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

[beorhthelm]

If it was that easy don't you think the government would have sorted something out by now?

Plenty will have not been self-employed for the full 3 years, others will have been employed AND self-employed for part or all of that period, will small salary / large dividends all count as one figure for these purposes?

There will be plenty of grey area, HMRC cannot do anything and keep it simple.

its immensely complex, with so mmany scenarios to cater for and potential loop holes to avoid. its seems though it needs a simple approach of trust but check later. let people make claims and pay out fast, with a very clear message over claims will be clawed back. now is not the time to worry f someone claims and carries on working, it will be caught in the clean up next year when they have filed.

 

[Kalimantan Gull]

Here's the Bill Heading towards Parliament today regarding Self Employed

14 Committee of the whole House: 23 March 2020
Coronavirus Bill, continued

“Statutory self-employment pay
(1) The Secretary of State must, by regulations, introduce a scheme of Statutory Self-
Employment Pay.
(2) The scheme must make provision for payments to be made out of public funds to
individuals who are
(a) self-employed, or
(b) freelancers.
(3) The payments to be made in subsection (2) are to be set so that the net monthly
earnings of an individual specified in subsection (2) do not fall below—
(i) 80 per cent of their monthly net earnings, averaged over the last three
years, or
(ii) £2,917
whichever is lower.
(4) No payment to be made under subsection (2) shall exceed £2,917 per month.
(5) A statutory instrument containing regulations under this section is subject to
annulment in pursuance of a resolution of either House of Parliament.
Member’s explanatory statement
The purpose of this amendment is to make the Government ‘top up’ self-employed workers’
earnings to the lower of 80% of their net monthly earnings averaged over three years, or £2,917
a month.

top-up - so either that implies every self-employed person declares actual earnings monthly and then makes claim - pretty impossible to administer - or that when 2020-21 earnings are filed there will be a repayment required, which anyone averaging more than £2,917 will most probably have to make.

Further to that, these are 'net' earning limits, so does that mean these payments will have to be declared separately as presumably won't be taxable in future?

All these details are to be worked out later, presumably, so might be some time.....

 

[NooBHA]

top-up - so either that implies every self-employed person declares actual earnings monthly and then makes claim - pretty impossible to administer - or that when 2020-21 earnings are filed there will be a repayment required, which anyone averaging more than £2,917 will most probably have to make.

Further to that, these are 'net' earning limits, so does that mean these payments will have to be declared separately as presumably won't be taxable in future?

All these details are to be worked out later, presumably, so might be some time.....

To make their Calculation it will be the average ''Taxable Profit'' for the last 3 years 2016/17 2017/18 and 2018/19

They will total these 3 years Taxable profits - Then divide the total by 3

That will give the Average Profit - You then divide that by 12 to get the monthly average and they will pay 3 months of the average profit over the next 3 months. Probably in one lump sum.

But only up to a Max of £2917 per month.

There is nothing in the Bill to suggest whether this Grant will be deemed to be taxable income or not. - Personally I think it will be deemed to be taxable

 

[Tim Over Whelmed]

The accountants don’t do anything illegal, they just advise what Tax benefits are available to help in the running of your own business (self employed), whose overheads depending on which trade, could be extremely high, add in the time for estimating, being responsible for their plant and materials, pension, additional family heath, holiday pay.
All that with no garuntee of even getting the work or working full time.

So yes, they deserve the legal Tax breaks available to them.
Show me a politician that doesn’t use every way possible to decrease their Tax bill.

Cash in hand is something completely different, often instigated by the home owner in order to reduce their costs and sometimes the difference between getting the job or not.

In Canada the homeowners seem to think that they have a devine right to pay cash and have discount. Personally I never do, unless you count the family or friends that your wife expects you work a week for a box of beer, just because.

Indeed, tax avoidance and tax evasion are two very different things.

 

[Questions]

My old accountant used to worry me because I always signed for ‘From receipts and information as submitted to me’ on his remittance form.

He used to bend things though.

 

[Kalimantan Gull]

To make their Calculation it will be the average ''Taxable Profit'' for the last 3 years 2016/17 2017/18 and 2018/19

They will total these 3 years Taxable profits - Then divide the total by 3

That will give the Average Profit - You then divide that by 12 to get the monthly average and they will pay 3 months of the average profit over the next 3 months. Probably in one lump sum.

But only up to a Max of £2917 per month.

Right. There will certainly be refunds then owing by anyone who claimed this and declares a profit of more than £35000 for this financial year, including this payment, but thats not going to affect me!

And the question of whether this amount will ultimately be taxable is an interesting one, considering that it is being calculated based on post-tax earnings, hence if we use it to replace our expected earnings then the tax has already been removed.

 

[NooBHA]

Right. There will certainly be refunds then owing by anyone who claimed this and declares a profit of more than £35000 for this financial year, including this payment, but thats not going to affect me!

And the question of whether this amount will ultimately be taxable is an interesting one, considering that it is being calculated based on post-tax earnings, hence if we use it to replace our expected earnings then the tax has already been removed.

No it isn't

It is a Gross payment with no ''Tax Deductible Outgoings'' expended in order to achieve that income - For instance You receive £1000 - you have not had to incur any Travel or subsistence or other costs in attaining that income.

 

[LlcoolJ]

My old accountant used to worry me because I always signed for ‘From receipts and information as submitted to me’ on his remittance form.

He used to bend things though.

That's the standard wording mate.

 

[LlcoolJ]

To make their Calculation it will be the average ''Taxable Profit'' for the last 3 years 2016/17 2017/18 and 2018/19

They will total these 3 years Taxable profits - Then divide the total by 3

That will give the Average Profit - You then divide that by 12 to get the monthly average and they will pay 3 months of the average profit over the next 3 months. Probably in one lump sum.

But only up to a Max of £2917 per month.

There is nothing in the Bill to suggest whether this Grant will be deemed to be taxable income or not. - Personally I think it will be deemed to be taxable

I think it will definitely be taxable. Surely the same as companies reclaiming the 80% they pay through PAYE. The employees will still be paying tax on their salaries so same difference.

It still doesn't answer the question of those with multiple sources of income or those whose major source is dividends from their company.

Mind, they're trying to screw everyone on that anyway so getting screwed on this too will be zero surprise.

Or those who have only just set up as self employed. Or..... Well, as I said I can think of a myriad different scenarios that these measures don't cover.

I'm with you. A universal income type payment would make much more sense.

 

[LlcoolJ]

The other option would be to use the SA302s for the last three years. Just like mortgage lenders do. Really simple.

 

[Kalimantan Gull]

No it isn't

It is a Gross payment with no ''Tax Deductible Outgoings'' expended in order to achieve that income - For instance You receive £1000 - you have not had to incur any Travel or subsistence or other costs in attaining that income.

Yep, you're right, my mistake

 

[atfc village]

Well i have the last 3 years tax returns in front of me ,i was laid off Monday but my main boss we do work for inquired earlier if i was willing to go back on site as early as tomorrow. I'd rather not if it's not safe ,but can't survive on nothing.

 

[atfc village]

Thanks LL
Mine always goes off on 6th April, as I like receiving tax refunds

Likewise.

 

[Wrong-Direction]

Without wanting to state the obvious, it's always best to get your return done as early as possible as then you know where you stand on tax way before you have to pay it. Or if you are due a refund then you get it sooner. But as Weststander said, no it wont have any bearing on any possible compensation by the looks of things as that would be all but impossible.

That's me ****ed then, I've got my books ready to go in 5th April, how can they not take into consideration your last year!? As the other poster stated, this has been highest year for a while

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[pauli cee]

Well i have the last 3 years tax returns in front of me ,i was laid off Monday but my main boss we do work for inquired earlier if i was willing to go back on site as early as tomorrow. I'd rather not if it's not safe ,but can't survive on nothing.

similar situation here, good luck mate!

 

[pauli cee]

The other option would be to use the SA302s for the last three years. Just like mortgage lenders do. Really simple.

This would suit me, as I've been self employed for yonks, and all my finances are on record.
I can appreciate it's different for many others tho

 

[NooBHA]

I think it will definitely be taxable. Surely the same as companies reclaiming the 80% they pay through PAYE. The employees will still be paying tax on their salaries so same difference.

It still doesn't answer the question of those with multiple sources of income or those whose major source is dividends from their company.

Mind, they're trying to screw everyone on that anyway so getting screwed on this too will be zero surprise.

Or those who have only just set up as self employed. Or..... Well, as I said I can think of a myriad different scenarios that these measures don't cover.

I'm with you. A universal income type payment would make much more sense.

Dividends are not covered at all - That comes under the Category of ''Too Bad'' And rightly so

 

[NooBHA]

That's me ****ed then, I've got my books ready to go in 5th April, how can they not take into consideration your last year!? As the other poster stated, this has been highest year for a while

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They can't take into account the 2019/20 Tax Year because payments are to be backdated to 1st March 2020 and that particular tax year hadn't ended by that date

 

[NooBHA]

I shall be raising my invoices for you all for this advice at the end of March

 

[Seecider]

Those of us who have got Companies that pay us a salary of £8500 or so and the rest in dividends will be stuffed by this. Dividends are an appropriation of profit not a business cost. Its standard advice that we accountants have been giving our small business clients for years and many will have saved shedloads on NI, but it could come back to bite us on the bottom now. As to what government does for the real self employed, its so complex, and HMRC is in such chaos generally, that I can't see that there is any chance of them administering anything that is related to recent income other than using data from submitted SA returns for the last 2-3 years. That would be comparatively easy for them to capture and do something with and in many cases will have bank account details attached to it. Trying to do anything else which requires someone to apply and an application to be processed on a person by person basis just won't work, they don't have the manpower, expertise energy or time. Then they'll have to move on to some help for the zero hours people. Just sitting here hoping that HMRC have got some really good people on board working day and night on a really good portal and supporting system that doesn't crash when it goes live. Don't hold your breath folks ! Given 12-24 months to develop and test systems HMRC don't have a good record.