Why has Sunak deliberately excluded 3m from COVID support?
Discussion
Piersman2 said:
Ultimately those companies that cannot or will not determine PSCs workers as outside IR35 will either have to pay more, or not have those flexible/experienced/skilled resources avaiable to them.
I've just started a new contract, I've been contracting for 30 years ALL outside IR35.
The new client intially offered the role inside IR35 at the old outside IR35 rate. I rejected the offer and decided to take some time out. The client came back a week later and offered a very sizeable uplift in rate to cover the inside IR35 costs. I don't actually end up taking much, if any, of that uplift home, the impact of IR35 means that will all go the goverment. I've not lost out, the client has.
Mind you, I do get the full rate paid into my limited company for the next 4 weeks which will give a nice little top up to my Ltd company that I wasn't expecting
and will offset some of the issues when they will start deducting NI(both), PAYE, App levy etc...from April 6th onward.
Like when IR35 first came in, give it 6 months. By then companies will be starting to realise that it's worth taking the time to do sensible CEST determinations and new style SOW contracts will be the new norm. Companies need PSCs as much as PSCs need the companies.
I expressed an interest in a contract in the defence industry back in October 2019. Outside IR35. £45 per hour. It woukd require me to live away from home in the week. At a cost if at least £7k a year. Plus 15000 miles a year.I've just started a new contract, I've been contracting for 30 years ALL outside IR35.
The new client intially offered the role inside IR35 at the old outside IR35 rate. I rejected the offer and decided to take some time out. The client came back a week later and offered a very sizeable uplift in rate to cover the inside IR35 costs. I don't actually end up taking much, if any, of that uplift home, the impact of IR35 means that will all go the goverment. I've not lost out, the client has.
Mind you, I do get the full rate paid into my limited company for the next 4 weeks which will give a nice little top up to my Ltd company that I wasn't expecting
and will offset some of the issues when they will start deducting NI(both), PAYE, App levy etc...from April 6th onward.Like when IR35 first came in, give it 6 months. By then companies will be starting to realise that it's worth taking the time to do sensible CEST determinations and new style SOW contracts will be the new norm. Companies need PSCs as much as PSCs need the companies.
But all that as legitimate business expences.
Somewhere I found out they are looking for 200 engineers, so can't see how it's outside IR35 really.
They eventually contacted me in June 2020 to tell me that I'd got a position, just need SC clearance. Still outside IR35
Eventually, I am told I can start whenever I'm ready. I use delaying tactics, as I'm on a contract, which is £40 an hour that I'm enjoying. Can i start in April ?
Now they've sent me the inside determination. Inside IR35.
Can I chose my options of how I want to be paid.
I told them id talk to.my accountant.
Via LTD company, but they'll deduction tax and NIc at source. Via an Umbrellor. Via PAYE at a rate of £35 per hour, but they factor in 20 days holiday pay.
I suggested they pay £55 an hour because I'm personally loosing that much Because of it.
The £10k of expences will incur top rate tax and national insurance before I get it. So that alone is probably £6 or £7k.
My accountants suggestion? You are 54. Pay as much as you can afford into pension. £30k a year.
In fact take some pension advice.
Stop paying off the mortgage on your wife's buy to let, and use that and savings to live on.
At the same time the place I am contracting to at £40 / hr has asked what package I'd need to go permie.
I'm thinking.
£49k salary. That reduces my tax bill.
£20k into my pension. That reduces thier Employers NIC
An electric car on lease hire. That reduces the cost to both of getting to.the office, business trips etc. Bik very much in my head.
Work from home option. Declared that my home office is my normal place of work.
And visit to office max 5 days a month, in 2 or 3 day blocks (it's 140 miles away), so only 2 actual trips a month. And I happen to have a second home nearby.
Share options.
anonymous said:
[redacted]
Given a stable LTD company / self employment income, over 10 years, but with a very cautious approach to risk, the amount I need is much lower than what I want, but it is clear that some of my financial obligations are based on the confidence of previous earnings. When the contract I did have was cut short in April, I knew how long we could survive before all our savings had all gone. And it was about a year. Others that work in a similar way to me, had a greater need, and it would be only a few months before the money would run out. But they went out and got s
t jobs, to keep the wolves at bay. RonaldMcDonaldAteMyCat said:
Not really. You've already made the distinction yourself; shareholders who are also directors can be treated differently to shareholders who don't work in or manage the business. Allow shareholder directors to count a proportion of dividends as their working income.
The difficulty is perhaps that if you do that, you open up a wider problem; government acceptance that dividends can be used as a substitute for salary. It's not supposed to be the case, but everybody knows that's how many small owner managed businesses operate. Hence the reduction in tax free allowance on divvies.
The problem with that is there are start ups who operate in a semi co-operative mode where employees who are not directors but are shareholders and derive some of their income from dividends.The difficulty is perhaps that if you do that, you open up a wider problem; government acceptance that dividends can be used as a substitute for salary. It's not supposed to be the case, but everybody knows that's how many small owner managed businesses operate. Hence the reduction in tax free allowance on divvies.
The problem is that a company structure for one man band businesses is actually inappropriate. It was shoehorned into the 1989 Companies Act to meet provisions for a single person entity business in EU legislation. It would have been far better to create a new structure specifically designed for the job rather than b
dize company law to make it fit in. You wouldn't have this mess where people are treating investment income as earned income. They are two very different things and should no be blurred together.Serious Question on this.
In essence and in simple terms, the Government has outlined that they won't provide Covid support for directors of small businesses, sole traders etc. The Government has provided a structure of support including loans etc for small businesses.
So in a hypothetical scenario, Brian and Brenda Brush who are both directors of BB Brush Decorators Ltd can't claim any Covid support for losses to their directors dividend or salary, but they can claim Covid small business support for BB Brush Decorators Ltd to ensure the business can continue to pay their employees.
Why do the directors need Covid support in addition to the Covid support that is given to their business?
In essence and in simple terms, the Government has outlined that they won't provide Covid support for directors of small businesses, sole traders etc. The Government has provided a structure of support including loans etc for small businesses.
So in a hypothetical scenario, Brian and Brenda Brush who are both directors of BB Brush Decorators Ltd can't claim any Covid support for losses to their directors dividend or salary, but they can claim Covid small business support for BB Brush Decorators Ltd to ensure the business can continue to pay their employees.
Why do the directors need Covid support in addition to the Covid support that is given to their business?
CaptainSlow said:
For genuine risk taking business owners I agree. For disguised employees, that have been legislated against via IR35, that have avoided or even evaded tax for the last couple of decades I shed no tears that they aren't getting much help from the tax-payer.
So - the lack of support by the government is genuinely unfair - but only if the individual is running a genuine "risk taking" company (rather than a disguised employee)?The tax savings that can be obtained by choosing dividends over salary still exist - but they are nowhere near as generous as they used to be.
There were significant changes made about 5 years ago to the way Income Tax is calculated on dividends which made dividends significantly less attractive compared to the "old system".
The Surveyor said:
Serious Question on this.
In essence and in simple terms, the Government has outlined that they won't provide Covid support for directors of small businesses, sole traders etc. The Government has provided a structure of support including loans etc for small businesses.
So in a hypothetical scenario, Brian and Brenda Brush who are both directors of BB Brush Decorators Ltd can't claim any Covid support for losses to their directors dividend or salary, but they can claim Covid small business support for BB Brush Decorators Ltd to ensure the business can continue to pay their employees.
Why do the directors need Covid support in addition to the Covid support that is given to their business?
Directors are able to claim furlough for salary. The problem arises if you are a single director company. For many it would be very difficult to comply with the conditions for furlough for a single director company.In essence and in simple terms, the Government has outlined that they won't provide Covid support for directors of small businesses, sole traders etc. The Government has provided a structure of support including loans etc for small businesses.
So in a hypothetical scenario, Brian and Brenda Brush who are both directors of BB Brush Decorators Ltd can't claim any Covid support for losses to their directors dividend or salary, but they can claim Covid small business support for BB Brush Decorators Ltd to ensure the business can continue to pay their employees.
Why do the directors need Covid support in addition to the Covid support that is given to their business?
spanky3 said:
Surely the answer to the original question is the one pointed out on the second page: if you compensate directors/contractors who have lost dividends you have to compensate everyone who has lost dividends.
Not really. They need only need to insert a test something like "You conduct work directly for the company and dividend income from it accounts for 50% or more of your income".It would be easily achieved, if he wanted to do it.
Eric Mc said:
So - the lack of support by the government is genuinely unfair - but only if the individual is running a genuine "risk taking" company (rather than a disguised employee)?
IMO yes. Eric Mc said:
The tax savings that can be obtained by choosing dividends over salary still exist - but they are nowhere near as generous as they used to be.
There were significant changes made about 5 years ago to the way Income Tax is calculated on dividends which made dividends significantly less attractive compared to the "old system".
I know, you're not the only accountant on PH Eric.There were significant changes made about 5 years ago to the way Income Tax is calculated on dividends which made dividends significantly less attractive compared to the "old system".
plasticpig said:
The Surveyor said:
Serious Question on this.
In essence and in simple terms, the Government has outlined that they won't provide Covid support for directors of small businesses, sole traders etc. The Government has provided a structure of support including loans etc for small businesses.
So in a hypothetical scenario, Brian and Brenda Brush who are both directors of BB Brush Decorators Ltd can't claim any Covid support for losses to their directors dividend or salary, but they can claim Covid small business support for BB Brush Decorators Ltd to ensure the business can continue to pay their employees.
Why do the directors need Covid support in addition to the Covid support that is given to their business?
Directors are able to claim furlough for salary. The problem arises if you are a single director company. For many it would be very difficult to comply with the conditions for furlough for a single director company.In essence and in simple terms, the Government has outlined that they won't provide Covid support for directors of small businesses, sole traders etc. The Government has provided a structure of support including loans etc for small businesses.
So in a hypothetical scenario, Brian and Brenda Brush who are both directors of BB Brush Decorators Ltd can't claim any Covid support for losses to their directors dividend or salary, but they can claim Covid small business support for BB Brush Decorators Ltd to ensure the business can continue to pay their employees.
Why do the directors need Covid support in addition to the Covid support that is given to their business?
Anyway I would not worry about it now 3m votes is probably enough to enuser a different Chancellor in 2024.
The Surveyor said:
Serious Question on this.
In essence and in simple terms, the Government has outlined that they won't provide Covid support for directors of small businesses, sole traders etc. The Government has provided a structure of support including loans etc for small businesses.
So in a hypothetical scenario, Brian and Brenda Brush who are both directors of BB Brush Decorators Ltd can't claim any Covid support for losses to their directors dividend or salary, but they can claim Covid small business support for BB Brush Decorators Ltd to ensure the business can continue to pay their employees.
Why do the directors need Covid support in addition to the Covid support that is given to their business?
There is no "support". Only the offer of debt to cover cash flow. With no idea when the end might be.In essence and in simple terms, the Government has outlined that they won't provide Covid support for directors of small businesses, sole traders etc. The Government has provided a structure of support including loans etc for small businesses.
So in a hypothetical scenario, Brian and Brenda Brush who are both directors of BB Brush Decorators Ltd can't claim any Covid support for losses to their directors dividend or salary, but they can claim Covid small business support for BB Brush Decorators Ltd to ensure the business can continue to pay their employees.
Why do the directors need Covid support in addition to the Covid support that is given to their business?
And anyone with half a brain knows how borrowing to cover cash flow is likely to end.
Eric Mc said:
So - the lack of support by the government is genuinely unfair - but only if the individual is running a genuine "risk taking" company (rather than a disguised employee)?
The tax savings that can be obtained by choosing dividends over salary still exist - but they are nowhere near as generous as they used to be.
There were significant changes made about 5 years ago to the way Income Tax is calculated on dividends which made dividends significantly less attractive compared to the "old system".
What about the NI savings?The tax savings that can be obtained by choosing dividends over salary still exist - but they are nowhere near as generous as they used to be.
There were significant changes made about 5 years ago to the way Income Tax is calculated on dividends which made dividends significantly less attractive compared to the "old system".
Countdown said:
Eric Mc said:
So - the lack of support by the government is genuinely unfair - but only if the individual is running a genuine "risk taking" company (rather than a disguised employee)?
The tax savings that can be obtained by choosing dividends over salary still exist - but they are nowhere near as generous as they used to be.
There were significant changes made about 5 years ago to the way Income Tax is calculated on dividends which made dividends significantly less attractive compared to the "old system".
What about the NI savings?The tax savings that can be obtained by choosing dividends over salary still exist - but they are nowhere near as generous as they used to be.
There were significant changes made about 5 years ago to the way Income Tax is calculated on dividends which made dividends significantly less attractive compared to the "old system".
plasticpig said:
Directors are able to claim furlough for salary. The problem arises if you are a single director company. For many it would be very difficult to comply with the conditions for furlough for a single director company.
So it's very difficult to for a director to claim furlough, I get that given they are not traditional 'employees', but I was meaning if the normal Covid support which is available to employees was not available, there are support packages available to their business. Surly they can't have both? monkfish1 said:
The Surveyor said:
Serious Question on this.
In essence and in simple terms, the Government has outlined that they won't provide Covid support for directors of small businesses, sole traders etc. The Government has provided a structure of support including loans etc for small businesses.
So in a hypothetical scenario, Brian and Brenda Brush who are both directors of BB Brush Decorators Ltd can't claim any Covid support for losses to their directors dividend or salary, but they can claim Covid small business support for BB Brush Decorators Ltd to ensure the business can continue to pay their employees.
Why do the directors need Covid support in addition to the Covid support that is given to their business?
There is no "support". Only the offer of debt to cover cash flow. With no idea when the end might be.In essence and in simple terms, the Government has outlined that they won't provide Covid support for directors of small businesses, sole traders etc. The Government has provided a structure of support including loans etc for small businesses.
So in a hypothetical scenario, Brian and Brenda Brush who are both directors of BB Brush Decorators Ltd can't claim any Covid support for losses to their directors dividend or salary, but they can claim Covid small business support for BB Brush Decorators Ltd to ensure the business can continue to pay their employees.
Why do the directors need Covid support in addition to the Covid support that is given to their business?
And anyone with half a brain knows how borrowing to cover cash flow is likely to end.
The Surveyor said:
So loans to keep their business afloat is not 'support'... what am I missing?
Self emloyed people have been given grants. Employees have been given furlough money. Don't confuse this 'free' money with loans, that are directly repayable. Shareholder directors who take minimal salary and pay themselves from the profit they generate have been offered very little.
RonaldMcDonaldAteMyCat said:
Self emloyed people have been given grants. Employees have been given furlough money. Don't confuse this 'free' money with loans, that are directly repayable.
Shareholder directors who take minimal salary and pay themselves from the profit they generate have been offered very little.
Haven't there also been other grants, for those with business premises? Shareholder directors who take minimal salary and pay themselves from the profit they generate have been offered very little.
RonaldMcDonaldAteMyCat said:
Shareholder directors who take minimal salary and pay themselves from the profit they generate have been offered very little.
But their businesses have been offered support, that's the point. If you are running a business that is deliberately suppressing it's profits, and is deliberately suppressing the salary of it's director for perfectly legal tax efficiency purposes, how on earth could .gov be expected to calculate a fair and reasonable level of support for those directors that is any more than 'very little'? You can't, so the best method is to offer support to their business which is what they have done.
As before, surely you wouldn't expect Covid support to both the business and separately the owners of that business?
The Surveyor said:
But their businesses have been offered support, that's the point.
If you are running a business that is deliberately suppressing it's profits, and is deliberately suppressing the salary of it's director for perfectly legal tax efficiency purposes, how on earth could .gov be expected to calculate a fair and reasonable level of support for those directors that is any more than 'very little'? You can't, so the best method is to offer support to their business which is what they have done.
As before, surely you wouldn't expect Covid support to both the business and separately the owners of that business?
A one or two person ltd company with the shareholder directors taking profit via dividends instead of salary. What help have they received?If you are running a business that is deliberately suppressing it's profits, and is deliberately suppressing the salary of it's director for perfectly legal tax efficiency purposes, how on earth could .gov be expected to calculate a fair and reasonable level of support for those directors that is any more than 'very little'? You can't, so the best method is to offer support to their business which is what they have done.
As before, surely you wouldn't expect Covid support to both the business and separately the owners of that business?
As for suppressed profits, taking dividends is the opposite. If you wanted to suppress profits and reduce corp tax liability, you'd take a big fat salary and leave no profit in the company to tax. Then you would also have been entitled to £2.5k a month furlough.
RonaldMcDonaldAteMyCat said:
one or two person ltd company with the shareholder directors taking profit via dividends instead of salary. What help have they received?
I may be wrong, but I thought small businesses were eligible for a subsidised loan. So in addition to some tax relief, your one or two person ltd company can apply for a loan to keep the business ticking over and paying a small salary to it's directors.Genuinely, what other help would you expect to these businesses ?
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