[Finance] Self employed to receive 80% of income from the Gov’t too

[Garage_Doors]

You only hadn’t to wait a few more days (& employers/employees haven’t received their 80% yet). It’s reported that the following will be announced. Favouring those who declared their true income in their last three personal tax returns!

“An amendment added to the Coronavirus Bill proposes statutory self-employment pay which would cover the lower of £2,917 or 80 per cent of a self-employed person's monthly earnings, averaged over the last three years”.

https://www.ftadviser.com/your-industry/2020/03/24/government-set-to-pay-80-of-self-employed-income/

Would that be calculated on 2017/18 - 2019/20 or 2016/17- 2018/19.
Only makes a small difference to me, but still a difference.

 

[NooBHA]

Why rightly so? It's just another form of income which has already been taxed.

I completely agree with the majority of everything else you've posted on the subject btw. But that just sounds like you're positive about shafting some people who will now have no money.

Which isn't nice.

Because Dividends are distributions of Profits. You could find yourself paying monies to people who have invested in companies who own shares and get paid dividends even though they may not even be working in those companies.

 

[LlcoolJ]

Because Dividends are distributions of Profits. You could find yourself paying monies to people who have invested in companies who own shares and get paid dividends even though they may not even be working in those companies.

I get that.

But the compensation is to be limited to a percentage of income / upper limit so more people who need money would benefit than those who don't. And those who don't aren't exactly going to make a fortune, especially if the compensation is taxable.

As a proponent of universal income, I would have thought you'd be in favour of assisting the weak despite the fact that some rich people will also gain (seeing as that's the fundamental point of universal income).

Rather than saying "too bad and rightly so".

It's actually impossible to support both viewpoints that you've stated.

And sorry, I'm not meaning to come across as a dick if that's how it sounds. Just not looking forward to explaining to lots of people why they will be getting zero money today........

 

[Weststander]

Would that be calculated on 2017/18 - 2019/20 or 2016/17- 2018/19.
Only makes a small difference to me, but still a difference.

Going by reports - 2016/17, 2017/18 and 2018/19.

 

[Weststander]

A small employer wanting to retain staff on the 80% of wage, is likely to need to ask the bank for a loan to do this for more than a couple of weeks, but what compels the banks to loan money to a company that may be not seen as a good credit risk?

Because the government will 100% back the loan, if it meets the terms of the new measure?

 

[Weststander]

I think directors salaries are not included in the scheme, so even if they paid themselves through PAYE more than dividend, they are screwed. Also, employers need to pay this up front and reclaim later, Gov site says preferential loans available from the banks for this purpose, the banks say it will take 3 months to sort out. This isn't going to work, but to be fair, I don't know what will work, not in a capitalist system anyway.

All true.

 

[Weststander]

This.

Single person companies are simply utilising the tax laws quite legitimately. So many employees moan about this arrangement without realising that in some industries it's almost impossible to get a proper 'job' with luxuries like sick pay, holiday pay, other employee benefits or a pension. To add insult to injury, it's a constant battle now with companies who want to tax you the same as a proper 'employee'. New rules make them liable if they incorrectly deem you to be self-employed.

That can has been kicked a year down the road because of the virus, but it's still a farce. My major client recently informed me I should now be taxed as an employee (based on several incorrect assumptions), then 3 days later blew out months of work, completely unpaid. So 80% of next to f**k all is probably the best I can hope for until society starts returning to normal. And after that I will still need to battle against the unrealistic HMRC rules on what constitutes employment.

I'd say having no guaranteed work at all - only bookings that can be wiped out with no compensation or notice - should pretty much be the definition of self-employed.... but there are so many other ridiculous hoops to jump through.

On that last paragraph, that’s a very good definition of not being employed/not being deemed employed - commercial/financial risk of a loss. It is already one of the Badges of Trade tests, a long established one.

 

[BN9 BHA]

evasion loophole bites back

Nice to see your comment biting you back, I'm glad you have been called out.
Leave this thread to the decent posters that are doing a great job helping out with answers.

 

[NooBHA]

I get that.

But the compensation is to be limited to a percentage of income / upper limit so more people who need money would benefit than those who don't. And those who don't aren't exactly going to make a fortune, especially if the compensation is taxable.

As a proponent of universal income, I would have thought you'd be in favour of assisting the weak despite the fact that some rich people will also gain (seeing as that's the fundamental point of universal income).

Rather than saying "too bad and rightly so".

It's actually impossible to support both viewpoints that you've stated.

And sorry, I'm not meaning to come across as a dick if that's how it sounds. Just not looking forward to explaining to lots of people why they will be getting zero money today........

Those people you are referring to have been limiting their National Insurance Contributions to virtually zero by their own choice . They have by choice been taxed at lower dividend rates for in many cases for lots of years.

They have had more than their fair share of the Government Assistance by paying less tax and NIC than others in their lifetime already.

I am not opposed to assisting people who need it but these people have been helping themselves to Government money by setting their tax affairs up the way that they have. They can't start crying now that for a year or so the tax system may no longer tickle their ears.

I too have clients in this position that I have become friends with over the years but unlike you. I have no problem telling then that for once the tax system hasn't dealt them a good hand.

 

[Pavilionaire]

I fear today that a self-employed nail technician working from home earning £9K profit may get a bigger government payout than the roofer running his own company, employing staff, engaging CIS subcontractors and taking significant business risk.

 

[LlcoolJ]

On that last paragraph, that’s a very good definition of not being employed/not being deemed employed - commercial/financial risk of a loss. It is already one of the Badges of Trade tests, a long established one.

Totally correct.

Unfortunately, despite HMRC saying that each case HAS to be looked at individually, a lot of companies have just gone for a blanket ban on contractors because they are shitting themselves over IR35. They're not allowed to but they are anyway.

As I said, maybe one positive out of all this will be that they have to scrap the whole thing. It's economic suicide and seeing as we're already falling off a cliff, it would seem insanity to hang a massive anvil covered in vomit round our ankle as well....... just so it can hit us on the way down.

 

[Icy Gull]

I think directors salaries are not included in the scheme, so even if they paid themselves through PAYE more than dividend, they are screwed. Also, employers need to pay this up front and reclaim later, Gov site says preferential loans available from the banks for this purpose, the banks say it will take 3 months to sort out. This isn't going to work, but to be fair, I don't know what will work, not in a capitalist system anyway.

When a working director is an employee of a limited company, what makes you think they are excluded? There are plenty of working directors who are not shareholders so can’t draw dividends either. Of course dividends shouldn’t and won’t be covered but wages up to £2500 should be. Cannot see why they wouldn’t.

 

[LlcoolJ]

Those people you are referring to have been limiting their National Insurance Contributions to virtually zero by their own choice . They have by choice been taxed at lower dividend rates for in many cases for lots of years.

They have had more than their fair share of the Government Assistance by paying less tax and NIC than others in their lifetime already.

I am not opposed to assisting people who need it but these people have been helping themselves to Government money by setting their tax affairs up the way that they have. They can't start crying now that for a year or so the tax system may no longer tickle their ears.

I too have clients in this position that I have become friends with over the years but unlike you. I have no problem telling then that for once the tax system hasn't dealt them a good hand.

And yet you favour universal income. Can you not see the juxtaposition?

You haven't actually replied to anything I said. Just restated a point which you've already contradicted yourself on.

I get that you have entrenched feelings on this but all I care about is making sure everyone is ok. Not "ooh you paid a bit less so **** you". Which is not a very nice attitude.

I expect to get nothing btw and I'll suck that up.

 

[Weststander]

Totally correct.

Unfortunately, despite HMRC saying that each case HAS to be looked at individually, a lot of companies have just gone for a blanket ban on contractors because they are shitting themselves over IR35. They're not allowed to but they are anyway.

As I said, maybe one positive out of all this will be that they have to scrap the whole thing. It's economic suicide and seeing as we're already falling off a cliff, it would seem insanity to hang a massive anvil covered in vomit round our ankle as well....... just so it can hit us on the way down.

I do get that. It’s a sledge hammer to crack a nut.

But don’t you think there are huge numbers who’ve been taking the p? Backed by ultimate engagers who save ‘ers NIC and being responsible for employment rights. I’ll give you some genuine examples of people I know:

People who are IT, project management, management consultant or advertising specialists. With a single ultimate engager, earning between £300 and £750 a day, no true right to substitution, no staff, no possibility of a loss, they work at the engager’s 3 or 5 days a week, say 2 at home where they’re required to be available and working 9 til 5, other than a laptop they’ve not invested in plant, they are to all intents controlled and instructed by someone at the engager’s.

(All the above disregards the middle agency smokescreen or ‘cleverly’ crafted contract).

These individuals gain hugely in net income, over the consultant properly on the books.

What do you think, have you come across this? I have, a plenty and still now.

 

[NooBHA]

And yet you favour universal income. Can you not see the juxtaposition?

You haven't actually replied to anything I said. Just restated a point which you've already contradicted yourself on.

I get that you have entrenched feelings on this but all I care about is making sure everyone is ok. Not "ooh you paid a bit less so **** you". Which is not a very nice attitude.

I expect to get nothing btw and I'll suck that up.

I do favour Universal Payments and that is the route that we should have gone down.

But that's not the route that has been chosen.

They have chosen to go down the tax route. So my attention then has to turn to that and for me to express my views on.

That's what I am doing. I am expressing views on two totally different things even though in this instance they are inherently linked.

 

[Weststander]

When a working director is an employee of a limited company, what makes you think they are excluded? There are plenty of working directors who are not shareholders so can’t draw dividends either. Of course dividends shouldn’t and won’t be covered but wages up to £2500 should be. Cannot see why they wouldn’t.

They’re not covered unless the company is mothballed, with zero income, the director carrying out zero duties and is furloughed at home.

 

[LlcoolJ]

I do get that. It’s a sledge hammer to crack a nut.

But don’t you think there are huge numbers who’ve been taking the p? Backed by ultimate engagers who save ‘ers NIC and being responsible for employment rights. I’ll give you some genuine examples of people I know:

People who are IT, project management, management consultant or advertising specialists. With a single ultimate engager, earning between £300 and £750 a day, no true right to substitution, no staff, no possibility of a loss, they work at the engager’s 3 or 5 days a week, say 2 at home where they’re required to be available and working 9 til 5, other than a laptop they’ve not invested in plant, they are to all intents controlled and instructed by someone at the engager’s.

(All the above disregards the middle agency smokescreen or ‘cleverly’ crafted contract).

These individuals gain hugely in net income, over the consultant properly on the books.

What do you think, have you come across this? I have, a plenty and still now.

Yeah I totally agree mate. But the majority affected by this who I deal with ARE genuinely self employed (like the poster earlier on this thread).

That's the entire reason why each case should be looked at individually. Before all this kicked off I was preparing appeals for numerous clients based on the fact that the companies they were contracting for had completely ignored CEST.

The thing is that IR35 has been around for years and HMRC could and should have already clamped down on the pisstakers.

As you know, the only difference now is that the onus has been put onto the big boys and they've gone for a short term, arse covering manoeuvre.

Anyway, this is boring for most people and off topic so I'll shut up.... Lol.

 

[LlcoolJ]

I do favour Universal Payments and that is the route that we should have gone down.

But that's not the route that has been chosen.

They have chosen to go down the tax route. So my attention then has to turn to that and for me to express my views on.

That's what I am doing. I am expressing views on two totally different things even though in this instance they are inherently linked.

That may somehow make sense to you. To me it's complete nonsense.

You either favour looking after the majority at the expense of some people gaining who shouldn't (which will happen with any useful system implemented anyway), or you don't.

How can you support both when they are diametrically opposing views?

The rest is semantics about "the route". Who cares? It's about people surviving.

Anyway, I'm not after a fight so I'll leave your brain to argue with itself on that one.

 

[Weststander]

Yeah I totally agree mate. But the majority affected by this who I deal with ARE genuinely self employed (like the poster earlier on this thread).

That's the entire reason why each case should be looked at individually. Before all this kicked off I was preparing appeals for numerous clients based on the fact that the companies they were contracting for had completely ignored CEST.

The thing is that IR35 has been around for years and HMRC could and should have already clamped down on the pisstakers.

As you know, the only difference now is that the onus has been put onto the big boys and they've gone for a short term, arse covering manoeuvre.

Anyway, this is boring for most people and off topic so I'll shut up.... Lol.

 

[Icy Gull]

They’re not covered unless the company is mothballed, with zero income, the director carrying out zero duties and is furloughed at home.

How about if just one director carries on working and others are furloughed? No need to mothball the company as there always things that need paying and admin even if there is zero business coming in