Our reader this week has pension income which exceeds his self-employed wages. Carl Lamb of Smith & Pinching responds.

Reader question:

I receive state pension and a pension from my employer. I have a teenage daughter at university, and I chose to work on a self-employed basis that helps pay her living costs. The combination of pension and modest net profit from my self-employment just about gets us through. The chancellor has mentioned support for the self-employed but there was mention “that the bulk of one’s income has to be from self-employment”.

MORE: Personal Finance: What do I do if coronavirus has impacted the value of my investments? My pension exceeds my self-employed income. Does this then preclude me from receiving the benefit mentioned by the chancellor?

Carl Lamb answer:

At this stage, I’m afraid you are indeed in the group of self-employed people who can’t be helped by the Self-Employed Support Scheme.

The scheme rules clearly state that you only qualify if at least one of two conditions are true: firstly if you have sole trader/partnership trading profits in 2018-19 of less than £50,000 and these profits constitute more than half of your total taxable income, or secondly if you have average trading profits in 2016-17, 2017-18 and 2018-19 of less than £50,000 and these profits constitute more than half of your average taxable income in the same period.

If you started trading sometime between 2016 and 2019, HMRC will only use those years for which you filed a Self-Assessment tax return.

The only potential way you might qualify would be if you had a higher proportion of self-employed income in previous tax years, in which case the averaging might help…

Banks and building societies are doing their best to help those adversely affected by the current crisis so overdrafts and other borrowing may be available to you, although some borrowing opportunities may prove expensive and will, of course, have to be repaid at some point.

The other route you might need to consider is to withdraw your support from your daughter and for her to apply for benefit support under the Universal Credit scheme so that she can pay her bills. According to the gov.uk website, a full-time student can apply for the benefit if he or she doesn’t have parental support, but this isn’t my area of expertise so you would need to explore this further yourselves through the benefits system.

This article is based on the measures announced as at 3 April 2020 which are subject to change. Any opinions expressed in the article do not constitute advice.