Help for self employed

Mudball

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Speaking to a self employed friend. Work dried up and so the SE Grant was god sent. However, very industrious, so kept working albeit lower takings. Adding 3 grants + work, getting close to an 2019 earnings. So she is in a bit of a moral dilemma. Should she apply to the grant. Highly likely wont qualify for the May payout.

disclosure - my view is to apply. She is eligible and money in the bank will be useful esp since she does not know which way the rest of the year would go..

Is there a moral dilemma or fairly straightforward?
 

road2ruin

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Corporation Tax - Tick
Dividend Tax - Tick
Self Assessment Tax - Tick

End of year accounts certified by a reputable accountancy company for the last 15 years now but apparently I'm not to be trusted, I'm too much of a fraud risk. I'm convinced his aim to get everyone onto PAYE ASAP. Also watch me having to pay 'my fair share' of tax to ensure the deficit is reduced.
 

road2ruin

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Speaking to a self employed friend. Work dried up and so the SE Grant was god sent. However, very industrious, so kept working albeit lower takings. Adding 3 grants + work, getting close to an 2019 earnings. So she is in a bit of a moral dilemma. Should she apply to the grant. Highly likely wont qualify for the May payout.

disclosure - my view is to apply. She is eligible and money in the bank will be useful esp since she does not know which way the rest of the year would go..

Is there a moral dilemma or fairly straightforward?
My view is that she could take it, tax increases in the coming years will affect her and you never know what the next 12 months will involve so if the money is on offer.......
 

pauljames87

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Speaking to a self employed friend. Work dried up and so the SE Grant was god sent. However, very industrious, so kept working albeit lower takings. Adding 3 grants + work, getting close to an 2019 earnings. So she is in a bit of a moral dilemma. Should she apply to the grant. Highly likely wont qualify for the May payout.

disclosure - my view is to apply. She is eligible and money in the bank will be useful esp since she does not know which way the rest of the year would go..

Is there a moral dilemma or fairly straightforward?
Did they not say at first time that you can claim but still work?
 
Thread starter #165

fundy

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Speaking to a self employed friend. Work dried up and so the SE Grant was god sent. However, very industrious, so kept working albeit lower takings. Adding 3 grants + work, getting close to an 2019 earnings. So she is in a bit of a moral dilemma. Should she apply to the grant. Highly likely wont qualify for the May payout.

disclosure - my view is to apply. She is eligible and money in the bank will be useful esp since she does not know which way the rest of the year would go..

Is there a moral dilemma or fairly straightforward?

straightforward, apply for the grant 4 and take the 30% grant 5 imho, pay the tax on it in the following years return
 

ColchesterFC

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Corporation Tax - Tick
Dividend Tax - Tick
Self Assessment Tax - Tick

End of year accounts certified by a reputable accountancy company for the last 15 years now but apparently I'm not to be trusted, I'm too much of a fraud risk. I'm convinced his aim to get everyone onto PAYE ASAP. Also watch me having to pay 'my fair share' of tax to ensure the deficit is reduced.
On the plus side Vaseline must now be an allowable business expense. With the amount of times Ltd company directors have been shafted in the last year they must be able to claim back their lubricant to make it a bit easier to take. (y)
 

road2ruin

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For those that are interested Martin Lewis has interviewed Rishi this morning and it's on his program tonight at 8:30pm (ITV I think). Martin has been very much on the side of the SE/Ltd Co Directors etc throughout this and it'll be interesting to see what response the Chancellor gives in the interview. If Martin allows him to spend the interview telling everyone how he's put an arm round British businesses my TV is going out the window......
 

ColchesterFC

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For those that are interested Martin Lewis has interviewed Rishi this morning and it's on his program tonight at 8:30pm (ITV I think). Martin has been very much on the side of the SE/Ltd Co Directors etc throughout this and it'll be interesting to see what response the Chancellor gives in the interview. If Martin allows him to spend the interview telling everyone how he's put an arm round British businesses my TV is going out the window......
At the beginning of the pandemic when the government was announcing the help package it looked as though the lack of help for Ltd Co directors was an oversight that would be corrected. A year down the line it can now only be seen as a deliberate policy decision to exclude those people from the help schemes. The big question is why has it been done. Why can someone who is employed and earning just over £50k get furlough at 80% of their salary but a Ltd Co director earning just over £50k gets nothing at all?
 

road2ruin

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At the beginning of the pandemic when the government was announcing the help package it looked as though the lack of help for Ltd Co directors was an oversight that would be corrected. A year down the line it can now only be seen as a deliberate policy decision to exclude those people from the help schemes. The big question is why has it been done. Why can someone who is employed and earning just over £50k get furlough at 80% of their salary but a Ltd Co director earning just over £50k gets nothing at all?
I honestly think it's a push to get as many as possible onto a PAYE scheme. There seems to be this (incorrect) view that us Ltd Co directors who pay ourselves a minimal salary and the bulk of income in dividends are having it away and the poor PAYE lot are being shafted. I only have to read on Twitter or FB the amount of people saying that it serves us right and if we paid the correct amount of tax in the first place and didn't try and get away with it then we'd have been okay. Maybe this will 'teach us a lesson' etc etc. They are ignorant of the fact that the gap between Salary + Dividends vs PAYE is getting smaller and smaller every year and that those who are PAYE also get sick pay, holiday pay etc which I just don't get. I pay an awful lot of tax, I get away with nothing bar probably getting a bit too much internet for free but that's it yet I am deemed unworthy of help.

The only plus point for me with the budget was that I am under the threshold for paying the increased Corporation Tax in the future rise so at least I'm only getting partially shafted......
 
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fundy

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Seems like the 4th SEISS grant wont be available until late April. Have no idea why they have delayed this grant and arent opening the claims in the next few weeks but seems youre all going to be waiting a while for your money
 

Imurg

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Seems like the 4th SEISS grant wont be available until late April. Have no idea why they have delayed this grant and arent opening the claims in the next few weeks but seems youre all going to be waiting a while for your money
Getting used to waiting.....:sleep:
 

road2ruin

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Seems like the 4th SEISS grant wont be available until late April. Have no idea why they have delayed this grant and arent opening the claims in the next few weeks but seems youre all going to be waiting a while for your money
Saw this yesterday, an unbelievable decision IMO. For those who have only just been added to the list who can receive some help this is a massive blow to then have to wait almost 8 weeks to get any money.
 

pauldj42

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I honestly think it's a push to get as many as possible onto a PAYE scheme. There seems to be this (incorrect) view that us Ltd Co directors who pay ourselves a minimal salary and the bulk of income in dividends are having it away and the poor PAYE lot are being shafted. I only have to read on Twitter or FB the amount of people saying that it serves us right and if we paid the correct amount of tax in the first place and didn't try and get away with it then we'd have been okay. Maybe this will 'teach us a lesson' etc etc. They are ignorant of the fact that the gap between Salary + Dividends vs PAYE is getting smaller and smaller every year and that those who are PAYE also get sick pay, holiday pay etc which I just don't get. I pay an awful lot of tax, I get away with nothing bar probably getting a bit too much internet for free but that's it yet I am deemed unworthy of help.

The only plus point for me with the budget was that I am under the threshold for paying the increased Corporation Tax in the future rise so at least I'm only getting partially shafted......
Can I ask some genuine questions as I have never been involved in running a company or self employed etc and I am going on what has been posted on here.

Re the bit in bold: This has been stated on this forum many times over the years as the “best way” to do it, surely there must of been a financial benefit or that wouldn’t have been the advice?

Has any of the rules or exemptions the chancellor failed to implement got any bearing on people using family members as directors etc?

Now, as I say, apologies if the questions are bone, but there is a perception that dome of these Ltd Companies are set up to avoid people paying their fair share and it’s simply part of the legal tax avoidance.

Finally, nobody should be left struggling or suffering due to the pandemic and the financial schemes implemented should of ensured everybody, and I mean everybody, was helped.
 
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fundy

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Saw this yesterday, an unbelievable decision IMO. For those who have only just been added to the list who can receive some help this is a massive blow to then have to wait almost 8 weeks to get any money.
also seems to have gone pretty unmentioned that SEISS for the next 8 mths will actually be 6 mths money, whilst those on furlough will get 8 mths money

for all the rhetoric coming from the govt there is definitely a multi tier system of support going on depending on whether you are employed or self employed
 

road2ruin

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Can I ask some genuine questions as I have never been involved in running a company or self employed etc and I am going on what has been posted on here.

Re the bit in bold: This has been stated on this forum many times over the years as the “best way” to do it, surely there must of been a financial benefit or that wouldn’t have been the advice?
Fundy might well be the man to explain in more detail, I can only speak from my own situation. I think traditionally it was a good way of paying less tax however was entirely legal and it has always been (and still presently is) the advice that all accountants will give a Ltd Co. I have have been a Ltd Co for about 10 years and in that time I can't say that I have ever felt that I've been putting one over on the tax man. It has been tax efficient however during that period the tax on dividends has increased and the gap between what I might earn at £50,000 and what a PAYE earns at £50,000 is now marginal. That doesn't take into account the holiday, sick pay etc that I don't get that a PAYE employee does so it's probably a very small benefit now. I have had the conversation with my tax man over the last few years and the advice is that it is still best to do it this way however it's a watching brief.
 
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fundy

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Fundy might well be the man to explain in more detail, I can only speak from my own situation. I think traditionally it was a good way of paying less tax however was entirely legal and it has always been (and still presently is) the advice that all accountants will give a Ltd Co. I have have been a Ltd Co for about 10 years and in that time I can't say that I have ever felt that I've been putting one over on the tax man. It has been tax efficient however during that period the tax on dividends has increased and the gap between what I might earn at £50,000 and what a PAYE earns at £50,000 is now marginal. That doesn't take into account the holiday, sick pay etc that I don't get that a PAYE employee does so it's probably a very small benefit now. I have had the conversation with my tax man over the last few years and the advice is that it is still best to do it this way however it's a watching brief.
This is pretty much spot on, PAYE v Dividend is almost always seen as a calculation to legally minimise the amount of tax and NI that is paid but there are also less benefits that come with the lower tax Dividend route, even moreso it seems when a pandemic comes around!

The "tax optimal" route is usually to pay yourself a small salary which takes advantage of the personal allowance and ensures that you pay your NI stamp towards state pension but then draw the rest of the income as dividends which attract a lower rate of tax and NI

The govt could very easily change this if they wanted to but never do, ultimately because they dont want to raise the dividend rate and make investment in UK businesses less attractive (and other reasons but I may be crossing the political threshold lol)
 

GreiginFife

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Can I ask some genuine questions as I have never been involved in running a company or self employed etc and I am going on what has been posted on here.

Re the bit in bold: This has been stated on this forum many times over the years as the “best way” to do it, surely there must of been a financial benefit or that wouldn’t have been the advice?

Has any of the rules or exemptions the chancellor failed to implement got any bearing on people using family members as directors etc?

Now, as I say, apologies if the questions are bone, but there is a perception that dome of these Ltd Companies are set up to avoid people paying their fair share and it’s simply part of the legal tax avoidance.

Finally, nobody should be left struggling or suffering due to the pandemic and the financial schemes implemented should of ensured everybody, and I mean everybody, was helped.
The most common misconception. Along with "all contractors are at it".
The set up is to avoid a Ltd Co contractor facing a double tax hit as people forget that as well as personal tax we also have to pay corporation tax and VAT bills.

My combined taxes for last year were night on £37k most of which was VAT and corp tax.

All of that comes from my day rate and therefore me with pension contributions to be made as well.

Also, the setup allows us to keep money aside for holidays and sick days should they arise as we, and I can't stress this enough, are not employees. We get no perks, no bonuses, no incentives, no "time off" pay.

In a lot of cases we have to buy our own tech, my last client did not supply IT kit to contractors so had I not already had one, I would have had to shell out, albeit via my company, for a laptop.

Do some take it to the extreme? I have no doubt as you will find with all things. But I have been a contractor for 9 years and not met a single person that does kick the arse out of it.
 
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The most common misconception. Along with "all contractors are at it".
The set up is to avoid a Ltd Co contractor facing a double tax hit as people forget that as well as personal tax we also have to pay corporation tax and VAT bills.

My combined taxes for last year were night on £37k most of which was VAT and corp tax.

All of that comes from my day rate and therefore me with pension contributions to be made as well.

Also, the setup allows us to keep money aside for holidays and sick days should they arise as we, and I can't stress this enough, are not employees. We get no perks, no bonuses, no incentives, no "time off" pay.

In a lot of cases we have to buy our own tech, my last client did not supply IT kit to contractors so had I not already had one, I would have had to shell out, albeit via my company, for a laptop.

Do some take it to the extreme? I have no doubt as you will find with all things. But I have been a contractor for 9 years and not met a single person that does kick the arse out of it.
All the above for me plus also when I started out PAYE was not an option because you have to pay yourself monthly and as many business owners will tell you everything like insurances, leases suppliers have to be paid first and you're last in the food chain. I tend to pay myself in chunks as and when I've been paid by my customers.
One other reason I'm ltd is I work in a highly litigious industry that if for whatever reason a claim is made against me and my insurance won't cover it my house and assets are protected.
There has definitely been a concerted choice not to support businesses like mine and to say it's been stressful and heart breaking is an understatement. If it hadn't have been for my wife's work we would have been screwed and as someone who has always been self sufficient it's taken it's toll on me.
I've always paid my taxes and strongly believe everyone should and to be cut adrift at a time like this is hard to take.
 

GreiginFife

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All the above for me plus also when I started out PAYE was not an option because you have to pay yourself monthly and as many business owners will tell you everything like insurances, leases suppliers have to be paid first and you're last in the food chain. I tend to pay myself in chunks as and when I've been paid by my customers.
One other reason I'm ltd is I work in a highly litigious industry that if for whatever reason a claim is made against me and my insurance won't cover it my house and assets are protected.
There has definitely been a concerted choice not to support businesses like mine and to say it's been stressful and heart breaking is an understatement. If it hadn't have been for my wife's work we would have been screwed and as someone who has always been self sufficient it's taken it's toll on me.
I've always paid my taxes and strongly believe everyone should and to be cut adrift at a time like this is hard to take.
If I were a cynic, I'd say they're using it as further pushes towards forcing the IR35 changes through...

"If you'd been inside IR35 that wouldn't have happened..." sort of thing.

So many people quick to condemn contractors yet so few actually understand how and why it works that way.
 
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