any payment due to the business in a country outside the UK that prohibits the
transfer of funds to the UK should be disregarded for as long as that restriction
applies (1).
1 JSA Regs 13, Sch , para 9

Example

Derek is S/E on a P/T basis in an import/export business. During the assessment
period his business received £1000 in a country that was, and currently is,
prohibiting the transfer of funds to the UK. The DM calculates the earnings as follows
Gross receipts (including the £1000
=
£5000
received abroad)
Deductions for allowable expenses, notional
=
£2500
income tax and NI contributions and half of a
premium for a personal pension
Net profit
=
£2500
Divided by the number of weeks in the
=
£48.07 less
assessment period
Normal earnings disregard
=
£5.00 less
Special disregard for earnings abroad
= £19.23
(£1000 divided by 52)
Earnings to be taken into account
= £23.84
(£48.07 - £5.00 - £19.23)
During the year that the earnings are taken into account, the country lifts its
prohibition against the transfer of funds to the UK. The DM revises or supersedes
the earnings disregard for the year, the amount of the earnings to be taken into
account increases to £43.07 (£48.07 - £5.00).

S3131

S3137

S3138 Business subsidies or payments of compensation « S3126 « S3961 « S3961 « S3961 « S3961

Some businesses may receive :
1.subsidies, for example businesses involving farming or agriculture receive
subsidies from the Department for the Environment, Food and Rural Affairs,
or the EC or :
2.payment of compensation from another person because of disruption to the
business. For example payments of compensation awarded because of BSE.
Such payments should be included in the gross receipts of the business.

S3139 Personal drawings « S3126 « S3961 « S3961 « S3961 « S3961

A S/E person may draw money from the business for day to day expenses. These
drawings, known as personal drawings, are in anticipation of profits or business
income and should be included as part of the gross receipts of the business. It is
possible for personal drawings to exceed the eventual profit.

S3140 « S3961

Where drawings are made in excess of the profits of the business they should be
treated as capital in the hands of the claimant. Money taken from the business in
excess of profits comes from :
1.capitalized profits from earlier years or :
2.increased borrowing.
In
1. or 2. the drawings are withdrawals from the capital of the business.

S3141 « S3961

If personal drawings are declared the DM should establish if the amount has been
deducted from the amount shown as the gross receipt. If it has, the amount of the
drawings should be added back to the amount of the gross receipts.

S3142 « S3961

A S/E person who is a sole owner of, or a partner in, a business may pay interest to
the business on money taken as personal drawings. These payments should be
included in the gross receipts of the business.

Example 1

Joseph is in receipt of JSA, he is a S/E earner. His assessment period is 12 months.
He produces evidence of his gross receipts and expenses for the assessment
period. Personal drawings are shown as an expense and are not included in the
gross receipts of the business. The DM determines
1. that the personal drawings should be added to the gross receipts of the
business and
2. allowable expenses should be deducted from this new gross receipts figure.

Example 2

Rachel is in receipt of JSA, she is a S/E earner. Her assessment period is 12
months. She produces evidence of her gross receipts and expenses for the
assessment period.
Personal drawings are shown as an expense and are not included in the gross
receipts of the business. It appears from the figures that the personal drawings may
exceed any profit.
The DM calculates the net profit without including the personal drawings as a gross
receipt of the business. This calculation shows that the personal drawings exceed
the net profit of the business.
The DM determines
1. that personal drawings equal to the amount of the net profit previously
calculated should be added to the gross receipts of the business and
2. allowable expenses should be deducted.

S3143

S3153

S3154 Income from letting or sub-letting « S3126 « S3961 « S3961 « S3961 « S3961

Any income received from letting or sub-letting of business premises or land should
be included in the gross receipts of the business. Any expense connected with the
letting should be included with other business expenses.

S3155 Sale of certain business assets « S3126 « S3166 « S3236 « S3961 « S3961 « S3961 « S3961 « S3961 « S3961

The amount received from the sale of a capital asset should not be included in the
gross receipts of the business, unless the asset was part of the stock in trade of the
business (1).
1 R(FC) 1/97

Example

S3156 Tips and gratuities « S3126 « S3961 « S3961 « S3961 « S3961

Tips or gratuities received in response to the service provided by a S/E earner, for
example as a hairdresser, taxi driver or coach driver, should be included in the
gross receipts of the business.

S3157 « S3961

Any tips or gratuities that are made as a gift unconnected to the self-employment,
for example, on personal grounds should not be included in the gross receipts of the
business.

S3158 Payments in kind « S3126 « S3961 « S3961 « S3961 « S3961

If a S/E person is paid in kind the DM should decide a monetary value equal to what
would have been paid and include this amount in the gross receipts of the business.

Example

S3159 « S3961

S3160 VAT « S3126 « S3161 « S3161 « S3212 « S3961 « S3961 « S3961 « S3961 « S3961 « S3961 « S3961

A S/E person who is registered for VAT is required to submit three monthly returns
to HMRC showing amounts of :
1.VAT collected from customers - known as output tax and :
2.VAT paid by the S/E person to supplier - known as input tax.
If
1. exceeds 2. the S/E person pays the difference to HMRC. If 2. exceeds 1. the
S/E person receives the difference from HMRC.

S3161 « S3961

Where :
1.a business is registered for VAT and
2. in the assessment period the amount received is greater than the amount
paid to HMRC.
the difference should be included in the gross receipts of the business. This is the
amount that S3160 2. exceeds S3160 1..
Note:
VAT can also be an allowable expense of the business, see S3211.

S3162

S3165

S3166 Capital receipts « S3961 « S3961 « S3961

Capital receipts do not form part of the gross receipts of the business (1). For
example, :
1.loans :
2.injections of capital :
3.grants from the Prince's Trust and :
4.proceeds from the sale of business assets, unless that asset was part of the
stock in trade of the business (see S3155).
1 R(FC) 1/97
S3167 Income for a different period A payment of income may be assessed over a period different to the assessment
period if the normal weekly amount of the item of income can be established more
accurately (1).
Note:
The DM should not consider any payment made before or after the
assessment period.

1 JSA Regs 13, reg 61(10)

S3168 « S3053 « S3961 « S3961

It is not intended that every payment is assessed individually over a period different
to the assessment period. This should be the exception rather than the rule. So, any
payment for a period :
1.equal to or shorter than the assessment period should be assessed over the
full length of the assessment period or :
2.longer than the assessment period should be converted on a pro rata basis to
represent the length of the assessment period.

Example

Ryan is a S/E earner in receipt of JSA. He receives a payment that is a half-yearly
payment under a long-term contract. As the level of trading has changed recently
due to a fire on the business premises the assessment period used is 13 weeks.
The DM considers that :
1.the payment should be multiplied by 13 and divided by 26 and
2. the resulting sum should be added to any other gross receipts of the
business.

S3169

S3189

Business expenses

S3190 Conditions for deducting business expenses « S3051 « S3191 « S3206 « S3220 « S3961 « S3961 « S3961 « S3961 « S3961 « S3961 « S3961

When calculating the net profit of a S/E earner the DM should deduct from the gross
receipts any business expense that
1. was paid out wholly and exclusively for the purposes of the business (1) and
2. was paid out during the assessment period and
3. was reasonably incurred (2) (see S3198) and
4. is an allowable expense (see S3206).
1 JSA Regs 13, reg 61(3)(a); 2 reg 61(7)

S3191 Wholly and exclusively « S3961 « S3961 « S3961

An expense is wholly and exclusively paid out when it has been incurred only for the
purpose of the business (1). Any such payment should be deducted in full, subject to S31902. - 4..
1 JSA Regs 13, reg 61(4)

S3192 Expenses for both business and private use « S3873 « S3961 « S3961 « S3961 « S3961

If expenditure is for both business and private use, for example
1. a business that is run from home or
2. there is only one vehicle for both business and private use
the DM should apportion the cost. Only the portion of the expenditure that is wholly
attributable to the business can be deducted.

S3193 « S3961

It is a common practice for a S/E person to put private expenses through a business
account. If a set of accounts has been submitted as evidence of expenses the DM
should establish the amount of the expenses paid out for the business.

S3194 « S3961

The DM should normally accept the evidence of
1. the S/E earner or
2. an accountant or
3. any apportionment already agreed by HMRC for tax and contribution
1
purposes .

1 R(FC) 1/91; R(IS) 13/91

S3195 « S3873 « S3961 « S3961

Examples of expenses that may be apportioned between private and business use
1 are
1. telephone calls and telephone rental :
2.motor expenses such as fuel, road fund license (sometimes called road tax),
insurance premiums, servicing, maintenance or repair charges :
3.fuel costs and standing charges for gas and electricity.
1 R(FC) 1/91; R(IS) 13/91

Example 1

Indra is in receipt of JSA. She runs a business from her home. She uses the
telephone for private and business use. The total cost of telephone charges in the
assessment period is £300.
Indra provides evidence that HMRC have agreed that the apportionment is 60% for
business use and 40% for personal use.
The DM decides that £180 of the expenses have been reasonably incurred and
allows this amount when calculating Indra's net profit.

Example 2

Greg uses a car for both business and private use. The total cost in the assessment
period is £750. Greg provides information that 55% of the cost is for business use
and 45% is for personal use.
The DM decides that this is reasonable and allows £412.50 as an expense.

Example 3

Serena is a dressmaker who works at home using an electric sewing machine. She
uses an electric fire to heat the room when working. A quarterly electric bill is
included as a business expense but no breakdown is given of business and private
use.
The DM apportions the expenses so that only the part that is wholly and exclusively
for the business is allowed. To do this the DM makes a determination based on all
the facts, including
1. the size of the working area in relation to the rest of the rooms
2. how many other people live in the home
3. what amount Serena thinks represents business use
4. how many hours are spent working and using the appliances
5. what other electrical appliances are used in the home.

S3196

S3197

S3198 Reasonably incurred « S3190 « S3961 « S3961 « S3961 « S3961

The term "reasonably incurred" is not defined in legislation. It should be given its
ordinary everyday meaning. To be reasonably incurred an expense must be :
1.appropriate to the business and
2. necessary to the business and :
3.not excessive.
The DM should consider the nature of the business, level of trading and if there are
any employees.

S3199 « S3961

To determine what is reasonable the DM should have regard to the circumstances
of each individual's case (1), including the level of the person's earnings (2).

1 R(P) 2/54; 2 R(G) 1/56

S3200 « S3961

The DM may have to consider if it is reasonable for a person to reduce the hours
worked to below the remunerative work level by employing someone to do part of
the work of the business. To determine if this expense is reasonably incurred the
DM should consider all of the circumstances of the individual case including if the :
1.person is capable of doing the work and :
2.evidence suggests that the person is employing another so that the
remunerative work condition is satisfied and the person can claim JSA
The DM may conclude that the expense of employing another person is not
reasonably incurred, therefore cannot be deducted from the gross receipts.

S3201 « S3961

If expenditure on a particular item is necessary to enable the person to run the
business, the whole of that expenditure may be a deductible expense unless there
is evidence that it is excessive (1).

1 R(G) 7/62

S3202 « S3961

If the DM is not satisfied that the whole of an expense is reasonably incurred only
the part that is considered to be reasonable should be allowed as a deduction
against gross receipts.

S3203

S3205

S3206 Allowable business expenses « S3117 « S3190 « S3207 « S3210 « S3220 « S3221 « S3226 « S3232 « S3886 « S3911 « S3961 « S3961 « S3961 « S3961 « S3961 « S3961 « S3961 « S3961 « S3961 « S3961 « S3961 « S3961 « S3961

If the conditions in S3190 1. - 3. are met, all day to day expenses of a business are
allowable, including (1) :
1.accountancy charges :
2.advertising costs :
3.certain capital repayments on a loan used to (2)
3.1
replace an item of equipment or machinery that has
3.1.a
worn out in the course of the business or
3.1.b
become outdated or
3.2 repair an existing asset, but only to the extent that the loan exceeds
any sum paid or due to be paid under an insurance policy for that
repair, for example, labour may not be covered by the policy :
4.cleaning of business premises :
5.employee's wages before any deductions, including wages payable to a
partner, but not a business partner (see S3210) :
6.employer's contribution to an employee's pension scheme :
7.employer's secondary class 1 NI contributions :
8.heating and lighting :
9.hire or rental costs, but not any capital or purchase elements
10. income spent on the repair of an existing business asset, but only to the
extent that cost of the repair exceeds any sum paid or due to be paid under
an insurance policy for that repair (3)
11. interest payable on a mortgage, loan, credit sale, consumer credit agreement
or a hire purchase agreement - this does not include any capital element, but
see 3.4
12. legal fees for the running of the business, but not with the setting up or
expansion of the business
13. payment in kind for work done for the business - the monetary value is allowed
14. rent, council tax, water charges and insurance premiums on the business premises
15. stationery
16. stock purchases
17. sundries, if the DM is satisfied that the expenses are allowable
18. telephone, fax or telex
19. transport, for example business use of the car including petrol costs, road
fund license, insurance and servicing
20. VAT (see S3211).5
This list is not exhaustive.
1 JSA Regs 13, reg 61(3)(a), reg 61(4), reg 61(5), reg 61(7); reg 73(3); 2 reg 61(6); reg 73(3);

3 reg 61(8)(b)(ii); reg 73(3); 4 reg 61(8)(b)(iii); reg 73(3); 5 reg 61(8)(b)(i); reg 73(3)

S3207 « S3961

For the purpose of S3206 3.2 an asset includes buildings, plant machinery, vehicles
or equipment.

Example 1

Jayne is a mobile hairdresser. She takes out a loan to buy a replacement car as her
existing car is beyond repair.
The DM determines that
1. the loan is used to replace a car with a similar item and the capital
repayments are allowable and
2. interest payments on the loan are allowable. Example 2
Dermot is a builder. He takes out a loan to buy an additional van after taking on an
employee.
The DM determines that
1. the capital repayments on the loan are not allowable because the loan is for
an additional item and
2. interest payments on the loan are allowable. Example 3
Giles is a farmer. He takes out a loan to replace a tractor but decides to buy a
combine harvester instead.
The DM determines that
1. the capital repayments on the loan are not allowable because the loan is for a
different piece of machinery and
2. interest payments on the loan are allowable.

S3208

S3209

S3210 Partner's earnings from the business « S3206 « S3961 « S3961 « S3961 « S3961

The earnings of a partner (but not a business partner) who is employed in the
business should be allowed as a business expense (see S3206 5.). The wage
should not be added back to the business accounts to offset any loss (1).
1 JSA Regs 13, reg 61(11)

S3211 VAT « S3161 « S3206 « S3212 « S3212 « S3961 « S3961 « S3961 « S3961 « S3961 « S3961 « S3961

A S/E person who is registered for VAT is required to submit three monthly returns
to HMRC showing amounts of :
1.VAT collected from customers - known as output tax and
2. VAT paid by the S/E person to suppliers - known as input tax.
If
1. exceeds 2. the S/E person pays the difference to HMRC. If 2. exceeds 1. the
S/E person receives the difference from HMRC.

S3212 « S3886 « S3961 « S3961

Where :
1.a business is registered for VAT and :
2.in the assessment period the amount paid to HMRC is greater than the
amount received in the same period
the difference should be taken into account as an expense (1). This is the amount that S32111. exceeds S3211 2..
Note:
VAT can also be a gross receipt of the business (see S3160).
1 JSA Regs 13, reg 61(8)(b)(i)

S3213 « S3961

S3214 Expenditure for a different period « S3961 « S3961 « S3961

Any business expenditure paid out in the assessment period may be assessed over
a period different to the assessment period if the normal weekly amount of that item
of expenditure can be established more accurately (1).
Note:
The DM should not deduct an expense paid before or after the assessment
period.

1 JSA Regs 13, reg 61(10)

S3215 « S3961

It is not intended that every expense is assessed individually over a period different
to the assessment period. This should be the exception rather than the rule.

S3216 « S3961

Any expense for a period :
1.equal or shorter than the assessment period should be assessed over the full
length of the assessment period or :
2.longer than the assessment period should be converted on a pro rata basis to
represent the length of the assessment period.

Example

Dominic is a S/E taxi driver. He started trading six months before he claimed JSA.
The assessment period is 26 weeks. In that time the annual road fund license and
insurance on the taxi was paid.
The DM determines
1. that the expenses should be multiplied by 26 (the length of the assessment
period) and divided by 52 and
2. the resulting figure should be added to any other allowable expenses.

S3217

S3219

S3220 Expenses not allowed « S3961 « S3961 « S3961

Business expenses that should not be allowed are :
1.those expenses where the conditions for deducting a business expense are
not met (see S3190) :
2.capital expenditure :
3.depreciation of capital assets
4. expenses used, or intended to be used, in setting up or expanding a business
5. any loss incurred
5.1
before the start of the assessment period (1) or
5.2
in any other employment (2)
6. repayment of capital on loans except where S3206 3. applies
7. business entertainment expenses
8. losses incurred on the disposal of a capital asset
9. payments into a contingency fund to safeguard against future bad debts (3)
10. personal drawings on income and capital
11. money on goods used for personal consumption.
1 JSA Regs 13, reg 61(5)(d); 2 reg 61(11); 3, reg 61(7)

S3221 Capital expenditure « S3911 « S3961 « S3961 « S3961 « S3961

Capital expenditure is the expenditure on fixed assets, sometimes called capital
assets. In line with HMRC practise, fixed assets include items such as tools,
equipment, machinery and vehicles used in the business. The DM should not allow
capital expenditure as a business expense (1).
1 JSA Regs 13, reg 61(5)(a)

Example

S3222 Depreciation « S3961 « S3961 « S3961

Depreciation of a capital, or fixed, asset is the amount that the value of that asset is
estimated to have reduced, due to age or wear and tear, during the assessment
period.

S3223 « S3961

If there are fixed assets, accounts will always show depreciation as a business
expense. The DM should not allow depreciation as a business expense (1).
1 JSA Regs 13, reg 61(5)(b)

S3224

S3225

S3226 Sums used in setting up or expanding a business « S3911 « S3961 « S3961 « S3961 « S3961

The DM should not allow as a business expense any sum used, or intended to be
used, in setting up or expanding a business (1). This applies to expenditure on, for example
1. fixed assets of the business, including fixtures and fittings or the cost of larger
premises or :
2.non-recurring costs such as legal services in obtaining a lease.
Note:
If a business loan has been obtained the DM should consider interest on the
loan (see S3206 11.) and allow as an expense other items that are ongoing regular
expenses.
1 JSA Regs 13, reg 61(5)(c)

S3227 Loss incurred before the beginning of the assessment period « S3961 « S3961 « S3961

The DM should not allow as a business expense any loss incurred before the
beginning of the assessment period (1).
1 JSA Regs 13, reg 61(5)(d)

S3228

S3229

S3230 Loss incurred in any other employment « S3961 « S3961 « S3961

A person may :
1.have more than one employment as a S/E earner or :
2.be both a S/E earner and an employed earner, for example a director.
The earnings from each employment should be assessed separately.

S3231 « S3961

Any business loss in one employment should not be offset against the earnings of
another employment (1).
1 JSA Regs 13, reg 61(11)

Example

S3232 Repayment of capital on business loans « S3911 « S3961 « S3961 « S3961 « S3961

The DM should not allow the repayment of the capital part of a business loan as a
business expense unless it is for replacement or repair of an asset (1) (see S3206 3.).
1 JSA Regs 13, reg 61 (5)(e)

S3233

S3234

S3235 Business entertainment « S3961 « S3961 « S3961

Any expense claimed for providing business entertainment, for example
1. business lunches or
2. hospitality in connection with the business
should not be allowed as a business expense (1).
1 JSA Regs 13, reg 61(5)(f)

S3236 Loss on disposal of a capital asset « S3961 « S3961 « S3961

When an asset is sold for less than the value shown in the books of the business
the difference is referred to as the "loss on disposal" and is accepted as a loss for
accounting purposes. But the DM should not :
1.allow the loss as an expense or :
2.include the proceeds from the sale of the asset as a gross receipt of the
business (see S3155).

S3237 Payments into contingency funds « S3961 « S3961 « S3961

Any payments into a contingency fund set up to safeguard against future bad debts
should not be allowed as a business expense. This is an allocation of funds rather
than an expense.

S3238

S3239

S3240 Personal drawings « S3961 « S3961 « S3961

Personal drawings may be shown as a :
1.trading expense of the business or :
2.withdrawal of capital on the balance sheet (if produced).
In either case, the drawings should not be allowed as a business expense.

S3241 Personal consumption « S3961 « S3961 « S3961

The DM should not allow any money spent on goods for personal consumption as a
business expense.

S3242 « S3961

Personal consumption is not limited to food products. It could include a range of
items, for example
1. paint
2. spare parts
3. building materials
4. drinks.

S3243 « S3961

The DM should not assume :
1.personal consumption or :
2.if the S/E person is a partner, that the figure for personal consumption will be
the same for each partner.

S3244 « S3100 « S3911 « S3961 « S3961 « S3961

If the business is one where personal consumption is likely to arise, for example :
1.a farmer or :
2.a grocer
and no figure has been declared, enquiries should be made about the nature and
value of any produce or goods consumed or used.

S3245

S3259

Calculation of income tax, National Insurance contributions and qualifying premium

S3260 Introduction « S3261 « S3961 « S3961 « S3961 « S3961

Having calculated the gross receipts and expenses from self-employment on a cash
flow basis, the DM should consider deductions for (1) :
1.income tax (see S3270 et seq) and :
2.Class 2 NI contributions (see S3297 et seq) and :
3.Class 4 NI contributions (see S3316 et seq) and
4. half of any premium for a personal pension scheme (see S3326).

1 JSA Regs 13, reg 61(3)(b)&(c)

S3261 « S3961

The DM should base deductions for S3260 1. - 3. on the chargeable income for the
assessment period.

S3262

S3265

S3266 Chargeable income « S3267 « S3961 « S3961 « S3961 « S3961

The chargeable income (1), that is, the income chargeable for tax, for the assessment
period is the amount of earnings :
1.in the case of a S/E child minder, one third of the gross receipts of that
employment (2) or :
2.in the case of a partnership, the person's share of
2.1 the gross receipts of the employment less
2.2 any allowable business expenses (3) or :
3.in any other case, the person's
3.1 gross receipts of the employment less
3.2 any allowable expenses (4).

1 JSA Regs 13, reg 62(5); 2 reg 62(5)(b); 3 reg 61(4); 4 reg 61(3)(a)

S3267 « S3961

The calculation at S3266 1. - 3. should not include any deductions for
1. notional income tax or
2. NI contributions or
3. premiums for a personal pension scheme.

S3268

S3269

S3270 Deduction for notional income tax « S3081 « S3117 « S3260 « S3820 « S3926 « S3961 « S3961 « S3961 « S3961 « S3961 « S3961 « S3961 « S3961

The DM should use the tax rates and allowances for the year (6 April to 5 April)
appropriate to the assessment period which is being used to calculate the earnings.

Example

S3271 Tax allowances « S3927 « S3934 « S3961 « S3961 « S3961 « S3961 « S3961

A tax allowance is an amount of income a person can earn or receive in a tax year
without paying tax. There are a number of tax allowances, but for the purposes of
calculating the earnings of a S/E earner, DMs should have regard to the personal
allowance only. The rates of income tax allowances are in Appendix 1 to this
Chapter.

S3272

S3273

S3274 Personal allowance « S3961 « S3961 « S3961

All earners whether married or single get a personal allowance. There are three
age-related levels of personal allowance (see Appendix 1 to this Chapter), but for
JSA purposes only the personal allowance for a person aged under 65 is deducted
even if another personal allowance appears to apply.

S3275 Tax rates « S3927 « S3934 « S3961 « S3961 « S3961 « S3961 « S3961

The tax rate is the percentage of taxable income payable to HMRC. Taxable income
is the amount of income remaining after deducting tax allowances. The rate is in
Appendix 1 to this Chapter.

S3276

S3287

S3288 Calculation of deduction « S3961 « S3961 « S3961

To determine the notional amount of income tax to be deducted from a S/E earners
chargeable income the DM should (1)
1. establish the chargeable income :
2.establish the personal allowance appropriate to the S/E earner. If it
2.1 is equal to or greater than the chargeable income there will be no
notional income tax to deduct or
2.2 is less than the chargeable income, go to 3. :
3.deduct the personal allowance (see Appendix 1 to this Chapter)
3.1 in full if the assessment period is a year or
3.2 on a pro rata basis if the assessment period is less than a year (2) :
4.multiply £34,370 (12/13 rates) of the remainder (or, if the assessment period
is less than a year, a pro rata amount) by the basic rate of tax (see Appendix
1 to this Chapter) :
5.round up where necessary.
1 JSA Regs 13, reg 62(1); 2 reg 62(2)

Example 1

Sam works P/T as a S/E gardener and claims JSA. The DM determines that the
assessment period is for a year and calculates the chargeable income for the
assessment period as £15,500.
The DM calculates the notional income tax as follows:
£
Chargeable income
-
15,500.00 less
Claimant's personal allowance
- 8,105.00
(12/13 rates)
7,395.00
£7,395.00 at 20%
=
1,479.00
Total notional income tax
=
1,479.00

Example 2

Angela is S/E. She is in receipt of JSA. The assessment period is 13 weeks.
£
Chargeable income
-
15,500.00 less
Claimant's personal allowance
-
2,020.70
(£8,105 (12/13 rates) x 91/365)
=
13,479.30
£13,479.30 at 20%
= 2695.80 Total notional income tax
=
2,695.80

S3289

S3296

S3297 Deduction for notional Class 2 NI contributions « S3081 « S3117 « S3260 « S3754 « S3820 « S3926 « S3937 « S3961 « S3961 « S3961 « S3961 « S3961 « S3961 « S3961 « S3961 « S3961 « S3961

A Class 2 contribution is a flat rate contribution although a higher rate is paid by
share fishermen. The Class 2 rates are in Appendix 2 to this Chapter.

S3298 Liability for a Class 2 contribution « S3961 « S3961 « S3961

The DM should make a deduction for a notional Class 2 contribution in all cases
unless the chargeable income is below the small earnings exception level (see
Appendix 2).

S3299 « S3961

The DM should only consider the chargeable income when deciding if a deduction
for Class 2 should be made. If appropriate, a deduction should still be made even if
the claimant holds a small earnings exception certificate.

S3300

S3303

S3304 Calculation of the Class 2 contribution « S3961 « S3961 « S3961

The deduction for the notional Class 2 contribution should be based on the rate of
Class 2 contributions and small earnings exception level current at the time of the
claim only (1). Take no account of any increases in the contribution rates or small
earnings exception level. To calculate the amount of the deduction the DM should :
1.establish the chargeable income (2) and :
2.determine if a deduction should not be made on the grounds of small
earnings and :
3.multiply the weekly rate (see Appendix 2 to this Chapter) by the number of
weeks in the assessment period.
1 JSA Regs 13, reg 62(3)(a); 2 reg 62(5)

S3305

S3315

S3316 Deduction for notional Class 4 NI contributions « S3260 « S3754 « S3926 « S3944 « S3961 « S3961 « S3961 « S3961 « S3961 « S3961 « S3961

A Class 4 contribution is a deduction of a fixed percentage of the annual profits of a
business when these profits fall within lower and upper levels (see Appendix 2 to
this Chapter). These payments are in addition to Class 2 contributions.

S3317 « S3961

S3318 Calculation of Class 4 deduction « S3944 « S3961 « S3961 « S3961 « S3961

The deduction for a notional Class 4 contribution should be based on the
percentage rate and lower and upper levels current at the date of claim only (1). Take
no account of any increases in the percentage rate and lower and upper levels. The
DM should :
1.establish the chargeable income and :
2.decide the number of weeks in the assessment period (if there are less than
52 weeks in the assessment period the DM should calculate 3. on a pro rata
basis) and :
3.deduct the LEL from chargeable income up to the UEL and :
4.multiply the remaining figure by the percentage rate to give the notional
contribution figure. No account should be taken of evidence of actual
payments made or due.
The Class 4 rates are in Appendix 2 to this Chapter.
1 JSA Regs 13, reg 62(3)(b)

Example 1

Assessment period is 52 weeks Chargeable income is £9,590.85 Class 4
-
Lower level is £7,605 (12/13 rates) -
Upper level is £42,475 Chargeable income 9,590.85 less
lower level
7,605 Profit
1,985.85 x 9% = 178.73 Notional Class 4 contributions for 52 weeks is £178.73. Example 2
273
Assessment period is 39 weeks or
days 365
Chargeable income for this period is £8,100.00 Class 4 - lower level is
7,605x273
= 5,688.00 365
Chargeable income
8,100.00 less
lower level
5,688.00
Profit
2,412.00 x 9% = 217.08
Notional Class 4 contributions for 39 weeks is £217.08.

S3319

S3324

S3325 Premiums for personal pension schemes « S3820 « S3926 « S3945 « S3961 « S3961 « S3961 « S3961 « S3961 « S3961

When calculating S/E earnings the DM should deduct from the chargeable income
half of any premium for a personal pension scheme for the relevant assessment
period (1).
1 JSA Regs 13, reg 61(1)(b)(ii)

Example

S3326 Personal pensions « S3081 « S3117 « S3260 « S3961 « S3961 « S3961 « S3961 « S3961 « S3961

Personal pension schemes (1) are
1. a scheme under certain pension and taxation legislation (2) or
2. an annuity contract or trust scheme under certain taxation legislation (3).
They provide benefits independently of any employer (although an employer may
still make contributions to such a scheme). Benefits are payable as annuities which
may provide lump sum and pension payments payable on death or retirement.
1 JS Act, s 35; 2 Pensions Schemes Act 93, s 1; Income and Corporation Taxes Act 1988,
Chapter 4 of Part 14 & Finance Act 2004, Sch 36, para 1(1)(g);
3 Income and Corporation Taxes Act 1988,s 620 or 621;
Finance Act 2004, Sch 36, para 1(1)(f) & Income and Corporation Taxes Act 1988, s 622(3)

S3327 « S3945 « S3961 « S3961

Taking an income from the pension fund allows the purchase of an annuity to be
delayed up to the age of 75. The amount of income to be paid from the fund is
recalculated every three years. At the age of 75 an annuity must be purchased.

S3328

S3349

Particular forms of self-employment

S3350 Child minders « S3100 « S3961 « S3961 « S3961 « S3961

A child minder is a person who engages in a contract for services to care for another
person's child in return for payment. Most child minders
1. work from their own homes and
2. are registered with the LA and
3. are restricted to the number of children they care for at any one time.

S3351 « S3961

To calculate a child minder's normal weekly earnings the DM should
1. determine the assessment period in the normal way and :
2.calculate the gross receipts for that period and :
3.calculate the chargeable income as one third of the gross receipts during the
assessment period (1) but make no deductions for business expenses and :
4.calculate a deduction for
4.1 income tax and
4.2 NI contributions and
4.3 half of any premium for a personal pension scheme and :
5.deduct any disregard.
1 JSA Regs 13, reg 62(5)(b)

Example

Fleur is a S/E child minder who is in receipt of JSA. Her assessment period is 13
weeks. The gross receipts for that period are £1,280.
The DM determines
1. that no expenses should be deducted from the gross receipts and
2. that the chargeable income is £426.67 (1/3 of £1,280) and
3. the income tax, NI contributions and premiums that are to be deducted from
the chargeable income.

S3352

S3360

S3361 Crofts or small holdings « S3100 « S3961 « S3961 « S3961 « S3961

Earnings from a croft or small holding should be decided on the same basis as a
small business. The person should produce an annual statement giving details of :
1.income from sales, subsidies, etc and :
2.expenditure, including for example, seed, fertiliser, feed and labour.
This statement should be used to calculate the person's net profit.

S3362

S3369

S3370 Farmers « S3100 « S3961 « S3961 « S3961 « S3961

A farmer in need of financial assistance may first seek advice from a surveyor, land
agent, valuer or some other similar professional to ensure he is taking advantage of
any schemes or subsidies, such as those administered by the Department for
Environment, Food and Rural Affairs Rural Payments Agency, that may be
available.

S3371 « S3961

Department for Environment Food and Rural Affairs are unable to supply opinions
about the amount of work involved in particular farms or their likely annual returns.
However, DMs may consult the Department for Environment, Food and Rural Affairs
website (www.defra.gov.uk - Economics and Statistics page) for information about
total farm income for the type of enterprise in question.

S3372

S3379

Hotels, guest houses, bed and breakfast establishments

S3380 « S3100 « S3961 « S3961 « S3961 « S3961

The DM should apply the normal remunerative work rules when considering a claim
involving a person running a hotel, guest house, lodging house or bed and breakfast
establishment.

S3381 « S3961

The DM should note that payments received for providing BL accommodation (see S3014) are not earnings (1).
1 JSA Regs 13, reg 60(2)(a)

S3382 Bars and restaurants in hotels, guest houses « S3961 « S3961 « S3961

Income from bars and restaurants where services are provided that are not included
in the BL charge should be treated as earnings from self-employment. The DM
should determine the assessment period and calculate the gross receipts and
allowable expenses in the normal way.

S3383

S3384

S3385 Local exchange trading systems « S3100 « S3961 « S3961 « S3961 « S3961

LETS are associations that allow participants to exchange goods and services with
others in the community.

S3386 « S3961

LETS members list their offers of, and requests for, goods and services in a
directory and then trade them using a system of credits. These can be given many
different names such as
· bobbins
· brads
· newberries
· beacons
· acorns.

S3387 Participating in a local exchange trading system scheme « S3961 « S3961 « S3961

Participating in a LETS scheme should be regarded as work. The credits obtained
are payment for the goods or services provided.

S3388 « S3961

DMs should consider whether a LETS participant is engaged in remunerative work
(see ADM Chapter R2). The DM should also consider whether the work-related
requirements continue to be satisfied (see ADM Chapter R4).

S3389 « S3961

S3390 Local exchange trading credits « S3961 « S3961 « S3961

Credits can be exchanged for goods and services in participating shops and
businesses in much the same way as ordinary currency. Credits are considered
taxable income by HMRC.

S3391 « S3961

Credits can be treated as :
1.capital or :
2.earnings
depending on the circumstances of each case. Credits are not payments in kind.

S3392 « S3961

If a person :
1.undertakes occasional, personal transactions for credits, for example selling
an item of furniture, the credits received should be treated as capital and :
2.is gainfully employed as a S/E earner and receives credits as payment for
services provided, those credits should be included in the gross receipts of
the business and are subject to the appropriate disregard.

S3393 « S3961

The value of credits is equivalent to the number of credits awarded for the particular
goods or services at the relevant exchange rate.

S3394 « S3961

The DM should firstly find out whether the organisers of the scheme have equated
the credits to a sterling equivalent. This may have been done for HMRC or VAT
purposes. If so, that equivalent can be used as the exchange rate.

S3395 « S3961

If a sterling equivalent is not available the DM should consider the question based
on the circumstances of each case, including :
1.how the transaction price is arrived at :
2.whether the amount of credits earned varies with the type of work performed :
3.what the exchange value of a credit is (what does it buy?) :
4.whether the claimant works in the cash economy as well as in the LETS
economy :
5.what the average local rate of pay is for the particular work performed.

S3396

S3399

S3400 Partnerships « S3005 « S3100 « S3961 « S3961 « S3961 « S3961 « S3961

Partners are similar to sole traders, except that ownership and control of the
business is shared between two or more people.

S3401 « S3961

People can enter into a partnership under an agreement that may be written, for
example a deed of partnership, verbal or implied. A deed of partnership includes
details of how any profit or loss is shared between the partners. In the absence of
an agreement any profit should be shared equally among the partners (1).

1 Partnership Act 1890, s 24

S3402 « S3961

The conditions under which a partnership is formed, operates or ends, are governed
by the terms of a partnership deed or agreement together with the provisions of the
Partnership Act 1890. For most purposes, the terms of the deed or agreement
prevail over the provisions of the Act. Where a deed or agreement exists, it
becomes a legal document and its interpretation is a matter of law.

S3403 « S3961

The legal status of a partnership should not be confused with that of a company, in
that a partnership has no legal personality in law. At any one time the assets and
liabilities of the partnership are (subject to the partnership deed or agreement and
the Partnership Act 1890), the joint and several assets and liabilities of the partners.
Note:
Scots Law on the legal status of a partnership differs. In Scotland a
partnership is a separate legal entity (1), distinct from the partners who carry out its
business. DMs should refer any cases to DMA Leeds if further guidance is needed.

1 Partnership Act 1890, s 4(2)

S3404 « S3961

A partnership does not necessarily end when it ceases trading. It must be formally
dissolved. The partnership deed or Partnership Act 1890 may continue to impose
rights and obligations on the parties following dissolution, providing further time for
the winding up of its affairs. Further delays may result from legal challenges
concerning the partnership's affairs.

S3405 « S3961

Where a partnership ends and the claimant has finished employment in the
business, a reasonable period of time is allowed for the claimant to dispose of any
assets before they are regarded as capital for benefit purposes. In considering that
period of time, regard should be had to any legal obligations and restrictions
imposed by the partnership deed or the Partnership Act 1890.

S3406 « S3961

The sale of assets may sometimes provide an income receipt as opposed to a
capital receipt (e.g. the sale of "work in hand" or "stock in trade" might well be
considered as resulting in an income receipt and not represent capital). Any such
decisions should be based on the principles of commercial accountancy. The
decision would need to reflect the approach taken by an accountant or HMRC to
such questions.

S3407 Calculation of a business partner's normal weekly earnings « S3961 « S3961 « S3961

Before calculating a partner's share of the net profit of the business, the DM should
ensure that the gross receipts include the following for all partners
1. personal drawings
2. expenses covering business and private use.

S3408 « S3961

To calculate the normal weekly earnings of a business partner (1), the DM should
determine the assessment period and :
1.total the gross receipts of the whole business and :
2.deduct any allowable expenses incurred by the whole business and :
3.calculate the partner's share of the resulting "net profit"2. The partner's share
will be
3.1 the share set out in the deed of partnership, if there is one or
3.2 the shares agreed in an express or implied agreement between the
partners or
3.3 an equal share (3) if neither 3.1 nor 3.2 apply, for example, if there are
four partners, each partner's share is 25% and :
4.deduct from 3. an amount for
4.1 income tax and
4.2
NI contributions calculated on the amount at 3. and :
5.deduct half of any premium for a personal pension scheme and :
6.deduct any disregard.
1 JSA Regs 13, reg 61 ;2 reg 61(4);
3 Partnership Act 1890, s 24

Example 1

Daniel is one of two partners in a building firm. He is in receipt of JSA. There is a
deed of partnership that states that Daniel will receive 40% of the profits and the
other partner 60%. The gross receipts for the business during the assessment
period are £10,600. The allowable expenses are £5,400. The DM decides that
Daniel's share of the profits is £2,080, calculated as follows
£
Gross receipts
10,600
Less allowable expenses
5,400
=
5,200
Divided by Daniel's
= 2,080 share - 40% The DM then deducts from £2,080 amounts for notional income tax and NI
contributions, half of a premium for a personal pension scheme and the appropriate
disregard.

Example 2

Agnes and her brother are partners in a small pottery business. Agnes is in receipt
of JSA. There is no deed of partnership or other agreement that profits should be
shared unevenly. The gross receipts of the business during the assessment period
are £8,750. Allowable expenses are £4,562. The DM determines that Agnes share
of the net profit is £2,094, calculated as follows
£
Gross receipts
8,750
Less allowable expenses
4,562
=
4,188
Divided by Agnes's
= 2,094 share - 50% The DM then deducts from £2,094 amounts for notional income tax, NI contributions
and the appropriate disregard. Agnes was not paying premiums for a personal
pension scheme.

[S3409]

S3410 Salaried partners « S3961 « S3961 « S3961

A salaried partner may be an employed or S/E earner. A salaried partner may be a
person who :
1.receives a salary as remuneration and maybe a profit-related bonus. This
type of salaried partner is an employed earner (1) or :
2.may be paid a fixed salary not based on profit. But in addition is included in
the partnership deed and is entitled to a share of the profits. This type of
salaried partner is a S/E earner.

1 Ross v. Parkins 1871, LR 20 Eq 331

S3411 « S3961

The DM should :
1.consider the facts of each case and :
2.examine the relationship between the person and the other parties
to decide if the salaried partner is a S/E earner.

S3412 « S3961

If a S/E salaried partner receives a salary from the business in addition to a share of
the business profit, the salary should not be deducted before arriving at the total net
profit to be shared between partners. The DM should :
1.calculate the chargeable income and :
2.deduct tax, NI contributions and any premiums for a personal pension scheme
from the partner's share of the chargeable income.

S3413

S3424

S3425 Renting out property as a business « S3100 « S3961 « S3961 « S3961 « S3961

If a person is letting properties that are not the home, the DM needs to consider if
this is by way of a business (1).

1 R(FC) 2/92

S3426 « S3961

A person who
1. has a single property that is not the home and
2. lets the property to tenants and
3. collects rents and does any repairs
is not conducting a business. The property is primarily an investment.

Example

S3427 « S3961

A person who joins with others to buy properties so that they can be let as flats or
offices could be said to be conducting a business. The
1. number of properties involved and
2. long term intentions of the person
are factors that need to be considered.

S3428 « S3961

If the DM determines that a person is conducting a business from renting out
properties, the income, that is the rent, should not be treated as capital. The income
has not been obtained from capital, but from the person's business. The property
was used as an asset. The rent is a gross receipt of the business.

Example

Michael has a partnership with another person in a business. The business has
been set up to buy land and property for sale and let to tenants. Michael and his
partner own a garage with two flats above it and two terraced houses on the same
street.
The flats and houses are all let to tenants and Michael collects the rent and does the
repairs and maintenance. All business activity takes 15 hours per week. Michael
claims JSA.
The DM calculates Michael's earnings, the rental income is regarded as part of the
gross receipts.

S3429

S3439

S3440 Seasonally self-employed « S3100 « S3961 « S3961 « S3961 « S3961

If a S/E earner is seasonally S/E the DM should consider if the S/E earner is in
remunerative work (see ADM Chapter R2). If not, the DM should :
1.consider the guidance at S3020 - S3023 and :
2.determine if the S/E earner remains gainfully employed as a S/E earner.

Example

Shaun is S/E as an amusement arcade owner. He made a claim for JSA in October
because the summer season had ended. Shaun stated that
1. he and his creditors regarded the business as a going concern. This is
because he anticipated that his business would start up again in the following
April when the holiday trade would re-commence
2. he was available for and actively seeking alternative employment
3. in April, when the holiday trade would re-commence he intends to start work
again in the amusement arcade
4. he still undertakes some activities in the business. He is currently
redecorating the arcade. He plans to renovate and maintain the electrics and
make minor repairs before April. He also plans to update the alarm system.
He is also looking to update some of the machines in the arcade
5. his accountant only submits figures from April to September each year. It is
normal for him to only work between April and September each year.
The DM considers the guidance at S3020 - S3023 and decides, in this case, that
Shaun remains gainfully employed as a S/E earner. As there had been no changes
that had affected the normal pattern of trading the DM determines that the
assessment period for the earnings should be one year.

S3441

S3449

S3450 Sub-contractors « S3100 « S3961 « S3961 « S3961 « S3961

A sub-contractor is a S/E person who enters into a contract with another contractor
to do a particular job, and is most commonly found in the construction industry.

Example

S3451 « S3961

If a S/E sub-contractor claims JSA the DM should consider :
1.the guidance at S3020 - S3023 and :
2.if the S/E sub-contractor remains gainfully employed as a S/E earner.

Example

S3452 Actors and entertainers « S3100 « S3961 « S3961 « S3961 « S3961

DMs must consider claims from actors and other entertainers in the same way as
any other claimants. Each case must be decided on its own merits. The DM should
decide whether a claimant's earnings are from employment as a S/E earner or
employment as an employed earner.

S3453 « S3961

In general, because of the nature of an actor's or entertainer's employment, the DM
may find that their earnings are from employment as a S/E earner. However, it is
possible for an entertainer whose general pattern of employment is that of a S/E
earner, to have periods of employment as an employed earner at the same time as
his overall self-employment.

S3454 « S3961

The fact that an actor or entertainer has periods of employment during which class 1
NI contributions are payable is not conclusive when deciding whether that
employment is as an employed earner. It is for the DM deciding the claim to decide
whether earnings are from employment as an employed earner or from self-
employment. Where an entertainer whose general pattern of employment is that of a
S/E earner contends that certain engagements were as an employed earner and
that class 1 contributions were paid it will be for the DM to decide whether the
claimant was employed under a contract of service or otherwise.

Example 1

Laura is an actress. She makes a claim for JSA because she has left her partner
who was in F/T employment. Her acting engagements are sporadic, and she is not
currently working. She continues to look for work and remains on her agent's books.
She has been booked for some future engagements, but nothing substantial, and
has not worked for several weeks. She says that she could find more substantial
acting work at any time, that being the nature of work. In the year prior to the current
claim, the claimant has had a number of engagements in advertising and the theatre
as well as three separate, short term, engagement with the BBC to appear in three
separate dramatic productions. Her most substantial earnings were derived from
these engagements with the BBC. She states that she was actually employed by the
BBC under a contract of service and says that the fact that she paid class 1 NI
contributions supports this contention. As such she argues that her earnings from
the BBC should not be included when working out her earnings from self-
employment. The DM: :
1.decides that the claimant is gainfully employed as a S/E earner (see S3020 -
S3023) :
2.considers the terms under which the claimant was engaged by the BBC and
decides that as she was engaged to perform a specific role on particular
occasions for a fixed fee, she was employed under a contract for services and
as such the earnings fell to be taken into account with her other earnings from
self-employment :
3.decides that the sporadic nature of the employment is the normal pattern of
the business and calculates her average weekly earnings over the preceding
year.

Example 2

Craig is a dancer. He is unable to work due to a broken ankle. He states that he is
usually S/E, carrying out one-off engagements in the theatre. However, unusually,
he was engaged by a dance company for a fixed 26 weeks period during the
previous year. He contends that during this period he was engaged as an employed
earner, employed under a contract of service, and paid class 1 NI contributions.
The DM decides that Craig's employment with the dance company was under a
contract of service for the 26 weeks when he was engaged by the dance company,
and as such the earnings from that employment are not included in the calculation
of the claimant's earnings as a S/E earner.

S3455

S3469

S3470 Disregard of earnings from self-employment « S3075 « S3117 « S3961 « S3961 « S3961 « S3961 « S3961

The following disregards should be applied to the net profit of a S/E earner.

S3471 Earnings from self-employment that has ceased « S3961 « S3961 « S3961

If a person has been engaged in
1. remunerative work as a S/E earner or
2. P/T self-employment
and that employment has ceased (that is, ceased outright), any earnings derived
from that employment are fully disregarded unless the earnings are royalties,
copyright payments or Public Lending Rights payments (see S3073 - S3081)1.
1 JSA Regs 13, Sch , para 4

Example

S3472 Earnings payable abroad « S3961 « S3961 « S3961

Money that is paid to the business in a country outside the UK should be treated as
a gross receipt if it is received by the business. For example, when it is paid
1. to any branch or official representative of the business or
2. into any business bank account.

S3473 « S3961

Any gross receipts that are received by the business in a country outside the UK
that prohibits the transfer of funds to the UK should be disregarded for as long as
that restriction applies (1).
1 JSA Regs 13, Sch , para 9

Example

Derek is S/E on a P/T basis in an import/export business. During the assessment
period his business received £1,000 in a country that was, and currently is,
prohibiting the transfer of funds to the UK. The DM calculates the earnings as follows
Gross receipts (including the £1,000 received
= £5,000
abroad)
Deductions for allowable expenses, notional
= £2,500
income tax and NI contributions and half of a
premium for a personal pension
Net profit
=
£2,500
Divided by the number of weeks in the
= £48.07
assessment period (52)
Normal earnings disregard
=
£5.00 less
Special disregard for earnings abroad (£1,000
= £19.23
divided by 52)
Earnings taken into account
= £23.84
(£48.07 - £5.00 - £19.23).
During the year that the earnings are taken into account, the country lifts it's
prohibition against the transfer of funds to the UK. The DM supersedes the earnings
disregard for the year, the amount of the earnings to be taken into account
increases to £43.07 (£48.07 - £5.00).

[S3474]

S3475 Earnings paid in a foreign currency « S3961 « S3961 « S3961

Where earnings are paid in a foreign currency, disregard any amount charged for
changing them into sterling, for example banking charges and commission
payments.
1 JSA Regs 13, Sch , para 10

S3476 Earnings disregard « S3961 « S3961 « S3961

The relevant earnings disregard (see ADM Chapter S2) should be applied.

S3477

S3500

Share fishermen - introduction and additional conditions for payment

S3501 Who is a share fisherman « S3502 « S3537 « S3961 « S3961 « S3961 « S3961 « S3961

A share fisherman is (1) :
1.a person who
1.1 usually works in the fishing industry and
1.2 is S/E and
1.3 is the master or a crew member of a fishing boat crewed by more than
one person and
1.4 is paid for that work wholly or partly by a share of the profits or gross
earnings of the fishing boat or
2. a person who
2.1 was a person who worked as in 1., but has permanently stopped such
work because of age or ill health and
2.2 usually works
2.2.a
ashore in GB (see ADM Chapter C3) and
2.2.b as S/E and
2.2.c
making or mending any gear belonging to a fishing boat or
performing other services that help, or are connected with, a
fishing boat and
2.3 is paid for that work wholly or partly by a share of the profits or gross
earnings of the fishing boat and
2.4 has not ceased to usually work as described in 2.2.

1 JSA Regs 13, reg 67

S3502 « S3961

The master and all the members of the crew of a fishing boat are within the
definition at S3501 1., This includes those who do a specialist job, such as an
engineman, cook or firefighter, as long as they are paid at least partly by a share in
the earnings of the fishing boat (1).
1 R(U) 10/51

S3503 Meaning of fishing boat « S3961 « S3961 « S3961

"Fishing boat" means (1) a boat that is used :
1.for or in connection with fishing for sea fish and :
2.in order to make a profit.
Sea fish includes shellfish, salmon and migratory trout.
1 JSA Regs 13, reg 67; Merchant Shipping Act 1995, s 313(1)

S3504 Meaning of usually works « S3961 « S3961 « S3961

A DM can consider that a person "usually works...." if the person has :
1.done that job for some time or :
2.only recently started it but intends to follow it in the future.

S3505 Meaning of profits or gross earnings of the fishing boat « S3961 « S3961 « S3961

The profits or gross earnings of the fishing boat are the money received for the
catch. People are paid by a share of the profits or gross earnings of the fishing boat
if :
1.the fishermen
1.1
sell the catch themselves (either retail or wholesale) and
1.2
share at least some of the profits between them or
2. the fishermen catch the fish for someone who then pays them a piece-rate
1
wage .
1 CU 495/49(KL)

S3506

S3508

S3509 Additional condition for payment of Jobseeker's Allowance to share fishermen « S3961 « S3961 « S3961

Share fishermen have to prove that they have not neglected to avail themselves of a
reasonable opportunity of employment as share fishermen for any period in a
benefit week when they have not worked as share fishermen. If they cannot prove
this, even if it is just for part of one day in a week, no JSA is payable for the whole of
that benefit week (1)
1 JSA Regs 13, reg 71(1)

S3510 Meaning of benefit week « S3538 « S3961 « S3961 « S3961 « S3961

"Benefit week" means (1) a period of seven days beginning with the :
1.date of claim or :
2.day after the last day of the previous benefit week.
1 JSA Regs 13, reg 71(4)

Example

S3511 « S3538 « S3961 « S3961

- S3512

S3513 Meaning of worked as a share fishermen « S3514 « S3518 « S3518 « S3518 « S3536 « S3539 « S3551 « S3552 « S3602 « S3961 « S3961 « S3961 « S3961 « S3961 « S3961 « S3961 « S3961 « S3961 « S3961 « S3961 « S3961

This guidance applies when a DM is identifying the period for which a share
fisherman has to prove that he has not neglected to avail himself of employment as
a share fisherman. Share fishermen do not always have to catch fish to work as
share fishermen. They will have worked as share fishermen if they have done any of
the following work (1) and they satisfy the conditions in S3514 :
1.any repairs or maintenance done to the fishing boat or its nets or gear
(including running repairs) or :
2.any work in connection with
2.1 laying up the boat, nets and gear at the end of a fishing season or
2.2
preparing the boat, nets and gear for a season's fishing.
But share fishermen will not have worked as share fishermen if they have done work
which is not to the fishing boat or its nets or gear (2).

1 JSA Regs 13, reg 71(2)(b); 2 R(U) 33/52

S3514 « S3513 « S3518 « S3518 « S3518 « S3536 « S3551 « S3552 « S3961 « S3961 « S3961 « S3961 « S3961 « S3961 « S3961 « S3961

The work in S3513 1. and 2. is only work as a share fisherman if (1) :
1.at the time it is done the work is, or is likely in the near future to become,
necessary for the safety or reasonable efficiency of the fishing boat and :
2.it is the duty of the share fisherman (by agreement, custom, practice or
otherwise) to perform it without pay, other than a share in the profits or gross
earnings of the fishing boat.
If the work cannot be postponed for as long as two months, then it is likely in the
near future to become necessary for the safety or reasonable efficiency of the
fishing boat.

1 JSA Regs 13, reg 71(2)(a)

S3515 « S3961

In most cases a share fisherman on board a boat that leaves harbour equipped to
fish will have performed work as a share fisherman for that period, even if fishing is
stopped or prevented by bad weather or other causes. But if the share fisherman
has only done what was reasonably necessary to find out that weather conditions
were not suitable for fishing, the fisherman has not performed work as a share
fisherman, even if the boat left harbour equipped to fish (1).

1 R(U) 1/81

S3516 « S3961

Examples of work as a share fisherman are
1. scraping and painting a boat, where that work is likely to become necessary
for its reasonable efficiency in the near future (1) :
2.fishing for bait (even if none is caught) where this has to be done and is
normally done before fishing for a catch to sell (2) :
3.setting off for the fishing grounds, but returning to dock before reaching them
because of an accident to the fishing boat or because the harbour entrance
was blocked (3) :
4.returning to home port earlier than intended because they are unable to
continue fishing alone when their neighbouring boat with whom they were
fishing breaks down (4).

1 CSU 88/49 (KL); 2 R(U) 22/51; 3 R(U) 9/52; 4 R(U) 9/53

S3517 « S3539 « S3602 « S3961 « S3961 « S3961

Examples of work which is not work as a share fisherman are :
1.voluntarily helping a harbour master, according to custom, to place a boom
across a harbour to protect vessels in the harbour (1) :
2.sailing to the entrance to a loch just to check if the weather was suitable for
fishing, where that was the only practicable way of checking this (2).
1 R(U) 33/52; 2 R(U)1/81

S3518 Neglected a reasonable opportunity of employment as a share fisherman « S3961 « S3961

Share fishermen have to prove that they have not neglected to avail themselves of a
reasonable opportunity of employment as share fishermen for any period they have
not worked as share fishermen either catching fish or as defined in S3513 - S3514 (1).
Any employment as a share fisherman is covered, including :
1.the claimant's usual work as a share fisherman on the claimant's usual boat
(including work as defined in S3513 - S3514) :
2.employment as a share fisherman on a boat other than the claimant's usual
boat (including work as defined in S3513 - S3514).

1 JSA Regs 13, reg 71(1) & (2)

S3519 « S3961

It is
for claimants to prove that they did not neglect an opportunity of such
employment (1). But DMs should accept that claimants satisfy this condition if there is
no evidence to suggest otherwise. Information about work which claimants might
have had may come, for example, from an employer or owner of a boat, or from the
local fishery officer. If some boats go fishing from a port while others do not, it is
difficult for those who stay behind to prove that they have not neglected a
reasonable opportunity to fish (2).
1 R(U) 28/53; 2 R(U) 1/51

Example 1

Bill, a share fisherman, is part owner of a crabbing boat manned by himself and a
partner. Bill does no work on two days because, in his opinion, fishing is not
profitable. Some boats do go fishing. Bill has neglected an opportunity to fish, and
no JSA is payable for the benefit week in which those two days fall. If the days fall in
two separate benefit weeks, then JSA would not be payable for those two weeks.

Example 2

S3520 « S3961

The guidance at ADM Chapter S5 on the meaning of neglect to avail and
reasonable opportunity should be applied when deciding whether a share fisherman
has neglected a reasonable opportunity of employment as a share fisherman (1).
1 R(U) 9/72

Example

Fred, a share fisherman who is a trawler skipper, misses an eight week (benefit
weeks) long fishing trip because he arranges with the owners of the boat to take his
sick wife on a two week holiday. He would normally have taken his holiday at the
end of the eight week trip. Fred has neglected to avail himself of a reasonable
opportunity of employment as a share fisherman (1). JSA is not payable for the eight
benefit weeks of the fishing trip.

1 R(U) 9/72

S3521 « S3961

An opportunity should not be regarded as reasonable if taking it would reduce the
share fisherman's chances of going back to fishing with their usual boat.

S3522

S3535

S3536 Further condition for payment if fishing boat is crew owned « S3541 « S3541 « S3541 « S3541 « S3541 « S3544 « S3544 « S3961 « S3961 « S3961 « S3961 « S3961 « S3961 « S3961 « S3961 « S3961 « S3961

If share fishermen are masters or members of the crew of fishing boats that are
crew owned, they must prove that, for any period in a benefit week when they have
not worked as share fishermen, the fishing boat did not put to sea to go fishing
because :
1.the state of the weather meant the boat could not reasonably have put to sea
to go fishing (see S3542 - S3546) or :
2.it was being repaired or having maintenance work done to it, other than the
repairs or maintenance referred to in S3513 - S3514 (see S3551 - S3552) or :
3.there was an absence of fish in any waters in which the fishing boat could
reasonably be expected to operate (see S3560 - S3563) or :
4.of any other good cause which forced them not to fish (see S3570 - S3584)1.

1 JSA Regs 13, reg 71(3)

S3537 « S3961

If the claimant cannot show that one of the reasons at 536 is met for any period in a
benefit week, even if it is just for part of one day in a week, JSA is not payable for
the whole of that benefit week. This applies to the share fishermen described in S35012. as well as those who actually go fishing.

S3538 Meaning of benefit week « S3961 « S3961 « S3961

Guidance on the meaning of benefit week is at S3510 - S3511.

S3539 Meaning of worked as a share fishermen « S3961 « S3961 « S3961

Guidance on the meaning of worked as share fishermen is at S3513 - S3517.

S3540 Meaning of crew owned « S3961 « S3961 « S3961

If the master or any member of the crew is the owner or part owner of the boat, the
boat is crew owned.

S3541 Share fishermen who are no longer masters or members of the crew « S3961 « S3961 « S3961

Share fishermen do not have to satisfy the further condition at S3536 if, although
linked to some extent to a particular boat, they can be treated as no longer being a
master or member of the crew. They cannot be so treated just because the boat is
idle (1).
1 R(U) 29/58; R(U) 6/63; R(U) 19/64

Example 1

A fishing boat changes from catching herring to seine net fishing for two weeks and
needs a smaller crew. Tim, a share fisherman who works on the boat, but has no
share in the ownership of the boat, is not needed and does not work for the two
weeks. Tim ceases to be a member of the crew whilst he is not needed and does
not have to satisfy the additional condition in S3536.

Example 2

A fishing boat changes from catching herring to seine net fishing for two weeks and
needs a smaller crew. Jimmy, a share fisherman who works on the boat, and has a
share in the ownership of the boat, is not needed and does not work for the two
weeks. Jimmy does not cease to be a member of the crew whilst he is not needed
and does have to satisfy the additional condition in S3536.

Example 3

The owners of a fishing boat are unable to get a full complement to crew their boat.
They decide to go out of business and lay up the vessel for sale. Pat, the master of
the boat, who is also a part owner, claims JSA. Pat continues to be a part-owner of
the vessel until it is sold, but meanwhile takes employment elsewhere. Pat and the
members of the crew ceased to be master and members of the crew at the end of
the last fishing trip - all intention of further fishing with the boat had definitely
ceased. Pat does not have to satisfy the additional condition in S3536.

Example 4

S3542 Weather « S3536 « S3961 « S3961 « S3961 « S3961

The question whether, because of the state of the weather, the boat could not
reasonably have put to sea to go fishing is one of fact which has to be considered
by the DM. Each case should be determined on its own particular facts, including
the opinion of the local fishery officer where the DM considers it necessary to obtain
it.

S3543 « S3961

Usually it is not possible to accept that the weather prevented a particular fishing
boat from putting to sea if on the same day other boats from the same port were
able to fish. But it may be possible to accept this if, for example, the evidence shows
that the weather was not too bad to stop larger boats from fishing, but was too rough
for the claimant's boat (1).

1 R(U) 15/57; R(U) 2/62

S3544 « S3961

The use of the word "reasonably" indicates that the test should be applied in a
reasonable, and therefore practical, manner. So the claimant does not have to show
that the weather was such that the boat could not put to sea throughout the whole
day. The claimant only has to show that the boat could not put to sea at all normal
and reasonable times for putting to sea on the day and at the port or harbour in
question (1).
1 R(U) 30/58; R(U) 2/62

Example 1

Scott is a share fisherman. His boat cannot put to sea at the normal early morning
time because of bad weather. By 11am the weather has improved sufficiently to
allow the boat to go out. But the boat does not go to sea, because it would have had
to return on the tide at about 2.30 pm. No other fishing boats leave harbour that day.
Scott satisfies the condition at S3536 1..

Example 2

S3545 « S3961

A fishing boat is not prevented from putting to sea by the weather if it could have
gone :
1.to the fishing grounds by a different and more sheltered route, even if it is
longer (1) or :
2.to different fishing grounds.

1 R(U) 15/57

S3546 « S3536 « S3961 « S3961

A fishing boat cannot go to different fishing grounds if it is not equipped to catch the
fish which live there. The boat is not expected to spend money to change gear to be
able to catch a different type of fish because there is bad weather on the fishing
grounds which it is equipped to fish in.

S3547

S3550

S3551 Repairs « S3536 « S3961 « S3961 « S3961 « S3961

A share fisherman who says that the boat did not go fishing because it was being
repaired or having maintenance work done to it must show that the repairs or
maintenance were not those described in S3513 - S3514. If the claimant cannot do
this, this condition is not satisfied, and JSA is not payable.

S3552 « S3536 « S3961 « S3961

Repair and maintenance work other than as described in S3513 - S3514 includes
the period during which the boat is sailing or being transported to and from the
repair yard. This condition is satisfied for those days.

S3553

S3559

S3560 Absence of fish « S3536 « S3961 « S3961 « S3961 « S3961

Absence of fish does not mean that :
1.there are no fish at all or :
2.there is a shortage of fish
in the waters concerned. There will be an absence of fish, and the condition will be
satisfied if there is a negligible quantity, that is only very few fish in the waters
concerned (1).

1 R(U) 20/58

S3561 « S3961

The claimant will not satisfy the condition just because :
1.the catches are so small that it is not financially worthwhile to continue daily
fishing (1) or :
2.that a particular type of fish are absent if
2.1 other fish are plentiful and
2.2 the boat can be easily adapted for the different type of fishing required.

1 R(U) 20/58

S3562 « S3573 « S3961 « S3961

Sometimes, from the same port, some share fishermen go fishing and some do not.
In such cases, it is difficult for those who do not go to prove that there was an
absence of fish from the waters (1).
1 R(U) 1/51; R(U) 11/58

Example 1

Robin, the part-owner of a two man crabbing boat, does no work as a share
fisherman for two days because he thinks that fishing is unprofitable due to a lack of
fish. But there is nothing different about these two days from the days before and
after them, when he does go fishing. Also, some other boats go fishing on the two
days. Robin has not proved that there is an absence of fish from the waters. He has
not satisfied the further condition, and JSA is not payable for the benefit week(s) in
which the two days fall.

Example 2

S3563 Evidence « S3536 « S3573 « S3961 « S3961 « S3961 « S3961 « S3961

Whether there is an absence of fish is a question of fact which the DM must
determine on the evidence available. This will usually include a statement by the
claimant. Where :
1.the Jobcentre Plus Office lacks information or technical knowledge on the
issues involved or :
2.it is desirable to obtain some confirmation of the claimant's statement
the DM will usually need the written opinion of the local fishery officer. Sometimes
expert opinion from another source will be available (1).
1 R(U) 22/59

Example

Nick, a ripper fisherman, does not fish when there is cloudy water because he does
not catch many fish. He says that when the water is cloudy the fish mainly caught by
that method of fishing move into deeper waters. Expert opinion from a marine
laboratory does not agree with this theory. Nick has not proved that there is an
absence of fish from the waters concerned.

S3564

S3569

S3570 Other good cause « S3536 « S3961 « S3961 « S3961 « S3961

Good cause will normally only be shown where share fishermen have been forced
not to fish by something (1) :
1.imposed on them and :
2.outside their control and :
3.about which they had no choice.
1 CSU 94/50(KL); R(U) 5/56; R(U) 16/57

Example 1

The crew of a fishing boat are unable to fish for three days because their licence is
suspended by the Sea Fish Industry Authority because they deliberately broke its
conditions. The suspension of the licence is not good cause.

Example 2

Len, who claims JSA, is master and part-owner of a fishing boat. The boat is put up
for sale, and does not go to sea for one week before the sale, so that potential
buyers can examine it. This is not good cause.

Example 3

Dominic, a share fisherman, does not go fishing because :
1.he runs out of bait and :
2.a different method of fishing without bait does not offer any reasonable
chance of success because the water is cloudy.
Neither of these reasons is good cause.

S3571 « S3961

The claimant cannot show good cause because as an individual the claimant could
not fish because :
1.the fishing boat did not put to sea (1) or
2. the claimant had to follow the master's decision (2).
The question of good cause relates to the boat and crew as a whole. To satisfy the
condition the claimant must show that the boat did not go fishing due to good cause
that is, some compelling circumstances over which the crew as a whole had no
control (3).

1 R(U) 7/55; 2 R(U) 15/57; 3 R(U) 7/55; R(U) 15/57

S3572 « S3961

It may be that there are circumstances which make it entirely reasonable for the
crew as a whole to decide not to go fishing. But this will not automatically mean that
this is good cause.

S3573 « S3961

It may be reasonable for a boat not to go fishing when it is likely that the trip will be
unprofitable. But this, of itself, is not good cause (1).
1 R(U) 10/51; R(U) 17/55; R(U) 19/64

Example 1

Jerry's boat, with others, stays in harbour because the current price for fish is not
high enough. This is not good cause.

Example 2

A fishermen's association make an agreement that, until the market for fish
improves, only part of the fishing fleet will go fishing at any one time, in accordance
with a fixed rota. Kevin's boat stays in harbour in accordance with the rota. This is
not good cause.

Example 3

The skippers of drift net fishing boats at a particular port decide not to go fishing
because there is no economic market for the fish caught. This is not good cause.
The claimants in Example 2 in S3562 and the Example in S3563 do not satisfy this
condition either.

S3574

S3575

S3576 No market for fish « S3961 « S3961 « S3961

Good cause will be shown if there is no possible market for the potential catch (1).
1 R(U) 6/56; R(U) 16/53

Example

Keith, a share fisherman, is under contract to sell to a particular buyer. This buyer
cannot take any fish on 26 December. Any fish caught on this day cannot be
preserved, and there is no evidence that any one else will buy it. This is good cause
for not going fishing.

S3577

S3578

S3579 Conservation - fishing quotas « S3961 « S3961 « S3961

Orders made under certain legislation (1) forbid the catching of certain species of fish
(mostly herring and mackerel) by certain methods and at certain times. EC law
forbids fishing once a set quota has been reached, and forbids fishing in certain
areas. Sea fishermen who fish for a species covered by such an order or EC law
have good cause for not fishing for that species if the reason is that they are
forbidden to do so by the orders or EC law or because the quota has been reached.

1 Sea Fish (Conservation) Act 1967

S3580 « S3961

But the DM also needs to consider whether or not the share fishermen have good
cause for not fishing for other types of fish, before good cause can be shown and
the condition met. In particular the DM should consider if the boats need to be and
can be converted to catch other fish that are available. The DM should also take into
account the difficulties involved in converting the boats, when compared to the
length of time before the share fisherman can go back to catching their usual
species of fish.

S3581

S3582

S3583 Crew members absent « S3961 « S3961 « S3961

It will be good cause if a boat does not go to sea because (1) :
1.one or more members of the crew are absent through necessity, not through
choice and :
2.no other arrangements to crew the boat, or for it to go out short handed, can
reasonably be made.
1 R(U) 7/55; R(U) 3/57; R(U) 6/58; R(U) 3/64

Example 1

A boat does not go to sea for three days because the master and mate are
attending to the funeral arrangements of another member of the crew. This is not
good cause. The fact that the boat does not go out to sea is within the control of the
crew as a whole. Whilst the action taken is reasonable and proper it is not
something that has been forced upon them.

Example 2

Peter, a share fisherman, reports at 2am that, because of his wife's sudden illness,
he is unable to go fishing. No replacement can be found at such short notice and the
boat is unable to sail that day. This is good cause.

Example 3

Ray, a member of the crew of a boat, is absent because of his father's illness.
Although a replacement could have been found, the boat does not sail. This is not
good cause.

Example 4

S3584 « S3536 « S3961 « S3961

There may be other circumstances in which it is not possible to get sufficient crew
for the boat to put to sea. For example, number of men available in the area reduce.
This would be good cause (1).
1 R(U) 6/63

S3585

S3599

Share fishermen - remunerative work

S3600 Introduction « S3813 « S3961 « S3961 « S3961 « S3961

The normal rules on remunerative work (see ADM Chapter R2) apply to share
fishermen, with one exception. The hours worked as a share fisherman do not count
towards the remunerative work exclusion (1).
1 JSA Regs 13, reg 72

S3601 Calculating hours of work « S3961 « S3961 « S3961

When calculating the hours of work ignore all the time spent in work as a share
fisherman. Hours worked in any other occupation, or in work which does not come
within the meaning of work as a share fisherman, count towards the remunerative
work exclusion in the normal way.

S3602 Work as a share fisherman « S3961 « S3961 « S3961

Work as a share fisherman is not defined. It will normally fall into two types :
1.time spent at sea :
2.time spent maintaining the boat and equipment.
DMs may find the guidance at S3513 - S3517 helpful in determining whether work
done is work as a share fisherman.

S3603

S3753

Earnings of share fishermen

S3754 A share fisherman is a self-employed earner « S3100 « S3961 « S3961 « S3961 « S3961

A share fisherman is a S/E earner. One difference between a :
1.share fisherman and :
2.business partner
is that the share fisherman pays a higher rate of Class 2 contributions (see S3297
and Appendix 2 to this Chapter) to qualify for JSA. Class 4 liability is the same (see S3316 and Appendix 2 to this Chapter).

S3755 « S3961

Earnings should only be taken into account when a person is a S/E earner. A S/E
earner is a person who is gainfully employed :
1.in GB and :
2.in employment that is not employed earner's employment (1).
Note:
A share fisherman may also be employed in another occupation as an
employed earner. This does not stop the share fisherman being S/E.
1 JSA Regs 13, reg 2(2); SS CB Act 92, s 2(1)(b)

S3756 Claims from share fishermen « S3961 « S3961 « S3961

When considering a claim that includes a share fisherman the DM should decide if
that person is in remunerative work. If the share fisherman is in remunerative work
JSA is not payable.

S3757 « S3961

If the share fisherman is not in remunerative work the DM should consider if :
1.any other conditions of entitlement are satisfied and :
2.the person is currently gainfully employed as a share fisherman (see S3020 -
S3025) and
3. any earnings are to be taken into account.

[S3758]

S3759 Earnings of a share fisherman « S3961 « S3961 « S3961

The earnings of a share fisherman are the gross receipts (see S3125) of the
employment (1).

1 JSA Regs 13, reg 60(1)

S3760 « S3961

S/E earnings do not include (1) :
1.charges paid to the share fisherman in return for providing BL
accommodation (see S3762) or :
2.any of the payments in S3013 et seq.

1 JSA Regs 13 reg 60(2)

S3761 « S3961

A share fisherman may be S/E and also have other work as an employed earner.
The earnings from each employment should be calculated separately.

S3762 Board and Lodging accommodation « S3760 « S3961 « S3961 « S3961 « S3961

BL accommodation is accommodation (1) :
1.where the charge for the accommodation includes some cooked or prepared
meals that are both
1.1 cooked or prepared by someone who is not
1.1.a
the person provided with accommodation or
1.1.b a member of the family of the person provided with
accommodation and
1.2
eaten in that accommodation or associated premises or :
2.provided to a person in a
2.1 hotel or
2.2 guest house or
2.3 lodging house (see S3763) or
2.4 or similar establishment or :
3.that is
3.1
not provided by a close relative (see S3764 - S3765) of
3.1.a
the person provided with accommodation or
3.1.b a member of the family of the person provided with
accommodation or
3.2 provided on a commercial basis.

1 JSA Regs 13, reg 60(3)

S3763 « S3762 « S3961 « S3961

A lodging house :
1.is not a private house in which rooms are rented, even if services such as the
provision and washing of bed linen are provided and
2. is a place where accommodation is offered on a long-term basis and :
3.is the kind of establishment that may have a sign outside offering
accommodation.

S3764 « S3762 « S3765 « S3961 « S3961 « S3961

A close relative is (1) :
1.a parent, parent-in-law, son, son-in-law, daughter, daughter-in-law, step-
parent, step-son, step-daughter, brother, half-brother, sister, half-sister and :
2.the partner of any of those persons in 1..

1 JSA Regs 13, reg 2(2);

S3765 « S3762 « S3961 « S3961

For the purposes of S3764, a child who is adopted becomes :
1.a child of the adoptive parents and :
2.the brother or sister of any other child of those parents.
The child stops being the child of, or the brother or sister of any children of, the
natural parents. Whether an adopted person is a close relative of another person
depends upon the legal relationship and not the blood relationship (1).
1 R(SB) 22/87

S3766

S3773

S3774 Gainfully employed « S3961 « S3961 « S3961

A S/E earner is someone who is gainfully employed. If a share fisherman is not
working, this does not mean that the share fisherman has ceased to be gainfully
employed.

S3775 « S3961

A share fisherman may be a :
1.boat owner or :
2.regular crew member or :
3.a casual crew member.

S3776 « S3961

Earnings should only be taken into account if the share fisherman is gainfully
employed. The DM should :
1.consider the guidance at S3020 - S3023 and :
2.determine if the share fisherman remains gainfully employed as a S/E earner.

Example 1

Kevin is a share fisherman, he is part owner of a boat. The boat is tied up because
of bad weather. He claims JSA. Kevin states that
1. the boat has been tied up before because of bad weather. Stoppages during
the winter months are a normal feature of his business. When the weather
improves the boat will go back out to sea
2. he and his bank still regard his business as a going concern
3. he is still regarded as S/E by HMRC.
The DM considers the guidance at S3020 - S3023 and determines, in this case,
that Kevin remains gainfully employed as a S/E earner.

Example 2

S3777 « S3961

If the share fisherman is gainfully employed the DM should consider what earnings
should be taken into account.

S3778 « S3961

S3779 « S3961

For the purposes of S3020 9., periods when the boat is confined to harbour, for
example, because of :
1.bad weather or :
2.routine repairs and maintenance or :
3.exhaustion of fishing quotas
would usually be part of the normal pattern of business for a share fisherman.

S3780 « S3961

Each case should be considered individually. But where long tie ups occur on a
regular basis the DM may consider that they form part of a regular pattern of
business.

S3781

S3785

S3786 Sickness « S3961 « S3961 « S3961

If a share fisherman is unable to work due to sickness, the DM should :
1.consider the guidance at S3020 - S3023 and :
2.determine if the share fisherman remains gainfully employed as a S/E earner.

S3787 « S3961

A share fisherman will experience occasional minor illnesses like anyone else. The
DM should regard the periods of minor illness as part of the normal pattern of self-
employment..

S3788

S3792

S3793 Share fisherman no longer self-employed « S3961 « S3961 « S3961

If the DM determines that a share fisherman is no longer S/E S3795 should be
considered.

Example

S3794 « S3961

S3795 Earnings from self-employment that has ceased « S3793 « S3961 « S3961 « S3961 « S3961

If a person has been engaged in
1. remunerative work as a S/E share fisherman or
2. P/T self-employment as a share fisherman
and that employment has ceased (that is, ceased outright), any earnings derived
from that employment are fully disregarded (1).
1 JSA Regs 13, Sch , para 4

Example

James is a share fisherman, he is a regular crew member. Due to health problems
he can no longer work as a share fisherman. He last worked on 11.11.13 and
received his share of the catch on that day. He claims JSA on 12.11.13.
The DM determines that James has ceased to be a S/E share fisherman. The
earnings received on 11.11.13 are disregarded.

S3796

S3809

S3810 Assessment period « S3961 « S3961 « S3961

The normal weekly earnings of a share fisherman should be calculated by using the
gross receipts received and expenses incurred or paid out (see S3871 - S3897)
during the assessment period.

S3811 « S3961

The assessment period is the share fisherman's benefit week (1).

1 JSA Regs 13, reg 73(3), (61(2))

S3812 « S3961

A share fisherman is paid JSA for complete benefit weeks even if the share
fisherman is without work for only part of the benefit week. A share fisherman is not
entitled to part-week payments (see ADM Chapter S1).

S3813 « S3961

Any work as a share fisherman does not count towards the remunerative work rule
(see S3600 et seq).

S3814 Benefit week « S3961 « S3961 « S3961

For the assessment period, a benefit week is a period of seven days beginning with
the :
1.date of claim or :
2.day after the last day of the previous benefit week (1).
1 reg 73(3)(61(12)) & reg 74(3)

Example

Dougal is a share fisherman, he claims JSA on Thursday 24 October. He is entitled
to JSA. His benefit week is Thursday 24 October to Wednesday 30 October. His
next benefit week is Thursday 31 October to Wednesday 6 November.
Dougal does some work as a share fisherman on 31 October and 1 November. The
DM determines that this work does not count towards the remunerative work rule
and considers entitlement to JSA for the seven days in benefit week 31 October to 6
November.

S3815

S3819

Calculation of weekly earnings

S3820 Method of calculation « S3961 « S3961 « S3961

To calculate the earnings of a share fisherman the DM :
1.should establish the gross receipts of the boat during the assessment period
(including any payment in S3826 2.) and :
2.deduct from the gross receipts the allowable expenses of the boat, and the
share fisherman, taking care to avoid duplication and :
3.calculate the person's share of the sum remaining at 2. according to the
agreement for distributing the proceeds of the catch (1) and :
4.deduct from the figure in 3. amounts for
4.1 notional income tax (see S3270 and S3934) and
4.2 notional NI contributions (see S3297 and S3936 et seq) and
4.3 half of any premium (see S3325) paid for a personal pension scheme
and :
5.deduct the correct disregard(s) (see S3953).
The figure that is left is the earnings that should be taken into account.
1 JSA Regs 13, reg 61(1)(b); reg 73(3)(61(3))

S3821

S3823

S3824 Evidence « S3961 « S3961 « S3961

The evidence that a share fisherman should provide depends on whether the share
fisherman is :
1.an owner or part owner of a boat or :
2.a regular crew member.

S3825 Share fisherman is an owner or part owner of a boat « S3961 « S3961 « S3961

A share fisherman who is the owner or part owner of a boat should be asked for details
of the :
1.gross receipts and expenses of the boat for the assessment period and :
2.agreement for sharing the proceeds of the catch.

S3826 Share fisherman is a regular crew member « S3820 « S3827 « S3828 « S3961 « S3961 « S3961 « S3961 « S3961 « S3961

A share fisherman who is a regular crew member of a boat should be asked :
1.to approach the boat owner for details of the
1.1 gross receipts and expenses of the boat during the assessment period
and
1.2 arrangement for sharing the proceeds of the catch and :
2.if the boat owner pays the
2.1 employee's portion of any SS contribution or
2.2 cost of provisions (such as food) or
2.3 cost of replacement gear or clothing and :
3.if the sum declared for gross receipts is the income received by the boat
before or after any of the payments under 2. have been made.

S3827 « S3961

If the conditions for deducting an expense is met (see S3871 or S3873) the DM
should allow as an expense payments in S3826 2. that have not been deducted
from the gross receipts figure. This will be in addition to any other allowable
expenses incurred by all members of the sharing scheme.

S3828 « S3961

If the gross receipts figure is net of any deductions in S3826 2. those amounts
should be added back to establish the correct gross receipts figure. The DM should
then consider the deductions in the normal way.

S3829

S3840

S3841 Gross receipts « S3961 « S3961 « S3961

For JSA purposes, a share fisherman's earnings, that is the gross receipts, are
treated as paid in the benefit week in which they are earned1. This means that a
share fisherman who is
1. gainfully employed and
2. in receipt of JSA
will not have any earnings averaged, unless S3842 - S3845 applies.
1 JSA Regs 13, reg 73(3)(61(2))

Example

S3842 Earnings unusually high or low « S3841 « S3961 « S3961 « S3961 « S3961

The DM may calculate earnings over a period that is not the assessment period,
which is the benefit week.

S3843 « S3961

The DM should consider calculating earnings over a period greater than the benefit
week if (1)
1. the earnings in the benefit week are unusually high or low and
2. it is reasonable to do so, having regard to all of the facts of the case.
1 reg 73(3)(61(11))

S3844 Determination for earnings unusually high or low « S3961 « S3961 « S3961

To determine if the earnings are unusually high or low the DM could take one or
more of the following steps
1. look at previous weeks in the share fisherman's current claim
2. look at previous claims from the share fisherman
3. look at claims from other share fishermen on a similar boat and in the same
circumstances :
4.look at the earnings of a similar boat with the same working pattern in the
same area :
5.make enquiries of the District Fisheries Officer :
6.make enquiries of the Harbour Master.

Example

Gareth is a share fisherman. He has been in receipt of JSA since 10.2.13. On
18.6.13 he receives a lump sum payment of compensation. The compensation is
paid because Gareth was unable to work as a share fisherman for five weeks in
2012 because of an oil spillage that affected fishing in the area.
The DM determines that
1. the earnings for benefit week ending 20.6.13 are unusually high and
2. the payment of compensation should be divided by five (the number of weeks
covered by the payment) and included in the earnings for benefit weeks
14.6.13 - 18.7.13.

S3845 « S3841 « S3961 « S3961

If the earnings are unusually low because the share fisherman has incurred an
unusually high expense, the DM should consider calculating the expense over a
period other than the benefit week (see S3890 - S3897).

S3846

S3870

Expenses

S3871 Conditions for deducting business expenses « S3810 « S3827 « S3873 « S3961 « S3961 « S3961 « S3961 « S3961 « S3961

When calculating the net profit of a share fisherman for JSA purposes, the DM
should deduct from the gross receipts any business expense that is
1. incurred wholly, exclusively and necessarily for the purpose of the business (1)
and :
2.incurred during the assessment period, that is the benefit week (2) and :
3.reasonably incurred (3) (see S3876) and :
4.an allowable expense (see S3886).
1 JSA Regs 13, reg 73(3)(61(6)&(10)(a)); 2 reg 73(3)(61(6)); 3 reg 73(3)(61(9))

S3872 « S3961

S3873 Wholly and exclusively « S3827 « S3961 « S3961 « S3961 « S3961

An expense is wholly and exclusively when the expense is only for the purpose of
the business (1). Any such payment should be deducted in full if all of the conditions in S3871are satisfied.
Note: S3192 - S3195 provide guidance where the expense is for both business and
private use.
1 JSA Regs 13, reg 61(4) & reg 73(3)(61(6))

S3874

S3875

S3876 Reasonably incurred « S3871 « S3961 « S3961 « S3961 « S3961

The term reasonably incurred is not defined in legislation. It should be given its
ordinary everyday meaning. To be reasonably incurred an expense must be
1. appropriate for the share fisherman and
2. necessary for the share fisherman and
3. not excessive.
The DM should consider the level of trading.

S3877 « S3961

To determine what is reasonable the DM should have regard to the circumstances
of each individual's case (1), including the level of the person's earnings (2).

1 R(P) 2/54; 2 R(G) 1/56

S3878 « S3961

If expenditure on a particular item is necessary to enable the share fisherman to run
the business the whole of that expenditure may be regarded as a deductible
expense, unless there is evidence that it is excessive (1).

1 R(G) 7/62

S3879 « S3961

If the DM is not satisfied that the whole of an expense is reasonably incurred only
the part that is considered to be reasonable should be allowed as a deduction
against gross receipts.

S3880

S3882

S3883 Shared expenses of share fishermen « S3961 « S3961 « S3961

Expenses of the boat may not always be attributable to all the sharers in the
scheme. The owner may bear all, or part, of the cost of certain items. The DM
should establish the expenses that are
1. common to all the sharers and
2. peculiar to the owner or owners.

Example 1

Arthur is a boat owner, he has three other share fishermen aboard. The boat, the
owner and each of the three sharers take 20% of the profit after deduction of
expenses.
If a claim for JSA was made involving Arthur, his share would be 40% of the net
profit.
If a claim for JSA was made involving one of the other share fishermen aboard, their
share would be 20% of the net profit.
In each case the DM should consider deductions for tax, NI contributions and half of
any premium for a personal pension scheme.

Example 2

Andrew is a part owner of a boat, there is one other owner and one other share
fisherman. The boat takes 60% of the gross profits and the two owners and the third
sharer divide the remainder equally. The owners meet all expenses.
If a claim to JSA was made involving the third sharer, the share would be 13.33% of
the gross receipts.
If a claim to JSA was made involving Andrew or his partner, the share would be
43.33% of the gross receipts less 50% of the allowable expenses.
In each case the DM should then consider deductions for tax, NI contributions and
half of any premium for a personal pension scheme.

S3884

S3885

S3886 Allowable business expenses « S3871 « S3961 « S3961 « S3961 « S3961

Guidance on allowable business expenses is at S3206 - S3212. DMs should note
that for the expenses have to be incurred in the assessment period, that is the
benefit week

S3887

S3889

S3890 Expenses unusually high or low « S3845 « S3961 « S3961 « S3961 « S3961

The DM may calculate expenditure over a period longer than the benefit week.

S3891 « S3961

The DM should consider calculating expenditure over a period longer than the
benefit week if (1)
1. the expenditure in the benefit week is unusually high or low and
2. it is reasonable to do so, having regard to all of the facts of the case.
1 JSA Regs 13, reg 73(3)(61(11))

S3892 Evidence of expenses « S3894 « S3961 « S3961 « S3961 « S3961

As the assessment period is the benefit week :
1.the share fisherman should be asked to provide details of expenses that are
not incurred weekly and :
2.the DM can then convert the expenses into a weekly figure.
This will give a true picture of the share fisherman's expenses.

S3893 « S3961

Evidence of incurred expenses could be :
1.receipts or :
2.invoices or :
3.accounts for the boat, taking care not to allow personal expenses put through
the accounts.

S3894 Determination for expenses unusually high or low « S3961 « S3961 « S3961

If the procedure at S3892 is followed the DM may not have to determine if an
expense is unusually high or low. But there may be expenses that the share
fisherman may not have been aware of at the start of the claim and declares in a
particular benefit week.

S3895 « S3961

To determine if an expense is unusually high or low the DM could take one or more
of the following steps :
1.look at previous weeks in the share fisherman's current claim :
2.look at previous claims from the share fisherman :
3.look at claims from other share fishermen on a similar boat and in the same
circumstances :
4.look at the expenses of a similar boat with the same working pattern in the
same area :
5.make enquiries of the District Fisheries Officer
6. make enquiries of the Harbour Master. Example
Ewan is a share fisherman who is a regular crew member. He claims JSA and has a
Wednesday benefit week ending.
Ewan declares that in the benefit week Thursday 4 March - Wednesday 10 March
an expense is incurred because of essential painting to the boat. This expense
makes the expenses of the boat unusually high for the benefit week. Ewan's share
of the catch is net of any expenses.
The cost incurred is £300 and the boat has this essential painting done once a
quarter. The annual costs of essential painting is £1,200. The DM checks a recent
claim from Ewan and finds that the essential painting costs were £300 per quarter.
The DM decides that the expense is wholly, exclusively and necessarily incurred for
share fishing and is reasonable in the circumstances. The DM calculates the weekly
amount of the expense to be £23.08 (£1,200 divided by 52). An allowable expense
of £23.08 is allowed from the gross receipts for each benefit week until the annual
cost of essential painting alters.

S3896 « S3961

It is not intended that every expense is assessed individually over a period different
to the benefit week. This should be the exception rather than the rule.

S3897 « S3810 « S3845 « S3961 « S3961 « S3961

Any expense for a period :
1.equal or shorter than the benefit week should be assessed over the benefit
week or :
2.longer than the benefit week should be converted into a weekly figure only if
the DM determines that (1)
2.1 the expenditure is unusually high or low and
2.2 it is reasonable to do so, having regard to all of the facts of the case.
1 JSA Regs 13, reg 73(3)(61(11))

S3898

S3910

S3911 Expenses not allowed « S3961 « S3961 « S3961

Business expenses that should not be allowed are (1) :
1.those expenses where the conditions for deducting a business expense are
not met (S3871) :
2.capital expenditure :
3.depreciation of capital assets :
4.expenses used, or intended to be used, in setting up or expanding a business :
5.repayment of capital on loans except where S3206 3. applies :
6.business entertainment expenses :
7.losses incurred on the disposal of a capital asset :
8.payments into a contingency fund to safeguard against future bad debts (2) :
9.personal drawings on income and capital
10. money on goods used for personal consumption. Full guidance on the above expenses is at S3221 - S3226 and S3232 - S3244. 1 JSA Regs 13, reg 73(3)(61(7)); 2 reg 73(61(9))

S3912

S3925

Calculation of income tax, National Insurance contributions and qualifying premium

S3926 General « S3929 « S3961 « S3961 « S3961 « S3961

Having calculated the share fisherman's gross receipts and expenses on a cash
flow basis, the DM should consider deductions for (1)
1. income tax (see S3270 and S3934) and
2. Class 2 contributions (see S3297 and S3936) and
3. Class 4 contributions (see S3316 and S3943) and
4. half of any premium for a personal pension. (See S3325).

1 JSA Regs 13, reg 61(3)(b) & (c) & 73(3)(61(3))

S3927 « S3961

A share fisherman is entitled to the same tax allowances and tax rates as any other
S/E earner (see S3271 - S3275). A share fisherman
1. pays a special rate of Class 2 contributions and
2. may also have to pay Class 4 contributions.

S3928 « S3961

S3929 Chargeable income « S3961 « S3961 « S3961

The DM should base deductions for S3926 1. to 3. on the chargeable income for the
assessment period.

S3930 « S3935 « S3961 « S3961

A share fisherman's chargeable income is the person's share of (1)
1. the gross receipts of the employment less
2. any allowable business expenses.
1 JSA Regs 13, reg 61(4) & 73(3)(61)(6))

S3931

S3933

S3934 Notional income tax « S3820 « S3926 « S3961 « S3961 « S3961 « S3961 « S3961

As the assessment period is the benefit week the
1. personal allowance and
2. tax rate
should be apportioned on a weekly basis (1). Guidance on personal allowances and
tax rates is at S3271 - S3275.
1 JSA Regs 13, reg 73(3)(61(3))

S3935 Calculation of deduction « S3961 « S3961 « S3961

To determine the deduction for notional income tax from a share fisherman's
chargeable income the DM should (1) :
1.establish the chargeable income (see S3930) :
2.deduct the personal allowance (see Appendix 1 to this Chapter) apportioned
on a weekly basis :
3.multiply the first £34,370 (12/13 rates) of the remainder by the basic rate of
tax (see Appendix 1 to this Chapter) :
4.round up where necessary.
1 JSA Regs 13, reg 73(3)(163(3)) & 62

Example

S3936 Notional Class 2 contributions « S3820 « S3926 « S3961 « S3961 « S3961 « S3961 « S3961

As the assessment period is for a benefit week the small earnings exception should
be apportioned on a weekly basis according to the benefit week (1).

1 JSA Regs 13, reg 73(61(3))

S3937 « S3961

If the chargeable income is above the proportion of the small earnings exception the
DM should consider if a Class 2 contribution should be deducted. Full guidance on
Class 2 contributions is at S3297 et seq.

Example

Gary is a married share fisherman who is receiving JSA
£ Chargeable income
-
160.00 Small earnings exception (£5,595 divided by 52)
-
107.60 Gary's chargeable income is more than the small earnings exception. The DM
decides that Gary is liable for a Class 2 deduction and deducts a notional Class 2
contribution.

S3938

S3942

S3943 Notional Class 4 contributions « S3926 « S3961 « S3961 « S3961 « S3961

As the assessment period is for a benefit week the specified levels should be
apportioned on a weekly basis according to the benefit week (1).

1 JSA Regs 13, reg 73(3)(61)(3))

S3944 « S3961

If the chargeable income is above the proportion of the specified level the DM
should consider if a Class 4 contribution should be deducted. Full guidance on
Class 4 contributions is at S3316 - S3318.

Example

Gary is a married share fisherman who is receiving JSA
£
Chargeable income
-
160.00
Lower level
(£7,605 divided by 52)
-
146.25
Gary's chargeable income is more than the proportion of the specified level. The DM
decides that Gary is liable for a Class 4 deduction.
The Class 4 deduction is calculated as follows
£160.00 - £146.25 = £13.75 x 9% = £1.24

S3945 Premiums for personal pension schemes « S3961 « S3961 « S3961

Full guidance on premiums for personal pension schemes is at S3325 - S3327.

S3946

S3949

S3950 Amount payable for share fishermen « S3961 « S3961 « S3961

The amount of JSA payable to share fishermen is calculated in the same way as
with any other JSA claimant and has to take account of earnings and any pension
payments (1). ADM Chapter S1 provides guidance on amounts payable.
1 JSA Regs 13, reg 74(1) & (2)

S3951

S3954

Earnings disregard for share fishermen

S3955 Introduction « S3961 « S3961 « S3961

The following disregards should be applied to the weekly earnings of a share
fisherman who is entitled to JSA

S3956 Earnings from self-employment that has ceased « S3961 « S3961 « S3961

If a person has been engaged in :
1.remunerative work as a share fisherman or :
2.P/T self-employment as a share fisherman
and that employment has ceased (that is, ceased outright), any earnings derived
from that employment are fully disregarded (1).
1 JSA Regs 13, reg 73(3)(61(4)(b)); Sch , para 4

Example

S3957 Earnings disregard « S3959 « S3961 « S3961 « S3961 « S3961

Unless S3958 - S3960 applies, a share fisherman entitled to JSA should have
£20.00 per week disregarded from any earnings from share fishing (1).
1 JSA Regs 13, reg 73(3)(61(4)(a))

S3958 Earnings from work that is not work as a share fisherman « S3957 « S3959 « S3960 « S3960 « S3961 « S3961 « S3961 « S3961 « S3961 « S3961 « S3961

If the share fisherman also has earnings from work (1) :
1.as
1.1 an auxiliary coastguard for costal rescue services (see ADM Chapter
S2) or
1.2 a P/T member of a fire brigade maintained under certain legislation
(see ADM Chapter S2) or
1.3 a P/T worker manning or launching a lifeboat (see ADM Chapter S2) or
1.4 member of the territorial army or reserve forces (see ADM Chapter S2)
or :
2.as in 1. and from another job (see ADM Chapter S2) and
3. the disregard for that work is £5 (see ADM Chapter S2)
the disregards in S3959 - S3960 should be applied.

1 JSA Regs 13, reg 73(3)(61(5))

S3959 « S3958 « S3961 « S3961

If the earnings disregard from work in S3958 is £20, the disregard for earnings as a
share fisherman in S3957 should not be applied (1).
1 JSA Regs 13, reg 73(3)(61(5)(a))

Example

S3960 « S3957 « S3958 « S3961 « S3961 « S3961

If the earnings disregard from work in S3958 is less than £20, the disregard for
earnings as a share fisherman will be the difference between
1. the amount disregarded from the earnings in S3958 and
2. £201.
1 JSA Regs 13, reg 73(3)(61(5)(b))

Example 1

Neil is a share fisherman. In one benefit week he declares that he has worked as a
share fisherman and that he has received earnings from helping a friend out in a
shop.
The DM determines that Neil is entitled to a £5 disregard for the earnings that he
earned from working in a shop and a £15 disregard on the earnings from work as a
share fisherman.

Example 2

S3961 Earnings paid in a foreign currency

Where earnings are paid in a foreign currency, disregard any amount charged for
changing them into sterling, for example banking charges and commission (1).
1 JSA Regs 13, reg 73(3)(61(4)(b)); Sch , para 10

S3962

S3999

Appendix 1
Notional deductions for income tax
Main income tax allowances
1. The main income tax allowances are as follows.
11/12 12/13 13/14 14/15
£ £ £ £
Personal
under 7,475 8,105 9,440 10,000 65 Personal
65-74 9,940 10,500 10,500 10,500
Personal
75
& 10,090 10,660 10,660 10,660 over
Married under
-
-
-
- couple
65 Married
65-74
-
-
-
- couple Married
75 &
7,295 7,705 7,915 8,165 couple
over Basic rates of tax
2. Income tax is payable on taxable income
£
11/12
1 - 35,000
at basic rate of 20%
12/13
1 - 34,370
at basic rate of 20%
13/14
1 - 32,010
at basic rate of 20%
14/15
1 - 31,865
at basic rate of 20%
Appendix 2
Notional deductions for National Insurance contributions
Class 1 contributions :
1.The Class 1 contribution for any week or month is based on the percentage
rate appropriate to the band in which the estimated gross earnings fall.
2. Earnings Bands
Earnings
Limits
11/12
11/12
Earnings Percentage
rates
LEL
1. up to LEL
NIL Weekly
£102
2. LEL to UEL
12% of earnings that
Monthly £442
exceed LEL up to
UEL
UEL
Weekly
£817
Monthly
£3540
Primary
threshold
No contributions are payable on weekly earnings of £139 or less or monthly
earnings of £602 or less. Otherwise contributions are still payable at a rate of 12%
for earnings between £139.01 and £817 per week and at 2% for earnings above
£817 per week. :
3.Earnings Bands
Earnings
Limits
12/13
12/13
Earnings Percentage
rates
LEL
1. up to LEL
NIL Weekly
£107
2. LEL to UEL
12% of earnings that
Monthly £464
exceed LEL up to
UEL
UEL
Weekly
£817
Monthly
£3540
Primary
threshold
No contributions are payable on weekly earnings of £146 or less or monthly
earnings of £634 or less. Otherwise contributions are still payable at a rate of 12%
for earnings between £146.01 and £817 per week and at 2% for earnings above
£817 per week.
4. Earnings Bands
Earnings
Limits
13/14
13/14
Earnings Percentage
rates
LEL
1. up to LEL
NIL Weekly
£109
2. LEL to UEL
12% of earnings that
Monthly £472
exceed LEL up to
UEL
UEL
Weekly
£797
Monthly
£3453
Primary
threshold
No contributions are payable on weekly earnings of £149 or less or monthly
earnings of £645 or less. Otherwise contributions are still payable at a rate of 12%
for earnings between £149.01 and £797 per week and at 2% for earnings above
£797 per week. :
4.Earnings Bands
Earnings
Limits
14/15
14/15
Earnings Percentage
rates
LEL
1. up to LEL
NIL Weekly
£111
2. LEL to UEL
12% of earnings that
Monthly £481
exceed LEL up to
UEL
UEL
Weekly
£805
Monthly
£3488
Primary threshold
No contributions are payable on weekly earnings of £153 or less or monthly
earnings of £663 or less. Otherwise contributions are still payable at a rate of 12%
for earnings between £153.01 and £805 per week and at 2% for earnings above
£805 per week.
Class 2 contributions
5. 11/12 12/13 13/14 14/15
£ £ £ £
Ordinary Class 2 rate
2.50
2.65
2.70
2.75
Share fisherman rate
3.15
3.30
3.35
3.40
Small earnings exception
6. 11/12 12/13 13/14 14/15
£ £ £ £
Earnings limit
5,315 5,595 5,725 5,885
Class 4 contributions
7. 11/12 12/13 13/14 14/15
£ £ £ £
Lower 7,225 7,605 7,755 7,956 level
Higher 42,475 42,475 41,450 41,865 level
Perce
9% of
9% of
9% of
9% of ntage
£7,225 to £7,605 to £7,755 to £7,956 to rate
£42,475
£42,475
£41,450
£41,865
per year, per year, per year, per year
2%
2%
2%
2% above
above above
above
£42,475
£42,475
£41,450
£41,865

Chapter S3: JSA, self-employed earners and share fishermen

Contents
Self-employed earners

S3001:

General

S3003:

Who is a self-employed earner

S3008:

Claims from self-employed earners

S3010:

Directors of limited companies

S3012:

Earnings of self-employed earners

S3014:

Board and lodging accommodation

S3020:

Deciding if a person is still a self-employed earner

S3024:

Sickness

S3033:

Earnings from self-employment that has ceased

S3051:

Assessment period for self-employed earners

S3052:

Business trading for less than a year

S3053:

Business trading for more than a year

S3060:

Changes likely to affect the normal pattern of trading

S3069:

New businesses

S3073:

Royalties, copyright payments and Public Lending Right payments

Expenses deducted from royalty, copyright payment or Public

S3080:

Lending Right Payment

Income tax, NI contributions and qualifying premium payments
deducted from a royalty, copyright payment or Public Lending

S3081:

Right payment

S3100:

Calculation of normal weekly earnings

Income tax certificate

S3117:

Method of calculation

S3125:

Gross receipts

S3127:

Payments received for goods and services provided

S3128:

Earnings payable abroad

S3138:

Business subsidies or payments of compensation

S3139:

Personal drawings

S3154:

Income from letting or sub-letting

S3155:

Sale of certain business assets

Income for a different period

Business expenses

S3190:

Conditions for deducting business expenses

S3191:

Wholly and exclusively

S3192:

Expenses for both business and private use

S3198:

Reasonably incurred

S3206:

Allowable business expenses

S3210:

Partner's earnings from the business

S3211:

VAT

S3214:

Expenditure for a different period

Sums used in setting up or expanding a business

S3227:

Loss incurred before the beginning of the assessment period

S3230:

Loss incurred in any other employment

S3232:

Repayment of capital on business loans

S3235:

Business entertainment

S3236:

Loss on disposal of a capital asset

S3237:

Payments into contingency funds

Calculation of income tax, National Insurance contributions and qualifying
premium

Deduction for notional income tax

Calculation of deduction

S3297:

Deduction for notional Class 2 NI contributions

S3298:

Liability for a Class 2 contribution

S3304:

Calculation of the Class 2 contribution

S3316:

Deduction for notional Class 4 NI contributions

S3318:

Calculation of Class 4 contribution

S3325:

Premiums for personal pension schemes

S3326:

Personal pensions

Particular forms of self-employment

S3350:

Child minders

S3361:

Crofts or small holdings

S3370:

Farmers

S3380:

Hotels, guest houses, bed and breakfast establishments

S3382:

Bars and restaurants in hotels, guest houses

S3385:

Local exchange trading systems

S3387:

Participating in a local exchange trading system scheme

S3390:

Local exchange trading credits

S3400:

Partnerships

S3407:

Calculation of a business partner's normal weekly earnings

S3410:

Salaried partners

S3425:

Renting out property as a business

S3440:

Seasonally self-employed

S3450:

Sub-contractors

S3452:

Actors and entertainers

S3470:

Disregard of earnings from self-employment

S3471:

Earnings from self-employment that has ceased

S3472:

Earnings payable abroad

S3475:

Earnings paid in a foreign currency

S3476:

Earnings disregard

Share fishermen - introduction and additional conditions for payment

S3501:

Who is a share fisherman

S3503:

Meaning of fishing boat

S3504:

Meaning of usually works

S3505:

Meaning of profits or gross earnings of the fishing boat

Additional condition for payment of Jobseeker's Allowance to

S3509:

share fishermen

S3510:

Meaning of benefit week

S3513:

Meaning of worked as a share fisherman

Neglected a reasonable opportunity of employment as a share fisherman S3518

S3536:

Further condition for payment if fishing boat is crew owned

S3538:

Meaning of benefit week

S3539:

Meaning of worked as a share fisherman

S3540:

Meaning of crew owned

S3541:

Share fishermen who are no longer masters or members of the crew

Conservation - fishing quotas

S3583:

Crew members absent

Share fishermen - remunerative work

S3600:

Introduction

S3601:

Calculating hours of work

S3602:

Work as a share fisherman

Earnings of share fishermen

S3754:

A share fisherman is a self-employed earner

S3756:

Claims from share fishermen

S3759:

Earnings of a share fisherman

S3762:

Board and lodging accommodation

S3774:

Gainfully employed

S3786:

Sickness

S3793:

Share fisherman no longer self-employed

S3795:

Earnings from self-employment that has ceased

S3810:

Assessment period

S3814:

Benefit week

Calculation of weekly earnings

S3820:

Method of calculation

S3824:

Evidence

S3825:

Share fisherman is an owner or part owner of a boat

S3826:

Share fisherman is a regular crew member

S3841:

Gross receipts

S3842:

Earnings unusually high or low

S3844:

Determination for earnings unusually high or low

Expenses

S3871:

Conditions for deducting business expenses

S3873:

Wholly and exclusively

S3876:

Reasonably incurred

S3883:

Shared expenses of share fishermen

S3886:

Allowable business expenses

S3890:

Expenses unusually high or low

S3892:

Evidence of expenses

S3894:

Determination for expenses unusually high or low

S3911:

Expenses not allowed

Calculation of income tax, National Insurance contributions and qualifying
premium

Calculation of deduction

S3936:

Notional Class 2 contributions

S3943:

Notional Class 4 contributions

S3945:

Premiums for personal pension schemes

S3950:

Amount payable for share fishermen

Earnings disregard for share fishermen

S3955:

Introduction

S3956:

Earnings from self-employment that has ceased

S3957:

Earnings disregard

S3958:

Earnings from work that is not work as a fisherman

S3961:

Earnings paid in a foreign currency

Notional deductions for income tax .................................................... Appendix 1
Notional deductions for National Insurance contributions .................. Appendix 2

Chapter S3: JSA, self-employed earners and share fishermen

Self-employed earners
S3001 General This Chapter deals with the calculation and treatment of the earnings of S/E earners
and share fishermen. S3002
S3003 Who is a self-employed earner A S/E earner is a person who is gainfully employed
1. in
GB
and
2. in employment that is not employed earners employment (1).
Note:
A person may also be employed as an employed earner. This does not stop
the person being S/E.

1 JSA Regs 13, reg 2(2); SS CB Act 92, s 2(1)(b)

S3004 A S/E earner enters into a contract for services to a customer
1. on a sole trader basis or
2. in partnership with others. S3005 S/E earners are responsible, to the full extent of their personal fortune, for the debts
of the business and are entitled to either
1. in the case of a sole trader, all the profits or
2. if in a partnership (see S3400), the agreed share of the net profits. S3006 A person may be S/E and also have other work as an employed earner. If so the
earnings from each employment should be calculated separately. S3007 To determine if a claimant is, or has been a S/E earner, the DM should have regard
to a number of factors. A determination should be made after weighing up the
answers to the following
1. is the claimant's work supervised? A lack of supervision may point towards
self-employment.
2. does the claimant have the powers of appointment and dismissal and can
they employ a substitute? A power to appoint a substitute may point towards
self-employment.
3. in what form does remuneration take? Taxation paid at source may suggest
that the employment is not S/E.
4. how long in duration are the contracts of work? Short contracts may point
towards self-employment.
5. does the claimant provide their own equipment? Provision of own equipment
may point towards self-employment.
6. where does the claimant work? Working from home may point towards self-
employment.
7. is the person who engages the claimant for work obliged to provide work? If
there is no obligation then this may point towards self-employment.
8. does the claimant have discretion to the hours of work? The greater the
discretion, the more likely that the work is self-employment.
S3008 Claims from self-employed earners Where the DM is considering whether the claimant and / or partner is a S/E earner
then it is important to keep that determination separate from the issue of
remunerative work (see ADM Chapter R2). S3009 In order to deal with claims where the question of self-employment arises, DMs
should apply the following four questions in this order (1): Is the claimant
1. still employed as a S/E earner i.e. still trading
1.1 if the answer is no then they will not be in employment and earnings
from past employment can be disregarded (2) or
1.2 if the answer is yes the DM considers question 2
2. carrying out activities connected to the self-employment or in a period of non-
activity which is a normal incident of the cycle of work
2.1 if the answer is no the DM considers question 4
2.2 if the answer is yes the DM considers question 3
3. in remunerative work (3) i.e. is the work 16 hours or more a week
3.1 if the answer is yes the claimant is not entitled to JSA
3.2 if the answer is no the DM considers question 4
4. in receipt of earnings that are to be taken into account (4) and in respect of what
period are the earnings to be taken into account (5).
Note 1: See S3020 for guidance on whether the claimant is still trading.
Note
2: A claimant could be in remunerative work if they are carrying out activities
or it is a period of non-activity which is a normal incident in the cycle of work so they
are treated as engaged in work. See ADM Chapter R2 for guidance on remunerative
work.
Note
3: To calculate the assessment period in order to determine the weekly
earnings of a S/E earner, see the guidance at S3051 et seq.
1 JC v SSWP (JSA) [2008] UKUT 40 (AAC), R (JSA) 1/09; 2 JSA Regs 13, Sch, para 4;
3 reg 42(1); 4 reg 60(1);5 reg 55(1)(a) & (b)
S3010 Directors of limited companies A limited company is a legal person (1) and is different from a sole trader or
partnership because
1. the company belongs to its shareholders, who share in any distributed profits
according to the size of their individual holding and
2. the liability of each shareholder is limited to the number of shares taken, or
the amount that the shareholder has stood as personal guarantor for. The
shareholder is not liable for any amount above the amount unpaid on shares
(if any) or the amount guaranteed and
3. if 2. does not apply, liability for debts is limited to the company's capital.

1 R(SB) 57/83

S3011
A limited company, of whatever size, is separate from its employees, officers and
shareholders (1). This means that the profits of the company do not belong to the
directors. A director of a limited company is an office holder in the company (2) and is
an employed earner.
1 R(SB) 57/83; 2 McMillan v Guest 1942, AC 561
S3012 Earnings of self-employed earners In S/E cases, earnings are the gross receipts (see S3125) of the employment (1).

1 JSA Regs 13, reg 60(1)

S3013 S/E earnings do not include
1. charges paid to the S/E earner in return for providing BL accommodation (1)
(see S3014) or
2. any payment made to the claimant with whom a person is accommodated by
virtue of arrangements made under relevant legislation (2) or
3. any payment made to the claimant for a person who is not normally a
member of the claimant's household but is temporarily in the claimant's care by
3.1 the NHS Commissioning Board (3)
3.2 an LA (but excluding payments of HB)4
3.3 a voluntary organisation (5)
3.4 the person concerned under relevant legislation (6)
3.5 a clinical commissioning group (7)
3.6 in Wales, a Local Health Board (8) or
4. any sports award (9).
1 JSA Regs 13, reg 60(2)(a); 2 reg 60(2)(b); Children Act 1989, s 22C(2), (3), (5), (6)(a), 6(b);
Children (Scotland) Act 1995, s 2 6; Looked After Children (Scotland) Regulations 2009, reg 33 or
reg 51; Children Act 1989, s 59(1)(a); 3 JSA Regs 13, reg 60(2)(c)(i); 4 reg 60(2)(c)(ii); 5 reg 60(2)(c)(iii);
6 reg 60(2)(c)(iv); NHA Act 48, s 26(3A); 7 JSA Regs 13, reg 60(2)(c)(v); National Health Service Act 2006,
s 14D; 8 JSA Regs, reg 60(2)(c)(vi); National Health Service (Wales) Act 2006, s 11; 9 JSA Regs 13, reg 60(2)(d)
S3014 Board and lodging accommodation BL accommodation is accommodation (1)
1. where the charge for the accommodation includes some cooked or prepared
meals that are both
1.1 cooked or prepared by someone who is not
1.1.a the person provided with accommodation or
1.1.b a member of the family of the person provided with
accommodation and
1.2
eaten in that accommodation or associated premises or
2. provided to a person in a
2.1 hotel or
2.2 guest house or
2.3 lodging house (see S3015) or
2.4 similar establishment or
3. that is
3.1
not provided by a close relative (see S3016 - S3017) of
3.1.a the person provided with accommodation or
3.1.b a member of the family of the person provided with
accommodation or
3.2 provided on a commercial basis.

1 JSA Regs 13, reg 60(3)

S3015
A lodging house
1. is not a private house in which rooms are rented, even if services such as the
provision of and washing of bed linen are provided and
2. is a place where accommodation is offered on a long-term basis and
3. is the kind of establishment that may have a sign outside offering
accommodation. S3016
A close relative is (1)
1. a parent, parent-in-law, son, son-in-law, daughter, daughter-in-law, step-
parent, step-son, step-daughter, brother, half-brother, sister, half-sister and
2. the partner of any of those persons in 1..

1 JSA Regs 13, reg 2(2); R(SB) 22/87

S3017 For the purposes of S3016, a child who is adopted becomes
1. a child of the adoptive parents and
2. the brother or sister of any other child of those parents.
The child stops being the child of, or the brother or sister of any children of the
natural parents. Whether an adopted person is a close relative of another person
depends upon the legal relationship and not the blood relationship (1).
1 R(SB) 22/87

S3018

S3019

S3020 Deciding if a person is still a self-employed earner To determine whether a person is still trading and therefore still employed as a S/E
earner, the DM should consider the following
1. if there is a reasonable prospect of work in the near future and
2. if the business is a going concern and regarded as such by
2.1 the person or
2.2 the business's bankers or
2.3 any creditors or
2.4 others and
3. if the person is genuinely available for and actively seeking alternative work
and
4. if the person hopes or intends to restart work in the business when economic
conditions improve and
5. if the person is undertaking any activities in connection with the self
employment and
6. if there is work in the pipeline and
7. if the person is regarded as S/E by HMRC and
8. if the person claims to be anxious for work in the S/E occupation, trade or
business. Is the person making it known that the business can take on
work?1. For example,
8.1 by advertising or
8.2 by visiting potential customers and
9. if the interruption in question is part of the normal pattern of the
9.1 person' s work or
9.2 work that the person is seeking.
Not all of these questions will be relevant to whether a person is still employed as a
S/E earner and the ones that are may not carry equal weight. It will depend on the
facts of the particular case. These questions will also be relevant when considering
the separate question of remunerative work if it is determined that self-employment
continues (2).
1 Vandyk v. Minister of Pensions & National Insurance [1955] IQ (29);

2 JC v SSWP (JSA) [2008] UKUT 40 (AAC), R (JSA) 1/09

S3021 All nine factors in S3020 should be considered in all cases where a person who has
been working as a S/E earner is now without work. This includes
1. people unable to work because of sickness
2. seasonal workers
3. sub-contractors and
4. share fishermen. S3022 Some of the factors in S3020 may point toward the fact that a person is trading as
S/E. Others may not. No one factor is decisive. The DM should consider the weight
to give each relevant factor. S3023 The DM should make a determination on gainful employment based on a balanced
view of the evidence. These are matters of individual judgement for the DM
concerned.

Example 1

Example 2

Ira claims JSA. He runs a business that supplies and fits doors and windows.
Because of the competition in the area the business has received fewer and fewer
orders, until now there are none. Ira states that
1. he has been unable to pay the rent on his shop and the landlord is
threatening eviction
2. his business has debts and the bank has advised that the business should be
wound up
3. he can not find a way of boosting his trade
4. there is no work in the pipeline
5. at present he is still regarded as S/E by HMRC
6. he still has an advertisement in the Yellow Pages.
The DM considers the guidance at S3020 - S3023 and determines, in this case,
that Ira is not gainfully employed and no longer trading.

Example 3

S3026

S3032

S3033 Earnings from self-employment that has ceased If a person has been engaged in
1. remunerative work as a S/E earner or
2. P/T self-employment
and that employment has ceased (that is, ceased outright), any earnings derived
from that employment are fully disregarded unless the earnings are royalties,
copyright payments or Public Lending Rights payments (see S3073 - S3081)1.
1 JSA Regs 13, Sch , para 4

Example

S3034

S3050

S3051 Assessment period for self-employed earners The normal weekly earnings of a S/E earner should be calculated by using the
1. gross receipts (see S3125) and
2. expenses paid out (see S3190)
during the assessment period. Different rules apply for royalties, copyright payments
and Public Lending Rights payments.
S3052 Business trading for less than a year If the business has been trading for less than a year, the assessment period should
be a period that will allow the DM to calculate the earnings most accurately (1).
1 JSA Regs 13, reg 55(1)(b)

Example

Liam claims JSA on Monday 4 November. He is a P/T S/E window cleaner. He
started doing occasional window cleaning jobs in February of the same year but it
was not until May that the business really got off the ground.
The DM uses an assessment period starting from 1 May to 31 October as the
figures produced for this period would most accurately reflect the current level of
earnings.
S3053 Business trading for more than a year If the business has been trading for more than a year and there is no change likely
to affect the normal pattern of business, the assessment period should be a year (1)
(but see S3167 - S3168).

1 JSA Regs 13, reg 55(1)(a)

S3054 The year does not need to be the year immediately before the claim or the date the
claim is looked at. If profit or loss accounts are available for the last trading year the
DM can use these as the assessment period. The profit and loss accounts should
be converted to a cash flow basis (see S3101 - S3111). S3055 A year means a period of
1. 365 days or
2. 366 days if the assessment period includes the February of a leap year.

S3056

S3059

S3060 Change likely to affect the normal pattern of trading If there has been a change that is likely to affect the normal pattern of trading, the
assessment period should be a period that will allow the DM to calculate the
earnings most accurately (1). The period does not need to be made up of complete
weeks.

1 JSA Regs 13, reg 55(1)(b)

S3061 The assessment period should
1. normally start on the date the change affecting the pattern of the business
occurred (but see S3064) and
2. end on the date that the most recent figures regarding earnings and expenses
are available, for example, the next week or month. S3062 The earnings would then be averaged over that period and apportioned on a weekly
basis until the figures for the following week or month become available. The
assessment period would then be extended. The assessment period would
1. start on the date the change affecting the pattern of business occurred and
2. end on the date that the new figures became available.
The DM should supersede if the new figures affect entitlement to JSA. Where
entitlement is not affected, a decision not to supersede should be made if the
claimant asked for earnings to be looked at again. For further guidance on
supersession including the effective date rule, see ADM Chapter A4. S3063 This procedure should continue until the assessment period has been extended to
one year and the earnings can be averaged over that year (see S3053). In most
cases this procedure will provide the most accurate determination of a S/E earners
earnings (but see S3064).

Example

Example 1

Example 2

Omar works P/T as a S/E draughtsman providing technical drawings for builders.
Most of his work comes from one particular building firm. Omar claims JSA because
six months before the claim the building firm went into receivership.
The DM determines that
1. there had been a change that had affected the normal pattern of business
and
2. the assessment period starts from the date Omar lost his major customer.

Example 3

Example 4

S3066

S3068

S3069 New businesses A person may start up a new business
1. at the same time as claiming JSA or
2. whilst in receipt of JSA.
The DM should consider if that person has started remunerative work. S3070 If the work is not remunerative work no income should be taken into account until
the S/E earner starts to receive actual earnings. When the first payment of earnings
is received the DM should use the assessment period
1. starting on the first day of the benefit week in which the person started S/E
and
2. ending on the last day of the benefit week in which actual earnings are
received. S3071 The assessment period should be extended every week or month until a yearly
assessment is possible (see S3062). In most cases this procedure will provide the
most accurate determination of a S/E earner's earnings (but see S3072).

Example

Gareth is in receipt of JSA. His benefit week ending day is a Monday. On 6.8.13 he
starts work as a S/E pine furniture maker working twelve hours per week.
The DM determines
1. Gareth is not in remunerative work and
2. that the assessment period is 5.8.13 - 11.8.13.
The earnings are taken into account for that period up to and including 18.8.13
when the figures for the following week become available.
At this point the DM supersedes the JSA award and extends the assessment period.
The assessment period is now 5.8.13 - 18.8.13. The earnings for this period are
averaged and apportioned on a weekly basis up to and including 25.8.13 when
further figures are available.
The DM continues with this procedure until the assessment period has been
extended to one year. S3072 When determining the assessment period for new businesses the DM should
consider the facts of each case carefully. A period that does not start with the first
day of self-employment may sometimes give a more accurate determination of the
S/E earner's earnings. If so, that period should be used instead.
S3073 Royalties, copyright payments and Public Lending Right payments Earnings as described in S3074 paid during an award of benefit have a different
assessment period to that in S3051 - S3072. S3074 This paragraph applies to (1)
1. royalties or other sums paid as a consideration for the use of, or the right to
use, any copyright, design, patent or trademark or
2. any payment in respect of any
2.1 book registered under the Public Lending Right Scheme 1982 or
2.2 work made under any international public lending right scheme that is
similar to the Public Lending Right Scheme 1982
where the claimant is the first owner of the copyright, design, patent or trademark, or
an original contributor to the book or work covered by 2.2 above.

1 JSA Regs 13, reg 55(3)

S3075 Each payment should be taken into account for the number of weeks (including part
of a week) calculated by dividing the amount of the payment by
1. the amount of JSA that would have been paid if the earnings had not been
received and
2. the correct disregard (see S3470)1.

1 JSA Regs 13, reg 55(4), Sch

S3076 The attribution period should begin on the first day of the benefit week in which the
payment is received.

Example

Libby is in receipt of JSA that is payable on a Monday in arrears. She receives
royalties of £500 on 15.11.13. Libby has been paid JSA to benefit week ending
25.11.13. The payment is taken into account as follows
£
1. current weekly rate
=
75.10
2. appropriate earnings disregard
=
5.00
3. total of weekly JSA + disregard
=
80.10
4. number of weeks is
500
=
6
19.40
80.10
80.10
5. the payment is taken into account for
5.1 six weeks is at £80.10 per week - no JSA payable for the period
12.11.13 to 23.12.13 and
5.2 one week at £19.40 but £5.00 is disregarded - JSA of £60.70 (£75.10
£14.40 (£19.40 - £5.00)) is payable on 30.12.13.
The overpayment question is referred to the DM. S3077 If at the end of the period calculated under S3075
1. a further claim for JSA is made and
2. another payment of royalties or copyright has been received during that period
the further payment should be treated separately as in S3075. If the period extends
beyond that calculated for the first payment, the second payment should be taken
into account from the end of that period.

Example

S3078

S3079

S3080 Expenses deducted from royalty, copyright payment or Public Lending Right payment The S/E earner may have to pay expenses on receipt of the royalty, copyright
payment or Public Lending Right payment. These expenses are deductible if they are
1. wholly and exclusively for the purpose of that employment and
2. paid out in the attribution period of the payment (1).
1 JSA Regs 13, reg 55(4); reg 61(1)(a); reg 61(3)(a)

Example 1

Example 2

Seeta writes a book. She agrees with her accountant that she will pay her
accountancy fees when she receives her first payment. Seeta's book is published in
March 2014 and the first copyright is received on 1.5.14.
Seeta pays her accountant using the money from the copyright payment. The DM
decides to deduct the accountant's bill as an expense because
1. the accountant's bill is an expense that is wholly and exclusively for the
purpose of Seeta's employment and
2. it is defrayed in the attribution period of the copyright payment.
S3081 Income tax, NI contributions and qualifying premium payments deducted from a royalty, copyright payment or Public Lending Right payment The DM should consider deductions for
1. income tax (see S3270 et seq) and
2. NI contributions (see S3297 et seq) and
3. half of any premiums for personal pensions (see S3326)
from the royalty, copyright payment or Public Lending Right payment (1).
Note:
The DM should take care not to duplicate any deduction for a personal
pension. A deduction for such a premium may already be deducted from another
assessment period.
1 JSA Regs 13, 61(3), 61(1)(a) & 61(3)(b) & (c)

S3082

S3099

S3100 Calculation of normal weekly earnings S3101 - S3244 provide guidance on the calculation of earnings of most S/E
earners. Specific guidance is given for
1. child minders (see S3350)
2. crofts or small holdings (see S3361)
3. farmers (see S3370)
4. hotels, guest houses, bed and breakfast establishments etc (see S3380)
5. local exchange trading schemes (see S3385)
6. partnerships (see S3400)
7. renting out property (see S3425)
8. seasonally S/E (see S3440)
9. share fishermen (see S3754)
10. sub-contractors (see S3450)
11. actors and entertainers (see S3452).
S3101 Evidence - cash flow To calculate the amount of earnings the DM will need evidence of
1. the gross receipts (see S3125) actually received, not money owed to the
business and
2. expenses defrayed, that is, actually paid for, not unpaid bills
for the assessment period. This is known as cash flow and evidence should be
presented on a cash flow basis. S3102 On a new or repeat claim to JSA, the onus is on the S/E earner to provide the
evidence necessary to support the claim. A claimant who is S/E or whose partner is
S/E should be asked to submit details of
1. the business and
2. actual gross receipts and expenditure
during the assessment period. S3103 The figures provided in S3102 2. should be accepted as accurate unless
1. there is reason to doubt or
2. they are unrepresentative of the current trading position.
Supporting evidence of every item of expenditure, or receipt, is not always required.
Totals for the assessment period are acceptable provided that each type of
expenditure, or receipt is separately detailed and 1. or 2. does not apply.S3104
S3105 Accounts A person may submit a set of accounts as evidence of S/E earnings. Accounts
provide some, but not all, of the information required by the DM to decide the
amount of the gross receipts and expenses paid for. S3106 A set of accounts consists of two main statements
1. the balance sheet: that is, a statement of the financial position of a business
at a given date and
2. the profit and loss account: that is, a summary of the results of a business's
transactions for a period ending on the date of the balance sheet. S3107 Accounts are prepared using accounting principles. Accounts may include
anticipated receipts and expenses for the accounting period. The anticipated
amounts are not
1. gross receipts as they have not been received by the business or
2. allowable expenses as they have not been paid for. S3108 If accounts are submitted as evidence the S/E person should be asked to provide
evidence of actual amounts received and expenses paid so that the evidence can
be converted into a cash flow basis. The S/E person can do this by providing
1. accounts that are calculated on a cash flow basis or
2. evidence of the gross receipts and expenses paid. S3109 The figures provided in S3108 1. and 2. should be accepted as accurate unless
1. there is reason to doubt them or
2. they are unrepresentative of the current trading position.
Supporting evidence of every item of expenditure, or receipt, is not always required.
Totals for the assessment period are acceptable provided that each type of
expenditure, or receipt is separately detailed and 1. or 2. does not apply. S3110 The S/E person should be asked any questions that cannot be resolved. It may be
necessary for the S/E person to provide further supporting evidence, for example
1. bank receipts
2. purchase receipts
3. expenses for a different assessment period. S3111 As profit and loss accounts are prepared using normal accounting principles, they
include certain entries that would not be included in a cash flow account. For example
1. the value of stock at the start and end of the accounting period
2. money owed to the business by debtors
3. money owed by the business to creditors
4. depreciation of assets of the business.
As the DM is considering the S/E person's cash flow, these will not be allowable
expenses.

S3112

S3115

S3116 Income tax certificate The DM should not accept as conclusive evidence of the weekly net profit an
1. income tax certificate or
2. accountant's statement of the net profit figure that is acceptable for tax
purposes.
S3117 Method of calculation To calculate the earnings of a S/E earner the DM
1. should establish the gross receipts of the business during the assessment
period (see S3125) and
2. deduct from the gross receipts the allowable expenses that have been paid
out during the assessment period (see S3206) and
3. deduct from any remaining figure amounts for
3.1 notional income tax (see S3270 et seq) and
3.2 notional NI contributions (see S3297 et seq) and
3.3 half of any premium paid for a personal pension scheme (see S3326)
and
4. deduct the correct disregard(s) (see S3470).
The figure that is left is the earnings that should be taken into account. S3118
The whole process can be summarized as follows gross
less allowable
less
notional income tax
less
notional NI contributions
Less
half of any personal pension scheme
divided by
the number of days in the assessment period
multiplied by
7 to give a weekly figure
equals
the weekly net profit
less
any disregards that apply
equals
the weekly earnings to be taken into account

S3119

S3124

S3125 Gross receipts Any payment of income actually received by the business during the assessment
period, regardless of when it is earned should be included as a gross receipt (1). S3167 provides guidance for payments received that relate to a period different to
the assessment period.

1 JSA Regs 13, reg 61(4)

S3126
The gross receipts of a business include
1. any payments for goods and services provided (see S3127)
2. earnings payable abroad (see S3128)
3. any business subsidies or payments of compensation (see S3138)
4. personal drawings (see S3139)
5. income from letting or sub-letting (see S3154)
6. sale of certain business assets (see S3155)
7. tips and gratuities (see S3156)
8. payments in kind (see S3158)
9. any VAT receipts (see S3160).
S3127 Payments received for goods and services provided All
1. cash and
2. cheque and
3. credit card payments
received in return for goods and services supplied, should be included as a gross
receipt of the business.
S3128 Earnings payable abroad Money that is due to be paid to a business in a country outside the UK should be
included as a gross receipt only when it is received by the business, for example
when it is paid
1. to any branch or official representative of the business or
2. into any business account. S3129 Where the payment is made in a currency other than sterling, any
1. bank charge or
2. commission
payable for converting the payment into sterling should be disregarded (1).

1 JSA Regs 13, Sch , para 10

S3130
Any payment due to the business in a country outside the UK that prohibits the
transfer of funds to the UK should be disregarded for as long as that restriction
applies (1).
1 JSA Regs 13, Sch , para 9

Example

S3131

S3137

S3138 Business subsidies or payments of compensation Some businesses may receive
1. subsidies, for example businesses involving farming or agriculture receive
subsidies from the Department for the Environment, Food and Rural Affairs,
or the EC or
2. payment of compensation from another person because of disruption to the
business. For example payments of compensation awarded because of BSE.
Such payments should be included in the gross receipts of the business.
S3139 Personal drawings A S/E person may draw money from the business for day to day expenses. These
drawings, known as personal drawings, are in anticipation of profits or business
income and should be included as part of the gross receipts of the business. It is
possible for personal drawings to exceed the eventual profit. S3140 Where drawings are made in excess of the profits of the business they should be
treated as capital in the hands of the claimant. Money taken from the business in
excess of profits comes from
1. capitalized profits from earlier years or
2. increased borrowing.
In
1. or 2. the drawings are withdrawals from the capital of the business. S3141 If personal drawings are declared the DM should establish if the amount has been
deducted from the amount shown as the gross receipt. If it has, the amount of the
drawings should be added back to the amount of the gross receipts. S3142 A S/E person who is a sole owner of, or a partner in, a business may pay interest to
the business on money taken as personal drawings. These payments should be
included in the gross receipts of the business.

Example 1

Example 2

S3143

S3153

S3154 Income from letting or sub-letting Any income received from letting or sub-letting of business premises or land should
be included in the gross receipts of the business. Any expense connected with the
letting should be included with other business expenses.
S3155 Sale of certain business assets The amount received from the sale of a capital asset should not be included in the
gross receipts of the business, unless the asset was part of the stock in trade of the
business (1).
1 R(FC) 1/97

Example

Adam runs a business that manufactures computers. The sale of these computers is
included in the gross receipts of the business. But when Adam sells a computer that
he uses to keep his business records on, the amount received for this computer is
not included in the gross receipts of the business.
S3156 Tips and gratuities Tips or gratuities received in response to the service provided by a S/E earner, for
example as a hairdresser, taxi driver or coach driver, should be included in the
gross receipts of the business. S3157 Any tips or gratuities that are made as a gift unconnected to the self-employment,
for example, on personal grounds should not be included in the gross receipts of the
business.
S3158 Payments in kind If a S/E person is paid in kind the DM should decide a monetary value equal to what
would have been paid and include this amount in the gross receipts of the business.

Example

Terry is a P/T S/E electrician in receipt of JSA. He does some work for a local
farmer. The farmer pays Terry for the work in the form of farm produce.
The DM values the produce at what it would have cost if bought from the farmer (or
a local grocer), and includes that amount in the gross receipts of the business.S3159
S3160 VAT A S/E person who is registered for VAT is required to submit three monthly returns
to HMRC showing amounts of
1. VAT collected from customers - known as output tax and
2. VAT paid by the S/E person to supplier - known as input tax.
If
1. exceeds 2. the S/E person pays the difference to HMRC. If 2. exceeds 1. the
S/E person receives the difference from HMRC. S3161
Where
1. a business is registered for VAT and
2. in the assessment period the amount received is greater than the amount
paid to HMRC.
the difference should be included in the gross receipts of the business. This is the
amount that S3160 2. exceeds S3160 1..
Note:
VAT can also be an allowable expense of the business, see S3211.

S3162

S3165

S3166 Capital receipts Capital receipts do not form part of the gross receipts of the business (1). For
example,
1. loans
2. injections of capital
3. grants from the Prince's Trust and
4. proceeds from the sale of business assets, unless that asset was part of the
stock in trade of the business (see S3155).
1 R(FC) 1/97
S3167 Income for a different period A payment of income may be assessed over a period different to the assessment
period if the normal weekly amount of the item of income can be established more
accurately (1).
Note:
The DM should not consider any payment made before or after the
assessment period.

1 JSA Regs 13, reg 61(10)

S3168 It is not intended that every payment is assessed individually over a period different
to the assessment period. This should be the exception rather than the rule. So, any
payment for a period
1. equal to or shorter than the assessment period should be assessed over the
full length of the assessment period or
2. longer than the assessment period should be converted on a pro rata basis to
represent the length of the assessment period.

Example

Ryan is a S/E earner in receipt of JSA. He receives a payment that is a half-yearly
payment under a long-term contract. As the level of trading has changed recently
due to a fire on the business premises the assessment period used is 13 weeks.
The DM considers that
1. the payment should be multiplied by 13 and divided by 26 and
2. the resulting sum should be added to any other gross receipts of the
business.

S3169

S3189

Business expenses
S3190 Conditions for deducting business expenses When calculating the net profit of a S/E earner the DM should deduct from the gross
receipts any business expense that
1. was paid out wholly and exclusively for the purposes of the business (1) and
2. was paid out during the assessment period and
3. was reasonably incurred (2) (see S3198) and
4. is an allowable expense (see S3206).
1 JSA Regs 13, reg 61(3)(a); 2 reg 61(7)
S3191 Wholly and exclusively An expense is wholly and exclusively paid out when it has been incurred only for the
purpose of the business (1). Any such payment should be deducted in full, subject to S31902. - 4..
1 JSA Regs 13, reg 61(4)
S3192 Expenses for both business and private use If expenditure is for both business and private use, for example
1. a business that is run from home or
2. there is only one vehicle for both business and private use
the DM should apportion the cost. Only the portion of the expenditure that is wholly
attributable to the business can be deducted. S3193 It is a common practice for a S/E person to put private expenses through a business
account. If a set of accounts has been submitted as evidence of expenses the DM
should establish the amount of the expenses paid out for the business. S3194 The DM should normally accept the evidence of
1. the S/E earner or
2. an accountant or
3. any apportionment already agreed by HMRC for tax and contribution
1
purposes .

1 R(FC) 1/91; R(IS) 13/91

S3195 Examples of expenses that may be apportioned between private and business use
1 are
1. telephone calls and telephone rental
2. motor expenses such as fuel, road fund license (sometimes called road tax),
insurance premiums, servicing, maintenance or repair charges
3. fuel costs and standing charges for gas and electricity.
1 R(FC) 1/91; R(IS) 13/91

Example 1

Example 2

Example 3

S3196

S3197

S3198 Reasonably incurred The term "reasonably incurred" is not defined in legislation. It should be given its
ordinary everyday meaning. To be reasonably incurred an expense must be
1. appropriate to the business and
2. necessary to the business and
3. not excessive.
The DM should consider the nature of the business, level of trading and if there are
any employees. S3199
To determine what is reasonable the DM should have regard to the circumstances
of each individual's case (1), including the level of the person's earnings (2).

1 R(P) 2/54; 2 R(G) 1/56

S3200 The DM may have to consider if it is reasonable for a person to reduce the hours
worked to below the remunerative work level by employing someone to do part of
the work of the business. To determine if this expense is reasonably incurred the
DM should consider all of the circumstances of the individual case including if the
1. person is capable of doing the work and
2. evidence suggests that the person is employing another so that the
remunerative work condition is satisfied and the person can claim JSA
The DM may conclude that the expense of employing another person is not
reasonably incurred, therefore cannot be deducted from the gross receipts. S3201
If expenditure on a particular item is necessary to enable the person to run the
business, the whole of that expenditure may be a deductible expense unless there
is evidence that it is excessive (1).

1 R(G) 7/62

S3202 If the DM is not satisfied that the whole of an expense is reasonably incurred only
the part that is considered to be reasonable should be allowed as a deduction
against gross receipts.

S3203

S3205

S3206 Allowable business expenses If the conditions in S3190 1. - 3. are met, all day to day expenses of a business are
allowable, including (1)
1. accountancy charges
2. advertising costs
3. certain capital repayments on a loan used to (2)
3.1
replace an item of equipment or machinery that has
3.1.a
worn out in the course of the business or
3.1.b
become outdated or
3.2 repair an existing asset, but only to the extent that the loan exceeds
any sum paid or due to be paid under an insurance policy for that
repair, for example, labour may not be covered by the policy
4. cleaning of business premises
5. employee's wages before any deductions, including wages payable to a
partner, but not a business partner (see S3210)
6. employer's contribution to an employee's pension scheme
7. employer's secondary class 1 NI contributions
8. heating and lighting
9. hire or rental costs, but not any capital or purchase elements
10. income spent on the repair of an existing business asset, but only to the
extent that cost of the repair exceeds any sum paid or due to be paid under
an insurance policy for that repair (3)
11. interest payable on a mortgage, loan, credit sale, consumer credit agreement
or a hire purchase agreement - this does not include any capital element, but
see 3.4
12. legal fees for the running of the business, but not with the setting up or
expansion of the business
13. payment in kind for work done for the business - the monetary value is allowed
14. rent, council tax, water charges and insurance premiums on the business premises
15. stationery
16. stock purchases
17. sundries, if the DM is satisfied that the expenses are allowable
18. telephone, fax or telex
19. transport, for example business use of the car including petrol costs, road
fund license, insurance and servicing
20. VAT (see S3211).5
This list is not exhaustive.
1 JSA Regs 13, reg 61(3)(a), reg 61(4), reg 61(5), reg 61(7); reg 73(3); 2 reg 61(6); reg 73(3);

3 reg 61(8)(b)(ii); reg 73(3); 4 reg 61(8)(b)(iii); reg 73(3); 5 reg 61(8)(b)(i); reg 73(3)

S3207 For the purpose of S3206 3.2 an asset includes buildings, plant machinery, vehicles
or equipment.

Example 1

S3208

S3209

S3210 Partner's earnings from the business The earnings of a partner (but not a business partner) who is employed in the
business should be allowed as a business expense (see S3206 5.). The wage
should not be added back to the business accounts to offset any loss (1).
1 JSA Regs 13, reg 61(11)
S3211 VAT A S/E person who is registered for VAT is required to submit three monthly returns
to HMRC showing amounts of
1. VAT collected from customers - known as output tax and
2. VAT paid by the S/E person to suppliers - known as input tax.
If
1. exceeds 2. the S/E person pays the difference to HMRC. If 2. exceeds 1. the
S/E person receives the difference from HMRC. S3212 Where
1. a business is registered for VAT and
2. in the assessment period the amount paid to HMRC is greater than the
amount received in the same period
the difference should be taken into account as an expense (1). This is the amount that S32111. exceeds S3211 2..
Note:
VAT can also be a gross receipt of the business (see S3160).
1 JSA Regs 13, reg 61(8)(b)(i)S3213
S3214 Expenditure for a different period Any business expenditure paid out in the assessment period may be assessed over
a period different to the assessment period if the normal weekly amount of that item
of expenditure can be established more accurately (1).
Note:
The DM should not deduct an expense paid before or after the assessment
period.

1 JSA Regs 13, reg 61(10)

S3215 It is not intended that every expense is assessed individually over a period different
to the assessment period. This should be the exception rather than the rule. S3216 Any expense for a period
1. equal or shorter than the assessment period should be assessed over the full
length of the assessment period or
2. longer than the assessment period should be converted on a pro rata basis to
represent the length of the assessment period.

Example

S3217

S3219

S3220 Expenses not allowed Business expenses that should not be allowed are
1. those expenses where the conditions for deducting a business expense are
not met (see S3190)
2. capital expenditure
3. depreciation of capital assets
4. expenses used, or intended to be used, in setting up or expanding a business
5. any loss incurred
5.1
before the start of the assessment period (1) or
5.2
in any other employment (2)
6. repayment of capital on loans except where S3206 3. applies
7. business entertainment expenses
8. losses incurred on the disposal of a capital asset
9. payments into a contingency fund to safeguard against future bad debts (3)
10. personal drawings on income and capital
11. money on goods used for personal consumption.
1 JSA Regs 13, reg 61(5)(d); 2 reg 61(11); 3, reg 61(7)
S3221 Capital expenditure Capital expenditure is the expenditure on fixed assets, sometimes called capital
assets. In line with HMRC practise, fixed assets include items such as tools,
equipment, machinery and vehicles used in the business. The DM should not allow
capital expenditure as a business expense (1).
1 JSA Regs 13, reg 61(5)(a)

Example

Paul is a mobile hairdresser. He buys a replacement car with cash. The
replacement car is a fixed asset of the business. The money used to buy it is capital
expenditure. The DM does not allow a deduction. But if Paul had taken out a loan to
buy the car, repayments of capital and interest would have been allowed as
expenses (see S3206).
S3222 Depreciation Depreciation of a capital, or fixed, asset is the amount that the value of that asset is
estimated to have reduced, due to age or wear and tear, during the assessment
period. S3223 If there are fixed assets, accounts will always show depreciation as a business
expense. The DM should not allow depreciation as a business expense (1).
1 JSA Regs 13, reg 61(5)(b)

S3224

S3225

S3226 Sums used in setting up or expanding a business The DM should not allow as a business expense any sum used, or intended to be
used, in setting up or expanding a business (1). This applies to expenditure on, for example
1. fixed assets of the business, including fixtures and fittings or the cost of larger
premises or
2. non-recurring costs such as legal services in obtaining a lease.
Note:
If a business loan has been obtained the DM should consider interest on the
loan (see S3206 11.) and allow as an expense other items that are ongoing regular
expenses.
1 JSA Regs 13, reg 61(5)(c)
S3227 Loss incurred before the beginning of the assessment period The DM should not allow as a business expense any loss incurred before the
beginning of the assessment period (1).
1 JSA Regs 13, reg 61(5)(d)

S3228

S3229

S3230 Loss incurred in any other employment A person may
1. have more than one employment as a S/E earner or
2. be both a S/E earner and an employed earner, for example a director.
The earnings from each employment should be assessed separately. S3231 Any business loss in one employment should not be offset against the earnings of
another employment (1).
1 JSA Regs 13, reg 61(11)

Example

Thomas is in receipt of JSA. His wife is a market trader and a S/E music teacher.
The market stall runs at a loss. The DM
1. considers that the loss from the market stall is not an allowable expense
against the gross receipts from teaching music and
2. calculates the net profit from each self-employment separately.
S3232 Repayment of capital on business loans The DM should not allow the repayment of the capital part of a business loan as a
business expense unless it is for replacement or repair of an asset (1) (see S3206 3.).
1 JSA Regs 13, reg 61 (5)(e)

S3233

S3234

S3235 Business entertainment Any expense claimed for providing business entertainment, for example
1. business lunches or
2. hospitality in connection with the business
should not be allowed as a business expense (1).
1 JSA Regs 13, reg 61(5)(f)
S3236 Loss on disposal of a capital asset When an asset is sold for less than the value shown in the books of the business
the difference is referred to as the "loss on disposal" and is accepted as a loss for
accounting purposes. But the DM should not
1. allow the loss as an expense or
2. include the proceeds from the sale of the asset as a gross receipt of the
business (see S3155).
S3237 Payments into contingency funds Any payments into a contingency fund set up to safeguard against future bad debts
should not be allowed as a business expense. This is an allocation of funds rather
than an expense.

S3238

S3239

S3240 Personal drawings Personal drawings may be shown as a
1. trading expense of the business or
2. withdrawal of capital on the balance sheet (if produced).
In either case, the drawings should not be allowed as a business expense.
S3241 Personal consumption The DM should not allow any money spent on goods for personal consumption as a
business expense. S3242 Personal consumption is not limited to food products. It could include a range of
items, for example
1. paint
2. spare parts
3. building materials
4. drinks. S3243 The DM should not assume
1. personal consumption or
2. if the S/E person is a partner, that the figure for personal consumption will be
the same for each partner. S3244 If the business is one where personal consumption is likely to arise, for example
1. a farmer or
2. a grocer
and no figure has been declared, enquiries should be made about the nature and
value of any produce or goods consumed or used.

S3245

S3259

Calculation of income tax, National Insurance contributions and qualifying premium
S3260 Introduction Having calculated the gross receipts and expenses from self-employment on a cash
flow basis, the DM should consider deductions for (1)
1. income tax (see S3270 et seq) and
2. Class 2 NI contributions (see S3297 et seq) and
3. Class 4 NI contributions (see S3316 et seq) and
4. half of any premium for a personal pension scheme (see S3326).

1 JSA Regs 13, reg 61(3)(b)&(c)

S3261 The DM should base deductions for S3260 1. - 3. on the chargeable income for the
assessment period.

S3262

S3265

S3266 Chargeable income The chargeable income (1), that is, the income chargeable for tax, for the assessment
period is the amount of earnings
1. in the case of a S/E child minder, one third of the gross receipts of that
employment (2) or
2. in the case of a partnership, the person's share of
2.1 the gross receipts of the employment less
2.2 any allowable business expenses (3) or
3. in any other case, the person's
3.1 gross receipts of the employment less
3.2 any allowable expenses (4).

1 JSA Regs 13, reg 62(5); 2 reg 62(5)(b); 3 reg 61(4); 4 reg 61(3)(a)

S3267 The calculation at S3266 1. - 3. should not include any deductions for
1. notional income tax or
2. NI contributions or
3. premiums for a personal pension scheme.

S3268

S3269

S3270 Deduction for notional income tax The DM should use the tax rates and allowances for the year (6 April to 5 April)
appropriate to the assessment period which is being used to calculate the earnings.

Example

Andrew makes a claim for JSA in June 2013. The DM accepts as evidence of his
earnings his cash flow accounts up to the tax year ending the previous April. The tax
rates and allowances used to calculate the notional tax deduction are those for the
previous tax year.
S3271 Tax allowances A tax allowance is an amount of income a person can earn or receive in a tax year
without paying tax. There are a number of tax allowances, but for the purposes of
calculating the earnings of a S/E earner, DMs should have regard to the personal
allowance only. The rates of income tax allowances are in Appendix 1 to this
Chapter.

S3272

S3273

S3274 Personal allowance All earners whether married or single get a personal allowance. There are three
age-related levels of personal allowance (see Appendix 1 to this Chapter), but for
JSA purposes only the personal allowance for a person aged under 65 is deducted
even if another personal allowance appears to apply.
S3275 Tax rates The tax rate is the percentage of taxable income payable to HMRC. Taxable income
is the amount of income remaining after deducting tax allowances. The rate is in
Appendix 1 to this Chapter.

S3276

S3287

S3288 Calculation of deduction To determine the notional amount of income tax to be deducted from a S/E earners
chargeable income the DM should (1)
1. establish the chargeable income
2. establish the personal allowance appropriate to the S/E earner. If it
2.1 is equal to or greater than the chargeable income there will be no
notional income tax to deduct or
2.2 is less than the chargeable income, go to 3.
3. deduct the personal allowance (see Appendix 1 to this Chapter)
3.1 in full if the assessment period is a year or
3.2 on a pro rata basis if the assessment period is less than a year (2)
4. multiply £34,370 (12/13 rates) of the remainder (or, if the assessment period
is less than a year, a pro rata amount) by the basic rate of tax (see Appendix
1 to this Chapter)
5. round up where necessary.
1 JSA Regs 13, reg 62(1); 2 reg 62(2)

Example 1

Example 2

S3289

S3296

S3297 Deduction for notional Class 2 NI contributions A Class 2 contribution is a flat rate contribution although a higher rate is paid by
share fishermen. The Class 2 rates are in Appendix 2 to this Chapter.
S3298 Liability for a Class 2 contribution The DM should make a deduction for a notional Class 2 contribution in all cases
unless the chargeable income is below the small earnings exception level (see
Appendix 2). S3299 The DM should only consider the chargeable income when deciding if a deduction
for Class 2 should be made. If appropriate, a deduction should still be made even if
the claimant holds a small earnings exception certificate.

S3300

S3303

S3304 Calculation of the Class 2 contribution The deduction for the notional Class 2 contribution should be based on the rate of
Class 2 contributions and small earnings exception level current at the time of the
claim only (1). Take no account of any increases in the contribution rates or small
earnings exception level. To calculate the amount of the deduction the DM should
1. establish the chargeable income (2) and
2. determine if a deduction should not be made on the grounds of small
earnings and
3. multiply the weekly rate (see Appendix 2 to this Chapter) by the number of
weeks in the assessment period.
1 JSA Regs 13, reg 62(3)(a); 2 reg 62(5)

S3305

S3315

S3316 Deduction for notional Class 4 NI contributions A Class 4 contribution is a deduction of a fixed percentage of the annual profits of a
business when these profits fall within lower and upper levels (see Appendix 2 to
this Chapter). These payments are in addition to Class 2 contributions. S3317
S3318 Calculation of Class 4 deduction The deduction for a notional Class 4 contribution should be based on the
percentage rate and lower and upper levels current at the date of claim only (1). Take
no account of any increases in the percentage rate and lower and upper levels. The
DM should
1. establish the chargeable income and
2. decide the number of weeks in the assessment period (if there are less than
52 weeks in the assessment period the DM should calculate 3. on a pro rata
basis) and
3. deduct the LEL from chargeable income up to the UEL and
4. multiply the remaining figure by the percentage rate to give the notional
contribution figure. No account should be taken of evidence of actual
payments made or due.
The Class 4 rates are in Appendix 2 to this Chapter.
1 JSA Regs 13, reg 62(3)(b)

Example 1

S3319

S3324

S3325 Premiums for personal pension schemes When calculating S/E earnings the DM should deduct from the chargeable income
half of any premium for a personal pension scheme for the relevant assessment
period (1).
1 JSA Regs 13, reg 61(1)(b)(ii)

Example

Sanjay is in receipt of JSA and runs a small business from home. His earnings are
calculated over a period of a year. Sanjay makes contributions under a personal
pension scheme on a monthly basis. The relevant assessment period is a year.
The DM should calculate the contributions on a yearly basis and deduct half of this
sum from the net profit.
S3326 Personal pensions Personal pension schemes (1) are
1. a scheme under certain pension and taxation legislation (2) or
2. an annuity contract or trust scheme under certain taxation legislation (3).
They provide benefits independently of any employer (although an employer may
still make contributions to such a scheme). Benefits are payable as annuities which
may provide lump sum and pension payments payable on death or retirement.
1 JS Act, s 35; 2 Pensions Schemes Act 93, s 1; Income and Corporation Taxes Act 1988,
Chapter 4 of Part 14 & Finance Act 2004, Sch 36, para 1(1)(g);
3 Income and Corporation Taxes Act 1988,s 620 or 621;
Finance Act 2004, Sch 36, para 1(1)(f) & Income and Corporation Taxes Act 1988, s 622(3) S3327Taking an income from the pension fund allows the purchase of an annuity to be
delayed up to the age of 75. The amount of income to be paid from the fund is
recalculated every three years. At the age of 75 an annuity must be purchased.

S3328

S3349

Particular forms of self-employment
S3350 Child minders A child minder is a person who engages in a contract for services to care for another
person's child in return for payment. Most child minders
1. work from their own homes and
2. are registered with the LA and
3. are restricted to the number of children they care for at any one time. S3351 To calculate a child minder's normal weekly earnings the DM should
1. determine the assessment period in the normal way and
2. calculate the gross receipts for that period and
3. calculate the chargeable income as one third of the gross receipts during the
assessment period (1) but make no deductions for business expenses and
4. calculate a deduction for
4.1 income tax and
4.2 NI contributions and
4.3 half of any premium for a personal pension scheme and
5. deduct any disregard.
1 JSA Regs 13, reg 62(5)(b)

Example

S3352

S3360

S3361 Crofts or small holdings Earnings from a croft or small holding should be decided on the same basis as a
small business. The person should produce an annual statement giving details of
1. income from sales, subsidies, etc and
2. expenditure, including for example, seed, fertiliser, feed and labour.
This statement should be used to calculate the person's net profit.

S3362

S3369

S3370 Farmers A farmer in need of financial assistance may first seek advice from a surveyor, land
agent, valuer or some other similar professional to ensure he is taking advantage of
any schemes or subsidies, such as those administered by the Department for
Environment, Food and Rural Affairs Rural Payments Agency, that may be
available. S3371 Department for Environment Food and Rural Affairs are unable to supply opinions
about the amount of work involved in particular farms or their likely annual returns.
However, DMs may consult the Department for Environment, Food and Rural Affairs
website (www.defra.gov.uk - Economics and Statistics page) for information about
total farm income for the type of enterprise in question.

S3372

S3379

Hotels, guest houses, bed and breakfast establishments S3380The DM should apply the normal remunerative work rules when considering a claim
involving a person running a hotel, guest house, lodging house or bed and breakfast
establishment. S3381
The DM should note that payments received for providing BL accommodation (see S3014) are not earnings (1).
1 JSA Regs 13, reg 60(2)(a)
S3382 Bars and restaurants in hotels, guest houses Income from bars and restaurants where services are provided that are not included
in the BL charge should be treated as earnings from self-employment. The DM
should determine the assessment period and calculate the gross receipts and
allowable expenses in the normal way.

S3383

S3384

S3385 Local exchange trading systems LETS are associations that allow participants to exchange goods and services with
others in the community. S3386 LETS members list their offers of, and requests for, goods and services in a
directory and then trade them using a system of credits. These can be given many
different names such as
· bobbins
· brads
· newberries
· beacons
· acorns.
S3387 Participating in a local exchange trading system scheme Participating in a LETS scheme should be regarded as work. The credits obtained
are payment for the goods or services provided. S3388 DMs should consider whether a LETS participant is engaged in remunerative work
(see ADM Chapter R2). The DM should also consider whether the work-related
requirements continue to be satisfied (see ADM Chapter R4).S3389
S3390 Local exchange trading credits Credits can be exchanged for goods and services in participating shops and
businesses in much the same way as ordinary currency. Credits are considered
taxable income by HMRC. S3391 Credits can be treated as
1. capital or
2. earnings
depending on the circumstances of each case. Credits are not payments in kind. S3392 If a person
1. undertakes occasional, personal transactions for credits, for example selling
an item of furniture, the credits received should be treated as capital and
2. is gainfully employed as a S/E earner and receives credits as payment for
services provided, those credits should be included in the gross receipts of
the business and are subject to the appropriate disregard. S3393 The value of credits is equivalent to the number of credits awarded for the particular
goods or services at the relevant exchange rate. S3394 The DM should firstly find out whether the organisers of the scheme have equated
the credits to a sterling equivalent. This may have been done for HMRC or VAT
purposes. If so, that equivalent can be used as the exchange rate. S3395 If a sterling equivalent is not available the DM should consider the question based
on the circumstances of each case, including
1. how the transaction price is arrived at
2. whether the amount of credits earned varies with the type of work performed
3. what the exchange value of a credit is (what does it buy?)
4. whether the claimant works in the cash economy as well as in the LETS economy
5. what the average local rate of pay is for the particular work performed.

S3396

S3399

S3400 Partnerships Partners are similar to sole traders, except that ownership and control of the
business is shared between two or more people. S3401
People can enter into a partnership under an agreement that may be written, for
example a deed of partnership, verbal or implied. A deed of partnership includes
details of how any profit or loss is shared between the partners. In the absence of
an agreement any profit should be shared equally among the partners (1).

1 Partnership Act 1890, s 24

S3402 The conditions under which a partnership is formed, operates or ends, are governed
by the terms of a partnership deed or agreement together with the provisions of the
Partnership Act 1890. For most purposes, the terms of the deed or agreement
prevail over the provisions of the Act. Where a deed or agreement exists, it
becomes a legal document and its interpretation is a matter of law. S3403 The legal status of a partnership should not be confused with that of a company, in
that a partnership has no legal personality in law. At any one time the assets and
liabilities of the partnership are (subject to the partnership deed or agreement and
the Partnership Act 1890), the joint and several assets and liabilities of the partners.
Note:
Scots Law on the legal status of a partnership differs. In Scotland a
partnership is a separate legal entity (1), distinct from the partners who carry out its
business. DMs should refer any cases to DMA Leeds if further guidance is needed.

1 Partnership Act 1890, s 4(2)

S3404 A partnership does not necessarily end when it ceases trading. It must be formally
dissolved. The partnership deed or Partnership Act 1890 may continue to impose
rights and obligations on the parties following dissolution, providing further time for
the winding up of its affairs. Further delays may result from legal challenges
concerning the partnership's affairs. S3405 Where a partnership ends and the claimant has finished employment in the
business, a reasonable period of time is allowed for the claimant to dispose of any
assets before they are regarded as capital for benefit purposes. In considering that
period of time, regard should be had to any legal obligations and restrictions
imposed by the partnership deed or the Partnership Act 1890. S3406 The sale of assets may sometimes provide an income receipt as opposed to a
capital receipt (e.g. the sale of "work in hand" or "stock in trade" might well be
considered as resulting in an income receipt and not represent capital). Any such
decisions should be based on the principles of commercial accountancy. The
decision would need to reflect the approach taken by an accountant or HMRC to
such questions.
S3407 Calculation of a business partner's normal weekly earnings Before calculating a partner's share of the net profit of the business, the DM should
ensure that the gross receipts include the following for all partners
1. personal drawings
2. expenses covering business and private use. S3408 To calculate the normal weekly earnings of a business partner (1), the DM should
determine the assessment period and
1. total the gross receipts of the whole business and
2. deduct any allowable expenses incurred by the whole business and
3. calculate the partner's share of the resulting "net profit"2. The partner's share
will be
3.1 the share set out in the deed of partnership, if there is one or
3.2 the shares agreed in an express or implied agreement between the
partners or
3.3 an equal share (3) if neither 3.1 nor 3.2 apply, for example, if there are
four partners, each partner's share is 25% and
4. deduct from 3. an amount for
4.1 income tax and
4.2
NI contributions calculated on the amount at 3. and
5. deduct half of any premium for a personal pension scheme and
6. deduct any disregard.
1 JSA Regs 13, reg 61 ;2 reg 61(4);
3 Partnership Act 1890, s 24

Example 1

Example 2

[S3409]

S3410 Salaried partners A salaried partner may be an employed or S/E earner. A salaried partner may be a
person who
1. receives a salary as remuneration and maybe a profit-related bonus. This
type of salaried partner is an employed earner (1) or
2. may be paid a fixed salary not based on profit. But in addition is included in
the partnership deed and is entitled to a share of the profits. This type of
salaried partner is a S/E earner.

1 Ross v. Parkins 1871, LR 20 Eq 331

S3411 The DM should
1. consider the facts of each case and
2. examine the relationship between the person and the other parties
to decide if the salaried partner is a S/E earner. S3412 If a S/E salaried partner receives a salary from the business in addition to a share of
the business profit, the salary should not be deducted before arriving at the total net
profit to be shared between partners. The DM should
1. calculate the chargeable income and
2. deduct tax, NI contributions and any premiums for a personal pension scheme
from the partner's share of the chargeable income.

S3413

S3424

S3425 Renting out property as a business If a person is letting properties that are not the home, the DM needs to consider if
this is by way of a business (1).

1 R(FC) 2/92

S3426 A person who
1. has a single property that is not the home and
2. lets the property to tenants and
3. collects rents and does any repairs
is not conducting a business. The property is primarily an investment.

Example

Neil inherits a house from his parents. Neil lives elsewhere with his family.
After trying for six months to sell the inherited property without success, he decides
to let the house on a nine month contract to four students. Neil collects the rent once
a month and carries out occasional minor repairs.
After the property has been let for six months Neil claims JSA. The DM determines
that Neil is not operating a business. The DM then goes on to consider how to treat
the value of the house and the rental income. S3427 A person who joins with others to buy properties so that they can be let as flats or
offices could be said to be conducting a business. The
1. number of properties involved and
2. long term intentions of the person
are factors that need to be considered. S3428 If the DM determines that a person is conducting a business from renting out
properties, the income, that is the rent, should not be treated as capital. The income
has not been obtained from capital, but from the person's business. The property
was used as an asset. The rent is a gross receipt of the business.

Example

S3429

S3439

S3440 Seasonally self-employed If a S/E earner is seasonally S/E the DM should consider if the S/E earner is in
remunerative work (see ADM Chapter R2). If not, the DM should
1. consider the guidance at S3020 - S3023 and
2. determine if the S/E earner remains gainfully employed as a S/E earner.

Example

S3441

S3449

S3450 Sub-contractors A sub-contractor is a S/E person who enters into a contract with another contractor
to do a particular job, and is most commonly found in the construction industry.

Example

A firm of builders contract to build a house extension for Tony. They sub-contract
the electrical work to Lee. Lee is a S/E sub-contractor and not an employee of either
the building firm or Tony.
When Lee completes the work he moves to a different contract that may be for
further work with the building firm or for a different contractor. S3451 If a S/E sub-contractor claims JSA the DM should consider
1. the guidance at S3020 - S3023 and
2. if the S/E sub-contractor remains gainfully employed as a S/E earner.

Example

Stephen claims JSA. He is a S/E electrician. He sub-contracts for other contractors.
Stephen has claimed JSA because he has just finished one contract and work on
the next contract is not due to start for another couple of weeks. Stephen states that
1. he still regards himself as S/E and his business as a going concern, he has
only claimed because he has no work at the moment
2. there are good prospects of work in the future
3. he is advertising for work all of the time and further contracts are in the pipeline
4. there have been other occasions where there has been a break between
contracts.
The DM considers the guidance at S3020 - S3023 and determines, in this case,
that Stephen remains gainfully employed as a S/E earner.
S3452 Actors and entertainers DMs must consider claims from actors and other entertainers in the same way as
any other claimants. Each case must be decided on its own merits. The DM should
decide whether a claimant's earnings are from employment as a S/E earner or
employment as an employed earner. S3453 In general, because of the nature of an actor's or entertainer's employment, the DM
may find that their earnings are from employment as a S/E earner. However, it is
possible for an entertainer whose general pattern of employment is that of a S/E
earner, to have periods of employment as an employed earner at the same time as
his overall self-employment. S3454 The fact that an actor or entertainer has periods of employment during which class 1
NI contributions are payable is not conclusive when deciding whether that
employment is as an employed earner. It is for the DM deciding the claim to decide
whether earnings are from employment as an employed earner or from self-
employment. Where an entertainer whose general pattern of employment is that of a
S/E earner contends that certain engagements were as an employed earner and
that class 1 contributions were paid it will be for the DM to decide whether the
claimant was employed under a contract of service or otherwise.

Example 1

Laura is an actress. She makes a claim for JSA because she has left her partner
who was in F/T employment. Her acting engagements are sporadic, and she is not
currently working. She continues to look for work and remains on her agent's books.
She has been booked for some future engagements, but nothing substantial, and
has not worked for several weeks. She says that she could find more substantial
acting work at any time, that being the nature of work. In the year prior to the current
claim, the claimant has had a number of engagements in advertising and the theatre
as well as three separate, short term, engagement with the BBC to appear in three
separate dramatic productions. Her most substantial earnings were derived from
these engagements with the BBC. She states that she was actually employed by the
BBC under a contract of service and says that the fact that she paid class 1 NI
contributions supports this contention. As such she argues that her earnings from
the BBC should not be included when working out her earnings from self-
employment. The DM:
1. decides that the claimant is gainfully employed as a S/E earner (see S3020 -
S3023)
2. considers the terms under which the claimant was engaged by the BBC and
decides that as she was engaged to perform a specific role on particular
occasions for a fixed fee, she was employed under a contract for services and
as such the earnings fell to be taken into account with her other earnings from
self-employment
3. decides that the sporadic nature of the employment is the normal pattern of
the business and calculates her average weekly earnings over the preceding
year.

Example 2

S3455

S3469

S3470 Disregard of earnings from self-employment The following disregards should be applied to the net profit of a S/E earner.
S3471 Earnings from self-employment that has ceased If a person has been engaged in
1. remunerative work as a S/E earner or
2. P/T self-employment
and that employment has ceased (that is, ceased outright), any earnings derived
from that employment are fully disregarded unless the earnings are royalties,
copyright payments or Public Lending Rights payments (see S3073 - S3081)1.
1 JSA Regs 13, Sch , para 4

Example

James was S/E. He last worked on 11 November. His business has completely
ceased to trade. He received earnings on that day. He claims JSA on 12 November.
The DM determines that James has ceased to be a S/E earner. The earnings
received on 11 November are disregarded.
S3472 Earnings payable abroad Money that is paid to the business in a country outside the UK should be treated as
a gross receipt if it is received by the business. For example, when it is paid
1. to any branch or official representative of the business or
2. into any business bank account. S3473
Any gross receipts that are received by the business in a country outside the UK
that prohibits the transfer of funds to the UK should be disregarded for as long as
that restriction applies (1).
1 JSA Regs 13, Sch , para 9

Example

[S3474]

S3475 Earnings paid in a foreign currency Where earnings are paid in a foreign currency, disregard any amount charged for
changing them into sterling, for example banking charges and commission
payments.
1 JSA Regs 13, Sch , para 10
S3476 Earnings disregard The relevant earnings disregard (see ADM Chapter S2) should be applied.

S3477

S3500

Share fishermen - introduction and additional conditions for payment
S3501 Who is a share fisherman A share fisherman is (1)
1. a person who
1.1 usually works in the fishing industry and
1.2 is S/E and
1.3 is the master or a crew member of a fishing boat crewed by more than
one person and
1.4 is paid for that work wholly or partly by a share of the profits or gross
earnings of the fishing boat or
2. a person who
2.1 was a person who worked as in 1., but has permanently stopped such
work because of age or ill health and
2.2 usually works
2.2.a ashore in GB (see ADM Chapter C3) and
2.2.b as S/E and
2.2.c making or mending any gear belonging to a fishing boat or
performing other services that help, or are connected with, a
fishing boat and
2.3 is paid for that work wholly or partly by a share of the profits or gross
earnings of the fishing boat and
2.4 has not ceased to usually work as described in 2.2.

1 JSA Regs 13, reg 67

S3502
The master and all the members of the crew of a fishing boat are within the
definition at S3501 1., This includes those who do a specialist job, such as an
engineman, cook or firefighter, as long as they are paid at least partly by a share in
the earnings of the fishing boat (1).
1 R(U) 10/51
S3503 Meaning of fishing boat "Fishing boat" means (1) a boat that is used
1. for or in connection with fishing for sea fish and
2. in order to make a profit.
Sea fish includes shellfish, salmon and migratory trout.
1 JSA Regs 13, reg 67; Merchant Shipping Act 1995, s 313(1)
S3504 Meaning of usually works A DM can consider that a person "usually works...." if the person has
1. done that job for some time or
2. only recently started it but intends to follow it in the future.
S3505 Meaning of profits or gross earnings of the fishing boat The profits or gross earnings of the fishing boat are the money received for the
catch. People are paid by a share of the profits or gross earnings of the fishing boat if
1. the fishermen
1.1
sell the catch themselves (either retail or wholesale) and
1.2
share at least some of the profits between them or
2. the fishermen catch the fish for someone who then pays them a piece-rate
1
wage .
1 CU 495/49(KL)

S3506

S3508

S3509 Additional condition for payment of Jobseeker's Allowance to share fishermen Share fishermen have to prove that they have not neglected to avail themselves of a
reasonable opportunity of employment as share fishermen for any period in a
benefit week when they have not worked as share fishermen. If they cannot prove
this, even if it is just for part of one day in a week, no JSA is payable for the whole of
that benefit week (1)
1 JSA Regs 13, reg 71(1)
S3510 Meaning of benefit week "Benefit week" means (1) a period of seven days beginning with the
1. date of claim or
2. day after the last day of the previous benefit week.
1 JSA Regs 13, reg 71(4)

Example

Joe, a share fisherman, makes a claim for JSA on Thursday. He does not want to
back-date it. His first benefit week will be from the Thursday he has made his claim
to the following Wednesday. His second benefit week will run from the next
Thursday to the following Wednesday.S3511
- S3512
S3513 Meaning of worked as a share fishermen This guidance applies when a DM is identifying the period for which a share
fisherman has to prove that he has not neglected to avail himself of employment as
a share fisherman. Share fishermen do not always have to catch fish to work as
share fishermen. They will have worked as share fishermen if they have done any of
the following work (1) and they satisfy the conditions in S3514
1. any repairs or maintenance done to the fishing boat or its nets or gear
(including running repairs) or
2. any work in connection with
2.1 laying up the boat, nets and gear at the end of a fishing season or
2.2
preparing the boat, nets and gear for a season's fishing.
But share fishermen will not have worked as share fishermen if they have done work
which is not to the fishing boat or its nets or gear (2).

1 JSA Regs 13, reg 71(2)(b); 2 R(U) 33/52

S3514
The work in S3513 1. and 2. is only work as a share fisherman if (1)
1. at the time it is done the work is, or is likely in the near future to become,
necessary for the safety or reasonable efficiency of the fishing boat and
2. it is the duty of the share fisherman (by agreement, custom, practice or
otherwise) to perform it without pay, other than a share in the profits or gross
earnings of the fishing boat.
If the work cannot be postponed for as long as two months, then it is likely in the
near future to become necessary for the safety or reasonable efficiency of the
fishing boat.

1 JSA Regs 13, reg 71(2)(a)

S3515
In most cases a share fisherman on board a boat that leaves harbour equipped to
fish will have performed work as a share fisherman for that period, even if fishing is
stopped or prevented by bad weather or other causes. But if the share fisherman
has only done what was reasonably necessary to find out that weather conditions
were not suitable for fishing, the fisherman has not performed work as a share
fisherman, even if the boat left harbour equipped to fish (1).

1 R(U) 1/81

S3516
Examples of work as a share fisherman are
1. scraping and painting a boat, where that work is likely to become necessary
for its reasonable efficiency in the near future (1)
2. fishing for bait (even if none is caught) where this has to be done and is
normally done before fishing for a catch to sell (2)
3. setting off for the fishing grounds, but returning to dock before reaching them
because of an accident to the fishing boat or because the harbour entrance
was blocked (3)
4. returning to home port earlier than intended because they are unable to
continue fishing alone when their neighbouring boat with whom they were
fishing breaks down (4).

1 CSU 88/49 (KL); 2 R(U) 22/51; 3 R(U) 9/52; 4 R(U) 9/53

S3517
Examples of work which is not work as a share fisherman are
1. voluntarily helping a harbour master, according to custom, to place a boom
across a harbour to protect vessels in the harbour (1)
2. sailing to the entrance to a loch just to check if the weather was suitable for
fishing, where that was the only practicable way of checking this (2).
1 R(U) 33/52; 2 R(U)1/81
S3518 Neglected a reasonable opportunity of employment as a share fisherman Share fishermen have to prove that they have not neglected to avail themselves of a
reasonable opportunity of employment as share fishermen for any period they have
not worked as share fishermen either catching fish or as defined in S3513 - S3514 (1).
Any employment as a share fisherman is covered, including
1. the claimant's usual work as a share fisherman on the claimant's usual boat
(including work as defined in S3513 - S3514)
2. employment as a share fisherman on a boat other than the claimant's usual
boat (including work as defined in S3513 - S3514).

1 JSA Regs 13, reg 71(1) & (2)

S3519 It is
for claimants to prove that they did not neglect an opportunity of such
employment (1). But DMs should accept that claimants satisfy this condition if there is
no evidence to suggest otherwise. Information about work which claimants might
have had may come, for example, from an employer or owner of a boat, or from the
local fishery officer. If some boats go fishing from a port while others do not, it is
difficult for those who stay behind to prove that they have not neglected a
reasonable opportunity to fish (2).
1 R(U) 28/53; 2 R(U) 1/51

Example 1

Example 2

A fishing boat fishes with another boat - neither boat can fish alone. One of the
boats is under repair for two days, and the crew of the other boat do not go fishing
either. But other local boats are available and could have been hired on those days.
As the crew of the other boat make no enquiries about these boats, and do not
make any attempt to find other work as share fishermen, they have not proved that
they did not neglect an opportunity to fish. S3520
The guidance at ADM Chapter S5 on the meaning of neglect to avail and
reasonable opportunity should be applied when deciding whether a share fisherman
has neglected a reasonable opportunity of employment as a share fisherman (1).
1 R(U) 9/72

Example

1 R(U) 9/72

S3521 An opportunity should not be regarded as reasonable if taking it would reduce the
share fisherman's chances of going back to fishing with their usual boat.

S3522

S3535

S3536 Further condition for payment if fishing boat is crew owned If share fishermen are masters or members of the crew of fishing boats that are
crew owned, they must prove that, for any period in a benefit week when they have
not worked as share fishermen, the fishing boat did not put to sea to go fishing because
1. the state of the weather meant the boat could not reasonably have put to sea
to go fishing (see S3542 - S3546) or
2. it was being repaired or having maintenance work done to it, other than the
repairs or maintenance referred to in S3513 - S3514 (see S3551 - S3552) or
3. there was an absence of fish in any waters in which the fishing boat could
reasonably be expected to operate (see S3560 - S3563) or
4. of any other good cause which forced them not to fish (see S3570 - S3584)1.

1 JSA Regs 13, reg 71(3)

S3537 If the claimant cannot show that one of the reasons at 536 is met for any period in a
benefit week, even if it is just for part of one day in a week, JSA is not payable for
the whole of that benefit week. This applies to the share fishermen described in S35012. as well as those who actually go fishing.
S3538 Meaning of benefit week Guidance on the meaning of benefit week is at S3510 - S3511.
S3539 Meaning of worked as a share fishermen Guidance on the meaning of worked as share fishermen is at S3513 - S3517.
S3540 Meaning of crew owned If the master or any member of the crew is the owner or part owner of the boat, the
boat is crew owned.
S3541 Share fishermen who are no longer masters or members of the crew Share fishermen do not have to satisfy the further condition at S3536 if, although
linked to some extent to a particular boat, they can be treated as no longer being a
master or member of the crew. They cannot be so treated just because the boat is
idle (1).
1 R(U) 29/58; R(U) 6/63; R(U) 19/64

Example 1

Example 2

Example 3

Example 4

Skippers at a particular port decide not to go fishing because there is no economic
market for the catch. Colin, a share fisherman on one of the boats affected, who is
not an owner of the boat he works on, is paid off. After six weeks the boats start
fishing again and Colin goes back to work on the same boat. He has not ceased to
be a member of the crew while the boat was temporarily idle. Colin does have to
satisfy the additional condition at S3536.
S3542 Weather The question whether, because of the state of the weather, the boat could not
reasonably have put to sea to go fishing is one of fact which has to be considered
by the DM. Each case should be determined on its own particular facts, including
the opinion of the local fishery officer where the DM considers it necessary to obtain
it. S3543
Usually it is not possible to accept that the weather prevented a particular fishing
boat from putting to sea if on the same day other boats from the same port were
able to fish. But it may be possible to accept this if, for example, the evidence shows
that the weather was not too bad to stop larger boats from fishing, but was too rough
for the claimant's boat (1).

1 R(U) 15/57; R(U) 2/62

S3544
The use of the word "reasonably" indicates that the test should be applied in a
reasonable, and therefore practical, manner. So the claimant does not have to show
that the weather was such that the boat could not put to sea throughout the whole
day. The claimant only has to show that the boat could not put to sea at all normal
and reasonable times for putting to sea on the day and at the port or harbour in
question (1).
1 R(U) 30/58; R(U) 2/62

Example 1

Example 2

Pat is a crew member of a fishing boat. The crew are ready to go to sea at 3am, but
they are prevented by bad weather. At 8am the master decides that fishing will not
be possible that day, and he dismisses the crew. The weather improves, and other
boats the same size (which on that day could only safely leave or enter the harbour
before 7am, or between 11am and 7pm or after 11pm) put to sea and fish
successfully. Pat does not satisfy the condition at S3536 1.. S3545 A fishing boat is not prevented from putting to sea by the weather if it could have gone
1. to the fishing grounds by a different and more sheltered route, even if it is
longer (1) or
2. to different fishing grounds.

1 R(U) 15/57

S3546 A fishing boat cannot go to different fishing grounds if it is not equipped to catch the
fish which live there. The boat is not expected to spend money to change gear to be
able to catch a different type of fish because there is bad weather on the fishing
grounds which it is equipped to fish in.

S3547

S3550

S3551 Repairs A share fisherman who says that the boat did not go fishing because it was being
repaired or having maintenance work done to it must show that the repairs or
maintenance were not those described in S3513 - S3514. If the claimant cannot do
this, this condition is not satisfied, and JSA is not payable. S3552 Repair and maintenance work other than as described in S3513 - S3514 includes
the period during which the boat is sailing or being transported to and from the
repair yard. This condition is satisfied for those days.

S3553

S3559

S3560 Absence of fish Absence of fish does not mean that
1. there are no fish at all or
2. there is a shortage of fish
in the waters concerned. There will be an absence of fish, and the condition will be
satisfied if there is a negligible quantity, that is only very few fish in the waters
concerned (1).

1 R(U) 20/58

S3561 The claimant will not satisfy the condition just because
1. the catches are so small that it is not financially worthwhile to continue daily
fishing (1) or
2. that a particular type of fish are absent if
2.1 other fish are plentiful and
2.2 the boat can be easily adapted for the different type of fishing required.

1 R(U) 20/58

S3562
Sometimes, from the same port, some share fishermen go fishing and some do not.
In such cases, it is difficult for those who do not go to prove that there was an
absence of fish from the waters (1).
1 R(U) 1/51; R(U) 11/58

Example 1

Example 2

Thomas, a share fisherman who normally fishes by line, does not fish when it
becomes unprofitable. The fish are not taking bait, and his boat is not equipped for
net fishing. But the day before he stops fishing, he caught 184 kilos (29 stones) of
fish. And other boats successfully fish on the days he does not, using different gear.
There is no absence of fish from the waters. Thomas has not satisfied the further
condition. JSA is not payable for the benefit weeks in which the days he did not fish
fall.
S3563 Evidence Whether there is an absence of fish is a question of fact which the DM must
determine on the evidence available. This will usually include a statement by the
claimant. Where
1. the Jobcentre Plus Office lacks information or technical knowledge on the
issues involved or
2. it is desirable to obtain some confirmation of the claimant's statement
the DM will usually need the written opinion of the local fishery officer. Sometimes
expert opinion from another source will be available (1).
1 R(U) 22/59

Example

S3564

S3569

S3570 Other good cause Good cause will normally only be shown where share fishermen have been forced
not to fish by something (1)
1. imposed on them and
2. outside their control and
3. about which they had no choice.
1 CSU 94/50(KL); R(U) 5/56; R(U) 16/57

Example 1

Example 2

Example 3

Dominic, a share fisherman, does not go fishing because
1. he runs out of bait and
2. a different method of fishing without bait does not offer any reasonable
chance of success because the water is cloudy.
Neither of these reasons is good cause. S3571 The claimant cannot show good cause because as an individual the claimant could
not fish because
1. the fishing boat did not put to sea (1) or
2. the claimant had to follow the master's decision (2).
The question of good cause relates to the boat and crew as a whole. To satisfy the
condition the claimant must show that the boat did not go fishing due to good cause
that is, some compelling circumstances over which the crew as a whole had no
control (3).

1 R(U) 7/55; 2 R(U) 15/57; 3 R(U) 7/55; R(U) 15/57

S3572 It may be that there are circumstances which make it entirely reasonable for the
crew as a whole to decide not to go fishing. But this will not automatically mean that
this is good cause. S3573
It may be reasonable for a boat not to go fishing when it is likely that the trip will be
unprofitable. But this, of itself, is not good cause (1).
1 R(U) 10/51; R(U) 17/55; R(U) 19/64

Example 1

Jerry's boat, with others, stays in harbour because the current price for fish is not
high enough. This is not good cause.

Example 2

Example 3

S3574

S3575

S3576 No market for fish Good cause will be shown if there is no possible market for the potential catch (1).
1 R(U) 6/56; R(U) 16/53

Example

S3577

S3578

S3579 Conservation - fishing quotas Orders made under certain legislation (1) forbid the catching of certain species of fish
(mostly herring and mackerel) by certain methods and at certain times. EC law
forbids fishing once a set quota has been reached, and forbids fishing in certain
areas. Sea fishermen who fish for a species covered by such an order or EC law
have good cause for not fishing for that species if the reason is that they are
forbidden to do so by the orders or EC law or because the quota has been reached.

1 Sea Fish (Conservation) Act 1967

S3580 But the DM also needs to consider whether or not the share fishermen have good
cause for not fishing for other types of fish, before good cause can be shown and
the condition met. In particular the DM should consider if the boats need to be and
can be converted to catch other fish that are available. The DM should also take into
account the difficulties involved in converting the boats, when compared to the
length of time before the share fisherman can go back to catching their usual
species of fish.

S3581

S3582

S3583 Crew members absent It will be good cause if a boat does not go to sea because (1)
1. one or more members of the crew are absent through necessity, not through
choice and
2. no other arrangements to crew the boat, or for it to go out short handed, can
reasonably be made.
1 R(U) 7/55; R(U) 3/57; R(U) 6/58; R(U) 3/64

Example 1

Example 2

Example 3

Ray, a member of the crew of a boat, is absent because of his father's illness.
Although a replacement could have been found, the boat does not sail. This is not
good cause.

Example 4

A boat is unable to begin a fishing trip on the day arranged because of the sudden
illness of Dave the skipper. Dave is not expected to be ill for long, and no-one
knows of a local substitute. No effort is made to try to find a substitute skipper for
at least a week. This is good cause. S3584 There may be other circumstances in which it is not possible to get sufficient crew
for the boat to put to sea. For example, number of men available in the area reduce.
This would be good cause (1).
1 R(U) 6/63

S3585

S3599

Share fishermen - remunerative work
S3600 Introduction The normal rules on remunerative work (see ADM Chapter R2) apply to share
fishermen, with one exception. The hours worked as a share fisherman do not count
towards the remunerative work exclusion (1).
1 JSA Regs 13, reg 72
S3601 Calculating hours of work When calculating the hours of work ignore all the time spent in work as a share
fisherman. Hours worked in any other occupation, or in work which does not come
within the meaning of work as a share fisherman, count towards the remunerative
work exclusion in the normal way.
S3602 Work as a share fisherman Work as a share fisherman is not defined. It will normally fall into two types
1. time spent at sea
2. time spent maintaining the boat and equipment.
DMs may find the guidance at S3513 - S3517 helpful in determining whether work
done is work as a share fisherman.

S3603

S3753

Earnings of share fishermen
S3754 A share fisherman is a self-employed earner A share fisherman is a S/E earner. One difference between a
1. share fisherman and
2. business partner
is that the share fisherman pays a higher rate of Class 2 contributions (see S3297
and Appendix 2 to this Chapter) to qualify for JSA. Class 4 liability is the same (see S3316 and Appendix 2 to this Chapter). S3755 Earnings should only be taken into account when a person is a S/E earner. A S/E
earner is a person who is gainfully employed
1. in GB and
2. in employment that is not employed earner's employment (1).
Note:
A share fisherman may also be employed in another occupation as an
employed earner. This does not stop the share fisherman being S/E.
1 JSA Regs 13, reg 2(2); SS CB Act 92, s 2(1)(b)
S3756 Claims from share fishermen When considering a claim that includes a share fisherman the DM should decide if
that person is in remunerative work. If the share fisherman is in remunerative work
JSA is not payable. S3757 If the share fisherman is not in remunerative work the DM should consider if
1. any other conditions of entitlement are satisfied and
2. the person is currently gainfully employed as a share fisherman (see S3020 -
S3025) and
3. any earnings are to be taken into account.

[S3758]

S3759 Earnings of a share fisherman The earnings of a share fisherman are the gross receipts (see S3125) of the
employment (1).

1 JSA Regs 13, reg 60(1)

S3760 S/E earnings do not include (1)
1. charges paid to the share fisherman in return for providing BL
accommodation (see S3762) or
2. any of the payments in S3013 et seq.

1 JSA Regs 13 reg 60(2)

S3761 A share fisherman may be S/E and also have other work as an employed earner.
The earnings from each employment should be calculated separately.
S3762 Board and Lodging accommodation BL accommodation is accommodation (1)
1. where the charge for the accommodation includes some cooked or prepared
meals that are both
1.1 cooked or prepared by someone who is not
1.1.a the person provided with accommodation or
1.1.b a member of the family of the person provided with
accommodation and
1.2
eaten in that accommodation or associated premises or
2. provided to a person in a
2.1 hotel or
2.2 guest house or
2.3 lodging house (see S3763) or
2.4 or similar establishment or
3. that is
3.1
not provided by a close relative (see S3764 - S3765) of
3.1.a the person provided with accommodation or
3.1.b a member of the family of the person provided with
accommodation or
3.2 provided on a commercial basis.

1 JSA Regs 13, reg 60(3)

S3763 A lodging house
1. is not a private house in which rooms are rented, even if services such as the
provision and washing of bed linen are provided and
2. is a place where accommodation is offered on a long-term basis and
3. is the kind of establishment that may have a sign outside offering
accommodation. S3764 A close relative is (1)
1. a parent, parent-in-law, son, son-in-law, daughter, daughter-in-law, step-
parent, step-son, step-daughter, brother, half-brother, sister, half-sister and
2. the partner of any of those persons in 1..

1 JSA Regs 13, reg 2(2);

S3765 For the purposes of S3764, a child who is adopted becomes
1. a child of the adoptive parents and
2. the brother or sister of any other child of those parents.
The child stops being the child of, or the brother or sister of any children of, the
natural parents. Whether an adopted person is a close relative of another person
depends upon the legal relationship and not the blood relationship (1).
1 R(SB) 22/87

S3766

S3773

S3774 Gainfully employed A S/E earner is someone who is gainfully employed. If a share fisherman is not
working, this does not mean that the share fisherman has ceased to be gainfully
employed. S3775 A share fisherman may be a
1. boat owner or
2. regular crew member or
3. a casual crew member. S3776 Earnings should only be taken into account if the share fisherman is gainfully
employed. The DM should
1. consider the guidance at S3020 - S3023 and
2. determine if the share fisherman remains gainfully employed as a S/E earner.

Example 1

Example 2

Barry is a share fisherman, he is a regular crew member. The boat is tied up
because of extensive damage caused when the boat recently ran aground in bad
weather. The boat will be tied up for a long period of time. He claims JSA. Barry
states that
1. the boat owner and the bank do not regard the boat as a going concern
2. he will resume work on the boat when it is repaired, however he is unable to
work whilst the boat is being repaired
3. he is not regarded as S/E by HMRC.
The DM considers the guidance at S3020 - S3023 and determines, in this case,
that Barry is not gainfully employed and no earnings should be taken into account. S3777 If the share fisherman is gainfully employed the DM should consider what earnings
should be taken into account. S3778 S3779For the purposes of S3020 9., periods when the boat is confined to harbour, for
example, because of
1. bad weather or
2. routine repairs and maintenance or
3. exhaustion of fishing quotas
would usually be part of the normal pattern of business for a share fisherman. S3780 Each case should be considered individually. But where long tie ups occur on a
regular basis the DM may consider that they form part of a regular pattern of
business.

S3781

S3785

S3786 Sickness If a share fisherman is unable to work due to sickness, the DM should
1. consider the guidance at S3020 - S3023 and
2. determine if the share fisherman remains gainfully employed as a S/E earner. S3787 A share fisherman will experience occasional minor illnesses like anyone else. The
DM should regard the periods of minor illness as part of the normal pattern of self-
employment..

S3788

S3792

S3793 Share fisherman no longer self-employed If the DM determines that a share fisherman is no longer S/E S3795 should be
considered.

Example

Ivor is a share fisherman who is a boat owner. He decides to sell the boat and ties it
up until it is sold. He claims JSA.
The DM determines
1. that Ivor is no longer a S/E share fisherman and
2. the value of Ivor's boat and whether it can be disregarded. S3794
S3795 Earnings from self-employment that has ceased If a person has been engaged in
1. remunerative work as a S/E share fisherman or
2. P/T self-employment as a share fisherman
and that employment has ceased (that is, ceased outright), any earnings derived
from that employment are fully disregarded (1).
1 JSA Regs 13, Sch , para 4

Example

S3796

S3809

S3810 Assessment period The normal weekly earnings of a share fisherman should be calculated by using the
gross receipts received and expenses incurred or paid out (see S3871 - S3897)
during the assessment period. S3811
The assessment period is the share fisherman's benefit week (1).

1 JSA Regs 13, reg 73(3), (61(2))

S3812 A share fisherman is paid JSA for complete benefit weeks even if the share
fisherman is without work for only part of the benefit week. A share fisherman is not
entitled to part-week payments (see ADM Chapter S1). S3813 Any work as a share fisherman does not count towards the remunerative work rule
(see S3600 et seq).
S3814 Benefit week For the assessment period, a benefit week is a period of seven days beginning with the
1. date of claim or
2. day after the last day of the previous benefit week (1).
1 reg 73(3)(61(12)) & reg 74(3)

Example

S3815

S3819

Calculation of weekly earnings
S3820 Method of calculation To calculate the earnings of a share fisherman the DM
1. should establish the gross receipts of the boat during the assessment period
(including any payment in S3826 2.) and
2. deduct from the gross receipts the allowable expenses of the boat, and the
share fisherman, taking care to avoid duplication and
3. calculate the person's share of the sum remaining at 2. according to the
agreement for distributing the proceeds of the catch (1) and
4. deduct from the figure in 3. amounts for
4.1 notional income tax (see S3270 and S3934) and
4.2 notional NI contributions (see S3297 and S3936 et seq) and
4.3 half of any premium (see S3325) paid for a personal pension scheme
and
5. deduct the correct disregard(s) (see S3953).
The figure that is left is the earnings that should be taken into account.
1 JSA Regs 13, reg 61(1)(b); reg 73(3)(61(3))

S3821

S3823

S3824 Evidence The evidence that a share fisherman should provide depends on whether the share
fisherman is
1. an owner or part owner of a boat or
2. a regular crew member.
S3825 Share fisherman is an owner or part owner of a boat A share fisherman who is the owner or part owner of a boat should be asked for details
of the
1. gross receipts and expenses of the boat for the assessment period and
2. agreement for sharing the proceeds of the catch.
S3826 Share fisherman is a regular crew member A share fisherman who is a regular crew member of a boat should be asked
1. to approach the boat owner for details of the
1.1 gross receipts and expenses of the boat during the assessment period
and
1.2 arrangement for sharing the proceeds of the catch and
2. if the boat owner pays the
2.1 employee's portion of any SS contribution or
2.2 cost of provisions (such as food) or
2.3 cost of replacement gear or clothing and
3. if the sum declared for gross receipts is the income received by the boat
before or after any of the payments under 2. have been made. S3827 If the conditions for deducting an expense is met (see S3871 or S3873) the DM
should allow as an expense payments in S3826 2. that have not been deducted
from the gross receipts figure. This will be in addition to any other allowable
expenses incurred by all members of the sharing scheme. S3828 If the gross receipts figure is net of any deductions in S3826 2. those amounts
should be added back to establish the correct gross receipts figure. The DM should
then consider the deductions in the normal way.

S3829

S3840

S3841 Gross receipts For JSA purposes, a share fisherman's earnings, that is the gross receipts, are
treated as paid in the benefit week in which they are earned1. This means that a
share fisherman who is
1. gainfully employed and
2. in receipt of JSA
will not have any earnings averaged, unless S3842 - S3845 applies.
1 JSA Regs 13, reg 73(3)(61(2))

Example

Abraham is a regular crew member, he is in receipt of JSA and he has a Thursday
to Wednesday benefit week. He works as a share fisherman on Monday 12 March
to Tuesday 12 March but he does not receive his share of the profit until Thursday
14 March.
The DM considers that his earnings from his work as a share fisherman on 11
March to 12 March are treated as paid in benefit week ending 13 March as this is
the benefit week in which they are earned.
S3842 Earnings unusually high or low The DM may calculate earnings over a period that is not the assessment period,
which is the benefit week. S3843 The DM should consider calculating earnings over a period greater than the benefit
week if (1)
1. the earnings in the benefit week are unusually high or low and
2. it is reasonable to do so, having regard to all of the facts of the case.
1 reg 73(3)(61(11))
S3844 Determination for earnings unusually high or low To determine if the earnings are unusually high or low the DM could take one or
more of the following steps
1. look at previous weeks in the share fisherman's current claim
2. look at previous claims from the share fisherman
3. look at claims from other share fishermen on a similar boat and in the same circumstances
4. look at the earnings of a similar boat with the same working pattern in the
same area
5. make enquiries of the District Fisheries Officer
6. make enquiries of the Harbour Master.

Example

S3846

S3870

Expenses
S3871 Conditions for deducting business expenses When calculating the net profit of a share fisherman for JSA purposes, the DM
should deduct from the gross receipts any business expense that is
1. incurred wholly, exclusively and necessarily for the purpose of the business (1)
and
2. incurred during the assessment period, that is the benefit week (2) and
3. reasonably incurred (3) (see S3876) and
4. an allowable expense (see S3886).
1 JSA Regs 13, reg 73(3)(61(6)&(10)(a)); 2 reg 73(3)(61(6)); 3 reg 73(3)(61(9)) S3872
S3873 Wholly and exclusively An expense is wholly and exclusively when the expense is only for the purpose of
the business (1). Any such payment should be deducted in full if all of the conditions in S3871are satisfied.
Note: S3192 - S3195 provide guidance where the expense is for both business and
private use.
1 JSA Regs 13, reg 61(4) & reg 73(3)(61(6))

S3874

S3875

S3876 Reasonably incurred The term reasonably incurred is not defined in legislation. It should be given its
ordinary everyday meaning. To be reasonably incurred an expense must be
1. appropriate for the share fisherman and
2. necessary for the share fisherman and
3. not excessive.
The DM should consider the level of trading. S3877
To determine what is reasonable the DM should have regard to the circumstances
of each individual's case (1), including the level of the person's earnings (2).

1 R(P) 2/54; 2 R(G) 1/56

S3878
If expenditure on a particular item is necessary to enable the share fisherman to run
the business the whole of that expenditure may be regarded as a deductible
expense, unless there is evidence that it is excessive (1).

1 R(G) 7/62

S3879 If the DM is not satisfied that the whole of an expense is reasonably incurred only
the part that is considered to be reasonable should be allowed as a deduction
against gross receipts.

S3880

S3882

S3883 Shared expenses of share fishermen Expenses of the boat may not always be attributable to all the sharers in the
scheme. The owner may bear all, or part, of the cost of certain items. The DM
should establish the expenses that are
1. common to all the sharers and
2. peculiar to the owner or owners.

Example 1

Example 2

S3884

S3885

S3886 Allowable business expenses Guidance on allowable business expenses is at S3206 - S3212. DMs should note
that for the expenses have to be incurred in the assessment period, that is the
benefit week

S3887

S3889

S3890 Expenses unusually high or low The DM may calculate expenditure over a period longer than the benefit week. S3891 The DM should consider calculating expenditure over a period longer than the
benefit week if (1)
1. the expenditure in the benefit week is unusually high or low and
2. it is reasonable to do so, having regard to all of the facts of the case.
1 JSA Regs 13, reg 73(3)(61(11))
S3892 Evidence of expenses As the assessment period is the benefit week
1. the share fisherman should be asked to provide details of expenses that are
not incurred weekly and
2. the DM can then convert the expenses into a weekly figure.
This will give a true picture of the share fisherman's expenses. S3893 Evidence of incurred expenses could be
1. receipts or
2. invoices or
3. accounts for the boat, taking care not to allow personal expenses put through
the accounts.
S3894 Determination for expenses unusually high or low If the procedure at S3892 is followed the DM may not have to determine if an
expense is unusually high or low. But there may be expenses that the share
fisherman may not have been aware of at the start of the claim and declares in a
particular benefit week. S3895 To determine if an expense is unusually high or low the DM could take one or more
of the following steps
1. look at previous weeks in the share fisherman's current claim
2. look at previous claims from the share fisherman
3. look at claims from other share fishermen on a similar boat and in the same circumstances
4. look at the expenses of a similar boat with the same working pattern in the
same area
5. make enquiries of the District Fisheries Officer
6. make enquiries of the Harbour Master. Example
Ewan is a share fisherman who is a regular crew member. He claims JSA and has a
Wednesday benefit week ending.
Ewan declares that in the benefit week Thursday 4 March - Wednesday 10 March
an expense is incurred because of essential painting to the boat. This expense
makes the expenses of the boat unusually high for the benefit week. Ewan's share
of the catch is net of any expenses.
The cost incurred is £300 and the boat has this essential painting done once a
quarter. The annual costs of essential painting is £1,200. The DM checks a recent
claim from Ewan and finds that the essential painting costs were £300 per quarter.
The DM decides that the expense is wholly, exclusively and necessarily incurred for
share fishing and is reasonable in the circumstances. The DM calculates the weekly
amount of the expense to be £23.08 (£1,200 divided by 52). An allowable expense
of £23.08 is allowed from the gross receipts for each benefit week until the annual
cost of essential painting alters. S3896 It is not intended that every expense is assessed individually over a period different
to the benefit week. This should be the exception rather than the rule. S3897 Any expense for a period
1. equal or shorter than the benefit week should be assessed over the benefit
week or
2. longer than the benefit week should be converted into a weekly figure only if
the DM determines that (1)
2.1 the expenditure is unusually high or low and
2.2 it is reasonable to do so, having regard to all of the facts of the case.
1 JSA Regs 13, reg 73(3)(61(11))

S3898

S3910

S3911 Expenses not allowed Business expenses that should not be allowed are (1)
1. those expenses where the conditions for deducting a business expense are
not met (S3871)
2. capital expenditure
3. depreciation of capital assets
4. expenses used, or intended to be used, in setting up or expanding a business
5. repayment of capital on loans except where S3206 3. applies
6. business entertainment expenses
7. losses incurred on the disposal of a capital asset
8. payments into a contingency fund to safeguard against future bad debts (2)
9. personal drawings on income and capital
10. money on goods used for personal consumption. Full guidance on the above expenses is at S3221 - S3226 and S3232 - S3244. 1 JSA Regs 13, reg 73(3)(61(7)); 2 reg 73(61(9))

S3912

S3925

Calculation of income tax, National Insurance contributions and qualifying premium
S3926 General Having calculated the share fisherman's gross receipts and expenses on a cash
flow basis, the DM should consider deductions for (1)
1. income tax (see S3270 and S3934) and
2. Class 2 contributions (see S3297 and S3936) and
3. Class 4 contributions (see S3316 and S3943) and
4. half of any premium for a personal pension. (See S3325).

1 JSA Regs 13, reg 61(3)(b) & (c) & 73(3)(61(3))

S3927 A share fisherman is entitled to the same tax allowances and tax rates as any other
S/E earner (see S3271 - S3275). A share fisherman
1. pays a special rate of Class 2 contributions and
2. may also have to pay Class 4 contributions. S3928
S3929 Chargeable income The DM should base deductions for S3926 1. to 3. on the chargeable income for the
assessment period. S3930 A share fisherman's chargeable income is the person's share of (1)
1. the gross receipts of the employment less
2. any allowable business expenses.
1 JSA Regs 13, reg 61(4) & 73(3)(61)(6))

S3931

S3933

S3934 Notional income tax As the assessment period is the benefit week the
1. personal allowance and
2. tax rate
should be apportioned on a weekly basis (1). Guidance on personal allowances and
tax rates is at S3271 - S3275.
1 JSA Regs 13, reg 73(3)(61(3))
S3935 Calculation of deduction To determine the deduction for notional income tax from a share fisherman's
chargeable income the DM should (1)
1. establish the chargeable income (see S3930)
2. deduct the personal allowance (see Appendix 1 to this Chapter) apportioned
on a weekly basis
3. multiply the first £34,370 (12/13 rates) of the remainder by the basic rate of
tax (see Appendix 1 to this Chapter)
4. round up where necessary.
1 JSA Regs 13, reg 73(3)(163(3)) & 62

Example

Gary is a married share fisherman who is receiving JSA
£
Chargeable income
200.00
less
Claimant's personal allowance
155.86 (£8,105 (12/13 rates) divided by 52) =
44.14
The remainder (£44.14) at
8.83 20% Total notional tax
=
8.83 S3936 Notional Class 2 contributions As the assessment period is for a benefit week the small earnings exception should
be apportioned on a weekly basis according to the benefit week (1).

1 JSA Regs 13, reg 73(61(3))

S3937 If the chargeable income is above the proportion of the small earnings exception the
DM should consider if a Class 2 contribution should be deducted. Full guidance on
Class 2 contributions is at S3297 et seq.

Example

S3938

S3942

S3943 Notional Class 4 contributions As the assessment period is for a benefit week the specified levels should be
apportioned on a weekly basis according to the benefit week (1).

1 JSA Regs 13, reg 73(3)(61)(3))

S3944 If the chargeable income is above the proportion of the specified level the DM
should consider if a Class 4 contribution should be deducted. Full guidance on
Class 4 contributions is at S3316 - S3318.

Example

S3946

S3949

S3950 Amount payable for share fishermen The amount of JSA payable to share fishermen is calculated in the same way as
with any other JSA claimant and has to take account of earnings and any pension
payments (1). ADM Chapter S1 provides guidance on amounts payable.
1 JSA Regs 13, reg 74(1) & (2)

S3951

S3954

Earnings disregard for share fishermen
S3955 Introduction The following disregards should be applied to the weekly earnings of a share
fisherman who is entitled to JSA
S3956 Earnings from self-employment that has ceased If a person has been engaged in
1. remunerative work as a share fisherman or
2. P/T self-employment as a share fisherman
and that employment has ceased (that is, ceased outright), any earnings derived
from that employment are fully disregarded (1).
1 JSA Regs 13, reg 73(3)(61(4)(b)); Sch , para 4

Example

James is a share fisherman, he is a regular crew member. He ceased work as a
share fisherman and last worked on 11 March. He received his share of the catch
on that day. He claims JSA on 12 March, he is entitled to JSA.
The DM determines that James has ceased to be a S/E share fisherman. The
earnings received on 11 March are disregarded.
S3957 Earnings disregard Unless S3958 - S3960 applies, a share fisherman entitled to JSA should have
£20.00 per week disregarded from any earnings from share fishing (1).
1 JSA Regs 13, reg 73(3)(61(4)(a))
S3958 Earnings from work that is not work as a share fisherman If the share fisherman also has earnings from work (1)
1. as
1.1 an auxiliary coastguard for costal rescue services (see ADM Chapter
S2) or
1.2 a P/T member of a fire brigade maintained under certain legislation
(see ADM Chapter S2) or
1.3 a P/T worker manning or launching a lifeboat (see ADM Chapter S2) or
1.4 member of the territorial army or reserve forces (see ADM Chapter S2)
or
2. as in 1. and from another job (see ADM Chapter S2) and
3. the disregard for that work is £5 (see ADM Chapter S2)
the disregards in S3959 - S3960 should be applied.

1 JSA Regs 13, reg 73(3)(61(5))

S3959
If the earnings disregard from work in S3958 is £20, the disregard for earnings as a
share fisherman in S3957 should not be applied (1).
1 JSA Regs 13, reg 73(3)(61(5)(a))

Example

Vince is a share fisherman. In one benefit week he declares that he has worked as
a share fisherman and that he has received earnings from manning a lifeboat.
The DM determines that Vince is entitled to a £20 disregard for the earnings from
manning the lifeboat and that he is not entitled to any disregard for the earnings
from work as a share fisherman. S3960 If the earnings disregard from work in S3958 is less than £20, the disregard for
earnings as a share fisherman will be the difference between
1. the amount disregarded from the earnings in S3958 and
2. £201.
1 JSA Regs 13, reg 73(3)(61(5)(b))

Example 1

Example 2

John is a share fisherman. In one benefit week he declares that he has worked as a
share fisherman and that he has received earnings of £8 from work as an auxiliary
coastguard.
The DM determines that John is entitled to a £8 disregard for the work as an
auxiliary coastguard and that he is entitled to a £12 disregard for the work as a
share fisherman.
S3961 Earnings paid in a foreign currency Where earnings are paid in a foreign currency, disregard any amount charged for
changing them into sterling, for example banking charges and commission (1).
1 JSA Regs 13, reg 73(3)(61(4)(b)); Sch , para 10

S3962

S3999

Appendix 1
Notional deductions for income tax
Main income tax allowances
1. The main income tax allowances are as follows.
11/12 12/13 13/14 14/15
£ £ £ £
Personal
under 7,475 8,105 9,440 10,000 65 Personal
65-74 9,940 10,500 10,500 10,500
Personal
75
& 10,090 10,660 10,660 10,660 over
Married under
-
-
-
- couple
65 Married
65-74
-
-
-
- couple Married
75 &
7,295 7,705 7,915 8,165 couple
over Basic rates of tax
2. Income tax is payable on taxable income
£
11/12
1 - 35,000
at basic rate of 20%
12/13
1 - 34,370
at basic rate of 20%
13/14
1 - 32,010
at basic rate of 20%
14/15
1 - 31,865
at basic rate of 20%
Appendix 2
Notional deductions for National Insurance contributions
Class 1 contributions
1. The Class 1 contribution for any week or month is based on the percentage
rate appropriate to the band in which the estimated gross earnings fall.
2. Earnings Bands
Earnings
Limits
11/12
11/12
Earnings Percentage
rates
LEL
1. up to LEL
NIL Weekly
£102
2. LEL to UEL
12% of earnings that
Monthly £442
exceed LEL up to
UEL
UEL
Weekly
£817
Monthly
£3540
Primary
threshold
No contributions are payable on weekly earnings of £139 or less or monthly
earnings of £602 or less. Otherwise contributions are still payable at a rate of 12%
for earnings between £139.01 and £817 per week and at 2% for earnings above
£817 per week.
3. Earnings Bands
Earnings
Limits
12/13
12/13
Earnings Percentage
rates
LEL
1. up to LEL
NIL Weekly
£107
2. LEL to UEL
12% of earnings that
Monthly £464
exceed LEL up to
UEL
UEL
Weekly
£817
Monthly
£3540
Primary
threshold
No contributions are payable on weekly earnings of £146 or less or monthly
earnings of £634 or less. Otherwise contributions are still payable at a rate of 12%
for earnings between £146.01 and £817 per week and at 2% for earnings above
£817 per week.
4. Earnings Bands
Earnings
Limits
13/14
13/14
Earnings Percentage
rates
LEL
1. up to LEL
NIL Weekly
£109
2. LEL to UEL
12% of earnings that
Monthly £472
exceed LEL up to
UEL
UEL
Weekly
£797
Monthly
£3453
Primary
threshold
No contributions are payable on weekly earnings of £149 or less or monthly
earnings of £645 or less. Otherwise contributions are still payable at a rate of 12%
for earnings between £149.01 and £797 per week and at 2% for earnings above
£797 per week.
4. Earnings Bands
Earnings
Limits
14/15
14/15
Earnings Percentage
rates
LEL
1. up to LEL
NIL Weekly
£111
2. LEL to UEL
12% of earnings that
Monthly £481
exceed LEL up to
UEL
UEL
Weekly
£805
Monthly
£3488
Primary threshold
No contributions are payable on weekly earnings of £153 or less or monthly
earnings of £663 or less. Otherwise contributions are still payable at a rate of 12%
for earnings between £153.01 and £805 per week and at 2% for earnings above
£805 per week.
Class 2 contributions
5. 11/12 12/13 13/14 14/15
£ £ £ £
Ordinary Class 2 rate
2.50
2.65
2.70
2.75
Share fisherman rate
3.15
3.30
3.35
3.40
Small earnings exception
6. 11/12 12/13 13/14 14/15
£ £ £ £
Earnings limit
5,315 5,595 5,725 5,885
Class 4 contributions
7. 11/12 12/13 13/14 14/15
£ £ £ £
Lower 7,225 7,605 7,755 7,956 level
Higher 42,475 42,475 41,450 41,865 level
Perce
9% of
9% of
9% of
9% of ntage
£7,225 to £7,605 to £7,755 to £7,956 to rate
£42,475
£42,475
£41,450
£41,865
per year, per year, per year, per year
2%
2%
2%
2% above
above above
above
£42,475
£42,475
£41,450
£41,865