Why has Sunak deliberately excluded 3m from COVID support?

[Louis Balfour]

Martin Lewis was speaking about this again on the Marr programme this morning.

Evidently, he asked Sunak directly "Can I tell all company directors that the door is permanently closed to them?" To which the answer was "yes".

[TVR1]

Well, presumably because they set up their tax affairs to reduce taxable income as much as possible or took profits as ‘dividends’. They could’ve changed it for 19/20. It’s not as though there wasn’t enough notice.

Also, it’s been fairly clear for months that the ‘excluded’ from SEISS (as they started after 18/19 tax year) would be included this time, as long as they did their 19/20 tax return by 2nd March.

I’m on a few industry specific forums and you wouldn’t believe how many people ‘forgot’ to do 19/20 tax return on time and are now moaning about being left out again!

[clockworks]

Not just company directors.

Plenty of sole traders who earned less than 50% of their income from their business have got nothing so far, although it looks like this will change from April.
Same for people who hadn't filed a tax return since going self-employed.

I fell into the first category, due to giving up a PAYE job late 2018 to concentrate on my growing 20-year small business. My 2018/19 tax return showed 45% of income from self-employment, so no help from the government at all so far. It looks like April's grant will take into account 2019/20 tax returns, so I may get something next time.
I reckon my profits will be about 40% down for 2020/21 over 2019/20, and more than 50% on projected growth before it all went pear-shaped.

[Claptonian]

clockworks said:

Not just company directors.

Plenty of sole traders who earned less than 50% of their income from their business have got nothing so far, although it looks like this will change from April.
Same for people who hadn't filed a tax return since going self-employed.

I fell into the first category, due to giving up a PAYE job late 2018 to concentrate on my growing 20-year small business. My 2018/19 tax return showed 45% of income from self-employment, so no help from the government at all so far. It looks like April's grant will take into account 2019/20 tax returns, so I may get something next time.
I reckon my profits will be about 40% down for 2020/21 over 2019/20, and more than 50% on projected growth before it all went pear-shaped.

I'm in that sole trader boat as a guitar teacher. It made up about 75% of my income but only after last Christmas (great timing). Before that much less. Infuriating. Back into schools after Easter though so hoping that'll be the end of it.

Edited by Claptonian on Sunday 7th March 11:08

[rfsteel]

Also ask yourself why he didn't mentioned anything about IR35, nor did he put any additional tax on Umbrella or Big Consultancies, you would have thought this would had been the best way to claw back some of what's being spent on Track & Trace with Deloitte and Capita ect.

As a PSC Ltd director myself, I was affected for the whole of 2018 when IR35 was being implemented into the public sector, then secured a 9 month contract in 2019, to be out of contract for the first 6 months of 2020. Fortunately I was able to secure a local contract for the past 8 months, but what I've been able to invoiced for, I'd normally be able to invoice in 8 weeks prior to IR35/CV19.

Fun times ahead, not.

[TVR1]

Claptonian said:

I'm in that sole trader boat as a guitar teacher. It made up about 75% of my income but only after last Christmas (great timing). Before that much less. Infuriating. Back into schools after Easter though so hoping that'll be the end of it.

Edited by Claptonian on Sunday 7th March 11:08

Did you submit your 19/20 tax return? Self employed income, as long as it’s more than 50% of income, qualifies for the 4th grant.

Believe me, I do massively sympathise. I’m self employed. My 1st tax return was for 18/19, by Chance, I was not working for a few months at the start of ‘18, otherwise I would’ve been caught out by the 50% rule.

19/20 was a monster year for me. Wife binned me, a good Summer, long days, daughter spent holidays overseas so not much else to do other than work.

I’ll actually receive close to the maximum amount for the 4th grant. Previously £3500.

Downside is I went to a food bank on Friday.

But really, fk me, if you didn’t do your 19/20 tax return. You could see this coming a mile off.

Edited by TVR1 on Sunday 7th March 11:31

[98elise]

TVR1 said:

Well, presumably because they set up their tax affairs to reduce taxable income as much as possible or took profits as ‘dividends’. They could’ve changed it for 19/20. It’s not as though there wasn’t enough notice.

Also, it’s been fairly clear for months that the ‘excluded’ from SEISS (as they started after 18/19 tax year) would be included this time, as long as they did their 19/20 tax return by 2nd March.

I’m on a few industry specific forums and you wouldn’t believe how many people ‘forgot’ to do 19/20 tax return on time and are now moaning about being left out again!

Whats wrong with taking profits as dividends? It's a perfectly legitimate way to take profits, and it's taxed.

I assume you are PAYE and are making use of all your allowances to minimise your tax bill?

[frisbee]

https://en.wikipedia.org/wiki/N._R._Narayana_Murth...

It isn't just Boris who is under the thumb!

[chrispmartha]

98elise said:

TVR1 said:

Well, presumably because they set up their tax affairs to reduce taxable income as much as possible or took profits as ‘dividends’. They could’ve changed it for 19/20. It’s not as though there wasn’t enough notice.

Also, it’s been fairly clear for months that the ‘excluded’ from SEISS (as they started after 18/19 tax year) would be included this time, as long as they did their 19/20 tax return by 2nd March.

I’m on a few industry specific forums and you wouldn’t believe how many people ‘forgot’ to do 19/20 tax return on time and are now moaning about being left out again!

Whats wrong with taking profits as dividends? It's a perfectly legitimate way to take profits, and it's taxed.

I assume you are PAYE and are making use of all your allowances to minimise your tax bill?

What those criticising people using dividends often don’t realise is that paying yourself this way means the company pays more corporation tax as a result.

It’s not the huge tax benefit that people seem to think

[Louis Balfour]

So is the consensus that, with regard to directors and dividends, the lack of support is a kind of punishment for not paying optimal tax?

[Claptonian]

TVR1 said:

Did you submit your 19/20 tax return? Self employed income, as long as it’s more than 50% of income, qualifies for the 4th grant.

Believe me, I do massively sympathise. I’m self employed. My 1st tax return was for 18/19, by Chance, I was not working for a few months at the start of ‘18, otherwise I would’ve been caught out by the 50% rule.

19/20 was a monster year for me. Wife binned me, a good Summer, long days, daughter spent holidays overseas so not much else to do other than work.

I’ll actually receive close to the maximum amount for the 4th grant. Previously £3500.

Downside is I went to a food bank on Friday.

But really, fk me, if you didn’t do your 19/20 tax return. You could see this coming a mile off.

Edited by TVR1 on Sunday 7th March 11:31

I did indeed do my tax return. We shall see what next month brings. More than anything, I'm.looking forward to getting back to work after Easter hols.

[TVR1]

chrispmartha said:

98elise said:

TVR1 said:

Well, presumably because they set up their tax affairs to reduce taxable income as much as possible or took profits as ‘dividends’. They could’ve changed it for 19/20. It’s not as though there wasn’t enough notice.

Also, it’s been fairly clear for months that the ‘excluded’ from SEISS (as they started after 18/19 tax year) would be included this time, as long as they did their 19/20 tax return by 2nd March.

I’m on a few industry specific forums and you wouldn’t believe how many people ‘forgot’ to do 19/20 tax return on time and are now moaning about being left out again!

Whats wrong with taking profits as dividends? It's a perfectly legitimate way to take profits, and it's taxed.

I assume you are PAYE and are making use of all your allowances to minimise your tax bill?

What those criticising people using dividends often don’t realise is that paying yourself this way means the company pays more corporation tax as a result.

It’s not the huge tax benefit that people seem to think

Elise, no I’m self employed.

Nothing wrong with paying yourself by dividends but the point is, it’s a way of reducing your taxable income. The SEISS is based on net profit. If you chose to arrange your tax affairs to reduce your net profit to 0, what do you expect?

[JagLover]

Louis Balfour said:

Martin Lewis was speaking about this again on the Marr programme this morning.

Evidently, he asked Sunak directly "Can I tell all company directors that the door is permanently closed to them?" To which the answer was "yes".

So they structured their affairs to avoid paying National INSURANCE and then wonder why they didn't get a pay out

[JagLover]

Louis Balfour said:

So is the consensus that, with regard to directors and dividends, the lack of support is a kind of punishment for not paying optimal tax?

Many public companies cut their dividends during the pandemic. Should those shareholders receive 80% of the dividend they used to get?

[98elise]

JagLover said:

Louis Balfour said:

Martin Lewis was speaking about this again on the Marr programme this morning.

Evidently, he asked Sunak directly "Can I tell all company directors that the door is permanently closed to them?" To which the answer was "yes".

So they structured their affairs to avoid paying National INSURANCE and then wonder why they didn't get a pay out

Why would it be tied to NI?

[98elise]

TVR1 said:

chrispmartha said:

98elise said:

TVR1 said:

Well, presumably because they set up their tax affairs to reduce taxable income as much as possible or took profits as ‘dividends’. They could’ve changed it for 19/20. It’s not as though there wasn’t enough notice.

Also, it’s been fairly clear for months that the ‘excluded’ from SEISS (as they started after 18/19 tax year) would be included this time, as long as they did their 19/20 tax return by 2nd March.

I’m on a few industry specific forums and you wouldn’t believe how many people ‘forgot’ to do 19/20 tax return on time and are now moaning about being left out again!

Whats wrong with taking profits as dividends? It's a perfectly legitimate way to take profits, and it's taxed.

I assume you are PAYE and are making use of all your allowances to minimise your tax bill?

What those criticising people using dividends often don’t realise is that paying yourself this way means the company pays more corporation tax as a result.

It’s not the huge tax benefit that people seem to think

Elise, no I’m self employed.

Nothing wrong with paying yourself by dividends but the point is, it’s a way of reducing your taxable income. The SEISS is based on net profit. If you chose to arrange your tax affairs to reduce your net profit to 0, what do you expect?

How do you reduce your profit to 0, and pay dividends?

You either take the money out as Income (paying Income Tax), or leave it in as profits (paying Corp Tax) then take it out as Dividends (paying Dividend Tax).

HMRC take their cut which ever route you use to take money out of your company.

[Countdown]

chrispmartha said:

What those criticising people using dividends often don’t realise is that paying yourself this way means the company pays more corporation tax as a result.

It’s not the huge tax benefit that people seem to think

It's a significant saving on Ees NI and Ers NI (circa 25% off the top of my head) and that's before any creative accounting which absolutely no Contractor on PH ever does

[Countdown]

98elise said:

JagLover said:

Louis Balfour said:

Martin Lewis was speaking about this again on the Marr programme this morning.

Evidently, he asked Sunak directly "Can I tell all company directors that the door is permanently closed to them?" To which the answer was "yes".

So they structured their affairs to avoid paying National INSURANCE and then wonder why they didn't get a pay out

Why would it be tied to NI?

Because paying NI entitles you to certain State benefits (Pension, Jobseekers allowance etc). SEISS is basically another State benefit.

[chrispmartha]

Countdown said:

chrispmartha said:

What those criticising people using dividends often don’t realise is that paying yourself this way means the company pays more corporation tax as a result.

It’s not the huge tax benefit that people seem to think

It's a significant saving on Ees NI and Ers NI (circa 25% off the top of my head) and that's before any creative accounting which absolutely no Contractor on PH ever does

Yes but as I say its ads to your corporation tax bill. Its no where near the savings tgat people think

[chrispmartha]

TVR1 said:

chrispmartha said:

98elise said:

TVR1 said:

Well, presumably because they set up their tax affairs to reduce taxable income as much as possible or took profits as ‘dividends’. They could’ve changed it for 19/20. It’s not as though there wasn’t enough notice.

Also, it’s been fairly clear for months that the ‘excluded’ from SEISS (as they started after 18/19 tax year) would be included this time, as long as they did their 19/20 tax return by 2nd March.

I’m on a few industry specific forums and you wouldn’t believe how many people ‘forgot’ to do 19/20 tax return on time and are now moaning about being left out again!

Whats wrong with taking profits as dividends? It's a perfectly legitimate way to take profits, and it's taxed.

I assume you are PAYE and are making use of all your allowances to minimise your tax bill?

What those criticising people using dividends often don’t realise is that paying yourself this way means the company pays more corporation tax as a result.

It’s not the huge tax benefit that people seem to think

Elise, no I’m self employed.

Nothing wrong with paying yourself by dividends but the point is, it’s a way of reducing your taxable income. The SEISS is based on net profit. If you chose to arrange your tax affairs to reduce your net profit to 0, what do you expect?

If you reduce your net profit to 0 you aren’t taking any dividends.

The way to reduce your net profits is to take a salary