TFC10050 - Self-employed person: expected income

Childcare Payments (Eligibility) Regulations 2015, regulation 10(3) and (4)

A self-employed person’s expected income comprises of the number of receipts the person expects to derive from a trade, profession, or vocation, less the amount of expenses the person expects to incur wholly and exclusively for the purposes of the trade, profession, or vocation. The term ‘wholly and exclusively’ will take its normal tax meaning.

If the person carries on a trade, profession, or vocation in a business partnership, the share expected to be allocated to the person of the partnership’s receipts less the share expected to be allocated to that person of the partnership’s expenses incurred wholly and exclusively for the purposes of the trade, profession, or vocation in the accounting period ended in the tax year of the declaration.

If the person has several self-employments, whether partnerships or sole proprietorships, the income net of expenses for each is added together.

In calculating a self-employed person’s income, receipts and expenses of a capital nature are to be disregarded.

If a parent has worked out their tax calculations on the cash basis and wants to translate that to see if they are eligible for TFC, then they can add back to their net income any capital purchase that they included in their expenses.

TFC does not define the word capital, so it takes it’s every day meaning – which means items of significant value that are used in the business over a number of years and are normally depreciated and not set wholly against profit in the year that they were bought.