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

[Weststander]

Not quite clear what I can claim or will get.

They said 80% of profit. For argument's sake, assume you are earning £1800 a month and you have £800 of fixed expenses, eg van rental, loans etc. That leaves your net profit at £1,000. You'll get 80% of that, ie £800. So effectively, you are getting money to cover your fixed expenses that leaves nothing to live off.

Assuming you aren't able to work (for example, I'm a driving instructor and, of course, you can't teach from a distance of 2m) can you also claim SSP, Universal Credit etc etc.

The devil will be in the detail.

Not all clear yet.

The Chancellor’s repeated point is that you make a claim for and SSP Universal Credit now. I assume that takes into account the current income of a spouse or partner.

 

[cheshunt seagull]

Thats when it hits you, you have used an accountant to get your earnings down for Tax purposes and then...

Heartbreaking... especially at a time when people are relying on the health services their actions have helped to starve of funds.

 

[Gazwag]

Not quite clear what I can claim or will get.

They said 80% of profit. For argument's sake, assume you are earning £1800 a month and you have £800 of fixed expenses, eg van rental, loans etc. That leaves your net profit at £1,000. You'll get 80% of that, ie £800. So effectively, you are getting money to cover your fixed expenses that leaves nothing to live off.

Assuming you aren't able to work (for example, I'm a driving instructor and, of course, you can't teach from a distance of 2m) can you also claim SSP, Universal Credit etc etc.

The devil will be in the detail.

I understand what you are saying but you are getting what you earn ie your profit, same as those on PAYE, they are getting what they earn

 

[Weststander]

My operating profit was 9 grand for 9 months so guess I'll get 800 a month? Shame they wont take this years into account as I reckon I've earnt double that

Sent from my SM-A600FN using Tapatalk

If your household income and financial position is now unsustainable, can you claim Universal Credit? An admin pain, but we all have far more time on our hands! No one should feel ashamed about looking to social security help, this is a pretty unique event on our lifetimes.

 

[drew]

I understand what you are saying but you are getting what you earn ie your profit, same as those on PAYE, they are getting what they earn

Not quite. PAYE earns £1800 a month, he gets £1440. From that they can pay their rent/mortgage, living expenses.

Self Employed will have fixed business costs, eg car loan, franchise fee etc. which are deducted to from your business income to arrive at your net profit. From that net profit (which is effectively your salary) you will then pay your mortgage, living expenses etc etc. In the example I gave, you won't have any money left to pay mortgage/rent living expenses.

Now of course there will be savings, eg as a driving instructor, I'm not having to spend so much on petrol, but I still need to pay for my driving instructor insurance, my franchise fee, car loan!

As I said, the devil will be in the detail, this is one size fits all.

 

[LlcoolJ]

As if Universal Basic Income woudn't have been easier than this mess.

Indeed.

 

[Weststander]

Not quite. PAYE earns £1800 a month, he gets £1440. From that they can pay their rent/mortgage, living expenses.

Self Employed will have fixed business costs, eg car loan, franchise fee etc. which are deducted to from your business income to arrive at your net profit. From that net profit (which is effectively your salary) you will then pay your mortgage, living expenses etc etc. In the example I gave, you won't have any money left to pay mortgage/rent living expenses.

Now of course there will be savings, eg as a driving instructor, I'm not having to spend so much on petrol, but I still need to pay for my driving instructor insurance, my franchise fee, car loan!

As I said, the devil will be in the detail, this is one size fits all.

Your financial comparison is not like for like, a true comparison would be:

Driving instructor - turnover £25,000, costs & interest (not the capital element of loan repayments, they’re never a tax deductible business cost) £7,000 = £18,000 taxable profit.

Versus

Employee earning £18,000 gross.

Both would get similar state aid now (albeit the employee’s via PAYE).

 

[LlcoolJ]

Not all clear yet.

The Chancellor’s repeated point is that you make a claim for and SSP Universal Credit now. I assume that takes into account the current income of a spouse or partner.

This is the best advice at present.

 

[maltaseagull]

Best conservative government in my lifetime. Never thought i would be pro Tory. Well done Boris.

I wonder how many will complain about austerity for the next 20 years to pay for this?

 

[drew]

Your financial comparison is not like for like, a true comparison would be:

Driving instructor - turnover £25,000, costs & interest (not the capital element of loan repayments, they’re never a tax deductible business cost) £7,000 = £18,000 taxable profit.

Versus

Employee earning £18,000 gross.

Both would get similar state aid now (albeit the employee’s via PAYE).

How is that the same? The driving instructors gross income is £7k more than the employee in the first place!!!

 

[Weststander]

How is that the same? The driving instructors gross income is £7k more than the employee in the first place!!!

Because profit is the same as gross income in the employed world.

Another example - a builder carries out extensions, his turnover is £100,000, costs including running a van and office rent £70,000, profit £30,000. The £30,000 is the equivalent of someone grossing £30,000 in a job.

It’s no benefit to him personally that he banks £100k, £70k is accounted for, he has to live on £30k pre-tax, the same as an employed person grossing £30k.

No one is suggesting that the nation should pay small businesses an amount equal to their turnover, the country would be bankrupt within a week. The government’s measures match the best in the world and have been widely welcomed by Labour, the SNP, unions and the FSB.

 

[Change at Barnham]

"The income support scheme will only be available to those who make the majority of their income from self-employment and who filed a tax return for 2019."

If my self-assessment declared £9000 income, but also £9500 from rental income should I assume that I may not be entitled to anything?

Or do you think they are saying the self-employed income shouldn't be more than income received by PAYE?

Does any one know how I might stand?

 

[Weststander]

"The income support scheme will only be available to those who make the majority of their income from self-employment and who filed a tax return for 2019."

If my self-assessment declared £9000 income, but also £9500 from rental income should I assume that I may not be entitled to anything?

Or do you think they are saying the self-employed income shouldn't be more than income received by PAYE?

Does any one know how I might stand?

On your three tax returns to 2018/19, was your self employment trade income (taxable profits) on average 51% or more of total taxable income. If so, you should be in luck.

 

[LamieRobertson]

Big thank you for the ‘experts’ on this thread bothering to give their time, advice and interpretation of what is being said

 

[LamieRobertson]

A very important point, made just before 6pm on 5live by a genuine expert, in favour of the self employed.

The self employed will receive these payouts regardless of whether they’re still trading eg with reduced trade, fewer jobs.

As opposed to staff/directors in the employed world, where it’s an all or nothing thing - if you’re working in any shape or form (including from home), then the government scheme will not pay 80% of your gross wages.

Being self employed it would be weird getting paid for not working...you work on a basis of don't work don't get paid ...so you generally always work despite being ill...

 

[Hampster Gull]

Good to see the signalling on levelling up the tax burden in future, in a similar vein of going for the Facebook,, Amazon and other equivalents

 

[Weststander]

Being self employed it would be weird getting paid for not working...you work on a basis of don't work don't get paid ...so you generally always work despite being ill...

The same for me, same principle, despite being via my limited company. We work through illness.

The huge advantage for the non-limited company self employed (you) is that you will get today’s financial aid backdated to 1 March, even if you’re still working at 25% or 50% capacity.

But for the 2.5 million owner directors of limited company (including myself), unless the company is genuinely mothballed and we’re not carrying duties, we will get zero or perhaps just SSP.

Personally I’m not complaining as we have an NHS salary and my work may hold up, but as [MENTION=19]Icy Gull[/MENTION] and [MENTION=14669]LlcoolJ[/MENTION] have pointed out, the latter scenario is a huge blow to many households.

 

[SIMMO SAYS]

Big thank you for the ‘experts’ on this thread bothering to give their time, advice and interpretation of what is being said

You're welcome anytime.

 

[LamieRobertson]

You're welcome anytime.

I never saw anything about Guinness

 

[LamieRobertson]

The same for me, same principle, despite being via my limited company. We work through illness.

The huge advantage for the non-limited company self employed (you) is that you will get today’s financial aid backdated to 1 March, even if you’re still working at 25% or 50% capacity.

But for the 2.5 million owner directors of limited company (including myself), unless the company is genuinely mothballed and we’re not carrying duties, we will get zero or perhaps just SSP.

Personally I’m not complaining as we have an NHS salary and my work may hold up, but as [MENTION=19]Icy Gull[/MENTION] and [MENTION=14669]LlcoolJ[/MENTION] have pointed out, the latter scenario is a huge blow to many households.

I actually traded as a limited company once...ironically it was a socialist government that made it attractive to do so .....Gordon Brown made it that the first 10k of profits was tax free...so as you do took salary covering personal allowance about 5k and balance in divs as net profit was sub 10k....only lasted a year i think ....Gordon couldn’t understand why so many rushed to become limited....i just set many own up over the net for £50 ...after a few years it became less and less attractive and not having an accountant i was filing a personal return a company return and stuff to companies house....sod that i thought ...started using an accountant and kept it simple reverted back to being self employed