What income support is available to farmers during the Coronavirus outbreak?


By Neil Adams

Farm businesses affected by the current epidemic which is placing our economy under enormous stress. With the food service sector in meltdown, stresses emerging in supply chains and challenges exporting goods, the situation could get worse. None of us like handouts, especially farmers, but in these unprecedented times, it could be the lifeline that keeps your business afloat.

The government have announced schemes to provide income support to employees and the self-employed. Both schemes have a three-month lifespan.

So, what are the relevance of these schemes with regards to agriculture?

Guidance for an employed worker applying for support under the Job Retention Scheme (JRS)

If you are an employee, your employer might be able to keep you on the payroll if they’re unable to operate or have no work for you to do because of coronavirus (COVID-19). This is being ‘on furlough’.

Your employees are eligible for 80% of their wages, up to a monthly cap of £2,500. Company Directors paid a salary are eligible for this payment, subject to normal taxation.

Anyone on this scheme cannot undertake work for their employer during the furlough period. This government scheme will be available by the end of April and claims can be backdated to the 1st of March.

Guidance for self-employed receiving support under the Self Employed Income Support Scheme (SEISS)

The government has set out plans that will see the self-employed receive up to £2,500 per month in grants for at least 3 months. The cash grant will be worth 80% of their average monthly trading profit over the last three years. It is not going to be any benefit unless a business has generated a profit and rewards more as profit increases.

The scheme is only open to a business with a trading profit of less than £50,000 in 2018-19 or an average trading profit of less than £50,000 from 2016-17, 2017-18 and 2018-19. The arrangements for new businesses who have not completed a year of trading are not specified.

Unless the HMRC contact you and invite you to apply for the aid you will not be eligible to apply. The scheme is for sole traders and will also apply to partnerships where we believe the rules will apply to the partners share in profits.  The scheme will be live in June and payments will cover the three months before. Subject to extension.

If you pay yourself a salary and a dividend through your company, you are not covered by the scheme however you will be covered for your salary by the Coronavirus Job Retention Scheme, if you operate PAYE schemes. This will leave a number of individuals running service companies, who take the majority of their income as dividends, ineligible and potentially exposed with no compensation.

Are you or your employees eligible for these payments?

Situations where individuals are eligible under the Job Retention Scheme Situations where individuals are ineligible under the Job Retention Scheme

Where the employee is not working and where the business is affected by Coronavirus
Providing the individual was employed on or before 28th February 2020
Where the employee continues to work, and the business is unaffected by Coronavirus
Where the individual is self employed
Situations where individuals are eligible to receive support under the under the Self Employed Income Support SchemeSituations where individuals are ineligible to receive support under the Self Employed Income Support Scheme
Where the trading profit for the individual partner or sole trader is below £50,000 in 2019 or under an average of £50,000 between 2016 and 2019
Business must be trading in 2019/20

Where the trading profit for the individual partner or sole trader is more than £50,000 in 2019 or above an average of £50,000 between 2016 and 2019
Where per partner or sole trader is below zero. (i.e. loss making)
A new business set up (Although the government may address this in the coming weeks)
Where a tax return for 2018/19 year has not been submitted
Where you are a company owner receiving most of your income as dividends

There is nothing in the government announcements that disallows farmers from receiving these payments.

Many would assume you are not affected by the outbreak than other industries, however, many farm businesses will be affected.

It may be difficult to have animals marketed, to move crops off the farm and there are an enormous number of farm businesses which have diversified into enterprises which rely on human contact, as anyone running accommodation, retail or sporting activities will testify.

We are awaiting further information from HMRC and will provide a further update in due course.