Coronavirus self employed payment

[snowhead]

It's to cover sick pay at the same rate as PAYE, it doesn't cover Holidays, that's the employers responsibility

 

[happysteve]

To work out the effect of this on your "usual" take home (drawings), you need to work out what fraction of your expenses will still continue, and what won't. You also need to know what fraction your usual expenses are compared with your profits (profits + expenses = turnover).

Say your profit is £25k, and your usual expenses are £16k. Which means your turnover - usual total income, would be £41k.

Of those £16k expenses, £11k is stock, and £1k is advertising (which you're not going be be spending on at the moment). £12k out of £16k is 75%, or, as a fraction, 0.75 (12/16).

You will be paid 80% of your profits, which is 0.8 x £25k, which is £20k. You still have to pay your unavoidable expenses, which is £16k - £12k, which is £4k. Which leaves you with £16k, which is 64% of your usual take-home.

If you know your profit (in £££) and you know your expenses that will still need to continue (in £££), then it's relatively simple: new take-home, "y" is:

y = (0.8 x profit) minus (expenses that need to continue).

As a percentage of your usual take-home, this is:

(y / profit) * 100

Plugging in the numbers for my own situation, I'm at about 52% in theory; although because my business has been growing over the past 3 years, my actual percentage is considerably lower, because the number they will use for "profit" is the average of those 3 years, and is a lot lower than it is currently. But I'll take that.

For some folk, their percentage of their expenses that they can't stop will be much higher. As others have said, reduce your unnecessary expenses as much as you can. This is the same whether you're self-employed or not. On the other hand, I'd encourage you to carry on with your charitable giving as much as you can, as the poorest and those most in need are going to suffer the most.

Hope the maths bit was useful, anyway.