26 Mar Self Employed Support Package – Q & A
Posted at 20:53h in Self EmployedHello to anyone reading this. The Chancellor has just made his announcement around the support package available for the self-employed (which includes partnerships). I have already been taking calls/emails/Whatsapps etc (you name it) from clients and also friends who know me as ‘their mate who deals with figures and tax’. To avoid not sleeping for the foreseeable, I have tried to summarise to the best of my ability what I have taken from the announcement and any other supporting documentation I can find. I will stress that there is no legislation around this so until this is the case, it is pure conjecture and you should not base your life around it – just saying…. I’ve tried to pull out the key items and to keep it simple as if I were talking to my best mate who, as he would put it ‘does up vans’, rather than fill it with wording only Chartered Accountants would understand. And I’ve done it in a Q&A style as this had good feedback the last time for the format. So here goes……
Q: How do I get it started? A: Don’t phone up HMRC – they don’t want to know yet as there is no system in place given Rishi has just chucked them a hospital pass, so don’t waste your time. They will identify you from their records and be in touch in due course.
Q: How much am I going to get? A: They’ll give you 80% of your averaged monthly profits based over the last 3 tax years (18/19 being the most recent) or £2,500 per month, whichever is the lower figure.
Q: How do I figure that out, Einstein? A: Take your last three years profits, add them together and divide by 36 (presuming they are full years). I’m presuming this is your profit before capital allowance deductions but it hasn’t been stated anywhere that I can see yet. But this would be a good assumption to make I reckon.
Q: What happens if I haven’t been trading for 3 years? A: They’ll average it out across the years you have done. If you’ve only just started in this current tax year, you’re knackered by the looks of things and will have to go down the Universal Credit route.
Q: When are they going to be paying me that then? A: Sometime in June by the looks at present.
Q: Serious?!? What am I supposed to do until then….eat dust?!?! A: There are other measures available potentially such as the job retention scheme if you employ anyone, business loans, deferring any HMRC debts, call in any debts owed to you, giving your creditors a ring to see how far they can bend, ring your mortgage provider/landlord to enquire about a payment holiday, cancel your Sky tele…..
Q: What about if I haven’t filed my 18/19 return yet? A: You’ll get another 4 weeks to file it. And also, if it’s your fault you haven’t filed it then go take yourself off to that corner and have a word, or if it’s with your accountant then bin them off!
Q: How long will this last then? A: Initially for 3 months being from March to May. However, if we’re still in the cart come May time I suspect it’ll be extended.
Q: My mate earns a shed load, he’ll be laughing….. A: If their profits are over £50k then it looks like they won’t qualify.
Q: I’ve got other income from my house rental – can I add this in? A: It only covers profit from self-employment as far as I can see. Rental property income is outside of this so this cannot be added. Also, your total income from self-employment needs to be more than 50% of your total income otherwise you don’t qualify.
Q: So Budgie from down the pub with all his rental properties and no job won’t get anything? A: It appears that’s the case.
Q: And what about Stevo who runs his business through a limited company and does the old minimum salary / higher dividends trick? A: Dividends are not covered but if he does run a payroll and pays himself, then he may be able to furlough himself and claim through that way.
Q: Fur-what? A: Have a look at my article I did on it recently cos I’m not going through it again https://link-accounting.co.uk/2020/03/23/coronavirus-job-retention-scheme/.
Q: What about if I stopped trading ages ago? A: Then you won’t be covered by this. You need to be currently trading at the point of application (or would have been if it were not for this virus) and also that you intend on continuing to trade once we’re out the other end of this.
Q: How will HMRC know? A: They’ll be making checks but don’t ask me what.
Q: Can we go back and refile my 18/19 return? A: What do you think! That’s fraud you numpty, and if you ask me to do it you’ll be sent packing.
Q: Just a thought but can I still do any work? A: Apparently so. To qualify, you need to show that your trade has been adversly affected by this issue. So long as this is the case and you’re not seeing increased activity, you can fill your boots!
Q: Right, cheers for that info. I’m off for a lie down in a dark room? A: No probs. It’s going to be a tough time for everyone and no-one is going to come out unscathed. But keep your chin up, enjoy your family and I’ll see you on the otherside.This is a scheme that has taken some time to put together; about a week later than the business/employees measures last Friday. I can see some glaring holes in there, particularly those who have registered as self-employed in this current tax year. For me, a good solution would be to allow a window to file 19/20 returns and have it signed off by a professional to do away with the risk of fraud. But I don’t think this is to happen. But these are just my opinions and they don’t matter…. I hope this helps with understanding things a little better. If anyone wants to talk through then get in touch. I have attached a few links from the GOV.UK website around this if you prefer the formal approach to things rather than my everyday version News story: Chancellor gives support to millions of self-employed individuals