Business advice

conaero

Forum Owner
Messages
34,593
As the title states, this thread is for help and advise to all the business/employers/self employed and relief and funding from the government that is available.
 
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conaero

Forum Owner
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34,593
I’ll kick it off, any employer whom has employees who are not able to wok, or if you are self employed you need to get your/their employment status changed to furlonged from 1/4/20 to claim 80% wage relief (up to £2500 max I bekeive)
 

conaero

Forum Owner
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34,593
Also you can get a small business grant of £10k if you are in rented premises and currently below the threshold and don’t pay business rates.
 

conaero

Forum Owner
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34,593
The self employed/company director/dividends relief is more tricky and if any of you can explain it would be appreciated.
 

DaveT

Member
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2,830
Company directors (even sole directors) CAN furlough themselves and claim the 80% of salary up to £2500 per month as above (salary only no dividends). Must be registered for PAYE.

However as with normal furloughed employees they cannot do any work for the company with the exception of statutory duties such as filing payroll, submitting tax returns etc

So no contacting staff, customers etc
 

DaveT

Member
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2,830
Deferral of payment of Vat due in period from March until 30 June until end of March 2021.

Still need to file return as normal. If you pay VAT by direct debit then cancel it now as they may still try to take it out.

Email from vat man a few days ago:

Dear customer,
The Chancellor announced a VAT payments deferral on 20 March to support businesses with cash flow during the COVID-19 pandemic.
This means that all businesses with a UK VAT registration have the option to defer VAT payments due between 20 March and 3‌0‌‌ June.
You therefore have until 3‌1‌‌ March 2021 to pay any VAT deferred as a result of this announcement.
You do not need to inform HMRC if you wish to defer payment. You can opt in to the deferral simply by not making VAT payments due in this period. If you pay by Direct Debit you should cancel this with your bank. You should do so in sufficient time so that HMRC does not attempt to automatically collect on receipt of their VAT return.
Should you wish, you can continue to make payments as normal during the deferral period. HMRC will also continue to pay repayment claims as normal. You must continue to submit VAT returns as normal.
For more information please go to GOV.UK.
Yours sincerely
jharra

Jim Harra
First Permanent Secretary and Chief Executive – HMRC
 

DaveT

Member
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2,830
Any self assessment tax due by individuals in July can be deferred until Jan 2021.
 
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1,117
Two things intertwined here. If self employed (sole trader for example) you will be contacted by HMRC based on average of last three years tax returns. It is dont call us, we'll call you. The payment will be 80% of average profit upto £2500/mth. Over-rider is your annual profit must be below £50k. If more than £50k you wont qualify and HMRC wont get in touch. You needed to have filed a tax return for 2018/19. Self employed people under 12 months wont qualify for the scheme and may consider Universal Credit.

Directors are not self-employed. They are employees and owners of their limited company. To qualify, they need to have been remunerated by taking a salary. If they did it by taking dividends, they do not qualify.

Other bits of detail omitted, but that is it in broad terms.
 

MarkMas

Chief pedant
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8,795
......Directors are not self-employed. They are employees and owners of their limited company. To qualify, they need to have been remunerated by taking a salary. If they did it by taking dividends, they do not qualify......

Yeah, this is a bit of a pain. I've been paying myself a minimal wage from my little consulting company for years, while taking most of my income as dividends, as his is tax-efficient and entirely ok with HMRC. Occasionally I said to my accountant, "Surely there is some rule about making the salary part 'reasonable' or 'proportionate'?" but no, apparently no such requirement. Now, with my company's revenues virtually disappearing, it turns out that Government support hinges not on current income, or current need, but on how I was incentivised to manage my tax affairs for the past few years.

I have, elsewhere, said that I'm pretty pleased that people who have been working for cash (evading tax) now can't get the handouts, and suggesting that company bailouts be limited to the tax they have paid in the past, but it seems a bit harsh to me that I get zero bailout because HMRC was ok with me paying roughly 22% not 25%-40% for years. Maybe there will be some lobbying on this to make a change.

Actually, I've done pretty well, and am winding down toward retirement over the next 5 years so I don't really need a bailout, personally, but there must be many thousands of small business owners facing hardship because of this anomaly. Not all company directors taking dividends are 'fat cats'!
 

conaero

Forum Owner
Messages
34,593
Same her Mark, I think it’s £700pm paye and rest by divs.

So £640 a month for me, oh goodie.

Been in business 25 years, employer, always paid all my vat and taxes and never missed one.

Garage, been going under 12 months so another FO from the government!

Thanks for repaying my loyalty!
 

MarkMas

Chief pedant
Messages
8,795
Same her Mark, .....

There is also a strange £50k profit cap, at which point the company is completely excluded. So a company with annual profit of £49,999 and you are in the scheme, but £50,001 you are out; which, if right, seems like a nasty abrupt cut-off.

I would like to think that IoD, FSB etc would be lobbying for a more sensible rule, something like a combining salary and dividend, but with a cap of, say, £40,000 income per year per person that is eligible.
 

bigbob

Member
Messages
8,952
Lots of people have been using the low salary, high div model for years with lots of savings in employer/employee NI and some income tax.

There will be little sympathy from the general population as people who have limited companies will be seen as privileged and they have saved loads of tax over the years compared with those solely on PAYE. I guess ‘National Insurance’ is now paying....or not.
 

DaveT

Member
Messages
2,830
….and corporation tax as well of course.

Think you are spot on though Bob with the perception from the general population.

I do the salary/dividend thing and have done for many years and with changes in the last few years (mainly to dividend taxation) the difference is minimal nowadays in terms of tax paid - certainly in my case as it's something me and my accountant review regularly.

I won't be furloughing as I'm using the time to do a refocus and prep for when things get going again and keeping in touch with clients and over 100 staff we normally use on events who are much worse affected. So won't get 80% help but that's OK - I am lucky enough to be able to live with that unlike many others less fortunate.
 

GeoffCapes

Member
Messages
14,000
So let me get this right. As I don't get paid via PAYE, I get nothing.
If I had say in one year out of 3 where I earned over 50k, I get nothing.
If I don't rent a building or property, I get nothing. What about renting a serviced office?

However, over the last 3 years I've paid 6 figures in VAT, Corporation Tax, Income Tax through my Limited company, yet I get nothing.

Sounds fair then.
 
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2b1ask1

Special case
Messages
20,220
As a sole trader, not a limited company or VAT registered, I have no black economy ability to hide anything, the last 18 years I've had total exposure to tax and NI for my turnover which less expenses has floated just under the VAT threshold, profitability has been around 50-55%. I have been hammered by the tax man so for once I actually may be in a wining situation here. I'm sceptical and will remain so until I receive a single bean. If I understand it correctly I should be on for around £2,100/month and the payment on account in July is deferred?
 
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1,117
So let me get this right. As I don't get paid via PAYE, I get nothing.
If I had say in one year out of 3 where I earned over 50k, I get nothing.
If I don't rent a building or property, I get nothing. What about renting a serviced office?

However, over the last 3 years I've paid 6 figures in VAT, Corporation Tax, Income Tax through my Limited company, yet I get nothing.

Sounds fair then.
Sounds right. But there is always Universal Credit.
 
Messages
1,117
There is also a strange £50k profit cap, at which point the company is completely excluded. So a company with annual profit of £49,999 and you are in the scheme, but £50,001 you are out; which, if right, seems like a nasty abrupt cut-off.

I would like to think that IoD, FSB etc would be lobbying for a more sensible rule, something like a combining salary and dividend, but with a cap of, say, £40,000 income per year per person that is eligible.
They ain't gonna lobby the Government and if they did, they wont be listened to. The Chancellor came to this decision in consultation with key bodies. The priority is on the worst off in society (strange but true) not on limited company directors who have taken dividends at 7.5% tax and nil NI and have probably kept retained profits in the business for a rainy day. I am sure any sensible accountant would advise them to do this - pay the 7.5% dividend tax when you have to break into the piggy bank (and yes, I know there is a nil rate dividend band of £2k before some clever accountant or accountant to-be in aspiration tells me I don't know what I am talking about..
 
Messages
1,117
Lots of people have been using the low salary, high div model for years with lots of savings in employer/employee NI and some income tax.

There will be little sympathy from the general population as people who have limited companies will be seen as privileged and they have saved loads of tax over the years compared with those solely on PAYE. I guess ‘National Insurance’ is now paying....or not.
Spot on. No sympathy in fact.....
 

D Walker

Member
Messages
9,827
In my field the gap had narrowed to so little I folded my ltd coy and went back to staff.
Was also easier to secure a mortgage as I couldn't get one when I was contracting in Denmark.

I still have a July payment to make tho, all though I envisage getting my January & July payments back as my earnings for 2019 - 2020 are much lower than 2018-19.
 

doodlebug

Member
Messages
913
I am not eligible for any government funding because I retired at the end of February. At the same time my SIPP took a massive hit when the stock markets crashed, as did everyone else's except Wattie's.

It is not financially prudent to take any of the 25% tax-free lump sum or draw-down until the markets recover somewhat, and luckily I haven't really got anything to spend it on. I'm not old enough to claim state pension and I still owe HMRC quite a few large ones from my last 2 year's incomes. If it wasn't for getting a temporary contract helping with the design of Dyson's all-singing ventilator, I too would be up poo creek without an oar.

PS Matt. Don't worry about me being able to pay for the car when you are finally able to get around to it. I have a special secret squirrel reserve for that.