Regulation 38 Financial loss (self-employment earnings) award

(1)

The amount of the financial loss (self-employment earnings) award in relation to an eligible infected person (“P”) is A – B, where—

(a)

“A” is the sum of the annual amounts in relation to each tax year of the reduced earnings period determined in accordance with paragraph (3);

(b)

“B” is the amount of the additional financial loss (core) award in relation to P.

(2)

For the purposes of this regulation, “the reduced earnings period” is the period which—

(a)

begins with the tax year in which P first suffered exceptional reduced self-employment earnings, and

(b)

ends with—

(i)

the tax year in which P attained, or is expected to attain, the age of 65, or

(ii)

if P died before that tax year, the tax year in which P died.

(3)

For each tax year of the reduced earnings period, the annual amount is the amount of P’s reduction in earnings in that tax year, adjusted to 2023 values if the tax year is not the 2023 tax year.

(4)

If P’s application for an exceptional loss award is not accompanied by evidence which establishes P’s net self-employment earnings and P’s net PAYE earnings for a tax year, the annual amount for that tax year is £0.

(5)

For the purposes of paragraph (3)—

(a)

the amount of P’s reduction in earnings in a tax year (“the relevant tax year”) is the greater of £0 or C – D, where—

(i)

“C” is the lesser of £54,028 or the amount of P’s average pre-reduction annual earnings in the relevant tax year as determined in accordance with paragraph (6);

(ii)

“D” is the sum of—

(aa)

P’s net self-employment earnings in the relevant tax year, and

(bb)

P’s net PAYE earnings in the relevant tax year;

(b)

“adjusted to 2023 values”, in relation to the amount of P’s reduction in earnings in a tax year (“the relevant tax year”), means—

(i)

if the relevant tax year is before the 2023 tax year, what the amount would have been if it had, on each 6th April during the period which—

(aa)

begins with (and includes) the 6th April immediately after the relevant tax year, and

(bb)

ends with (and includes) 6th April 2023,

been compounded by the consumer price index over the 12-month period ending with the month of September before that 6th April;

(ii)

if the relevant tax year is after the 2023 tax year, what the amount would have been if it had—

(aa)

on the 5th April of the tax year immediately before the year of the earnings, and

(bb)

on each previous 5th April until (and including) 5th April 2024,

been discounted by the consumer price index over the 12-month period ending with the month of September before that 5th April.

(6)

For the purposes of paragraph (5)(a)(i), the amount of P’s average pre-reduction annual earnings in a relevant tax year is the amount that they would have been if they had, on each 6th April during the period which—

(a)

begins with (and includes) the 6th April of the first tax year of reduced earnings, and

(b)

ends with (and includes)—

(i)

where the relevant tax year is before the application tax year, the 6th April immediately after the relevant tax year;

(ii)

where the relevant tax year is the application tax year or any subsequent tax year, the 6th April of the application tax year,

been compounded by the consumer price index over the 12-month period ending with the month of September before that 6th April.

(7)

For the purposes of paragraph (5)—

(a)

“P’s average pre-reduction annual earnings” are the sum of—

(i)

the 5-year average of P’s net self-employment earnings before the first tax year of reduced earnings, and

(ii)

the 5-year average of P’s net PAYE earnings before the first tax year of reduced earnings;

(b)

“P’s net self-employment earnings” are, in relation to any tax year during the reduced earnings period which is—

(i)

before the application tax year, P’s net self-employment earnings in that tax year;

(ii)

any other year, the 5-year average of P’s net self-employment earnings before the application tax year;

(c)

“P’s net PAYE earnings” are, in relation to any tax year during the reduced earnings period which is—

(i)

before the application tax year, P’s net PAYE earnings in that tax year;

(ii)

any other year, the 5-year average of P’s net PAYE earnings before the application tax year.

(8)

In this regulation—

(a)

“the 2023 tax year” means the tax year which begins with 6th April 2023 and ends with 5th April 2024.

(b)

“the application tax year” means the tax year in which the date of the application falls;

(c)

“net”, in relation to earnings in a tax year, means the amount of those earnings less the tax and national insurance (if any) that would have been paid on those earnings under the rates which applied in the tax year.