Government unveils help for self-employed - MSE News

Smirrs

I think I am one of many who will fall through the cracks here. The majority of my income for the last three years was "deemed employed" income for a Government department (effectively a zero-hours contract, but that's another gripe). They won't pay me under the Job Retention Scheme because their legal department says I'm self-employed, not employed, but the income went through PAYE so it shows up as employed income on my HMRC records, meaning I won't qualify for the Self-Employed Pay Scheme. To make matters worse, the contract comes to an end tomorrow (though there hasn't been any work for some weeks now, after 4 years of constant work), so I had just started swapping back completely to self-employed work - which has now, of course, dried up completely.

I don't earn masses here (30k-ish), so I'm not some fatcat contractor, but IR35 looks like it will screw me over nonetheless. Is there any point trying to campaign to get the deemed employed income accepted as self-employment? Not quite sure how we're, going to make it to June anyway, but some hope at the end of the tunnel might be nice...

Jeremy535897

That is an interesting question and one that has vexed me for some time. The dilemma as I see it is that it is not straightforward to know whether you really are self employed or employed in these sorts of circumstances. You have legal advice that you are self employed, but you have done what anyone would do and that is put the income as employment income on your tax return. To find a box to put PAYE or other non-CIS tax deducted from your self employment income you have to complete a self employment (full) and use (from memory) box 84 to record the tax deducted. But who is brave enough to amend their SA returns to do this? If you get it wrong and you weren't self employed in respect of this income after all, it is not going to end well, although the advice from their legal department, if you have it in writing, would be some help if HMRC alleged fraud.
If I were you, I would call HMRC, explain your circumstances, and ask what you can do.

SUVI

I have been self employed since 2017. My first TR showed a minimal profit. 2017 2018 profit had increased but i was also employed part time and my salary was more than self employed income. I finished the paid job in May 2019 and all of my income is now from self employment but obviously this wont show until I submit my 2019 2020 Tax Return on April 5th. Will this be taken into account when I submit?

SJmartin

Do we qualify? We are a two person self employed partnership. We submit individual self employment tax returns which show less than £50k each. However the profits from the partnership are above £50k. Unsure if £50k limit applies to partnership or individual? 

Scoobs2006

Hi All, 
Quick question. I've been told verbally I'm going on the Furlough List at work. We get monthly in arrears, so my March payment appears to 20% less, but here's the thing, I've had no letter agreeing to this and I've effectively worked the month of March for 20% less? I'm confused? 

Jeremy535897

SUVI said:

I have been self employed since 2017. My first TR showed a minimal profit. 2017 2018 profit had increased but i was also employed part time and my salary was more than self employed income. I finished the paid job in May 2019 and all of my income is now from self employment but obviously this wont show until I submit my 2019 2020 Tax Return on April 5th. Will this be taken into account when I submit?

No.

SJmartin said:

Do we qualify? We are a two person self employed partnership. We submit individual self employment tax returns which show less than £50k each. However the profits from the partnership are above £50k. Unsure if £50k limit applies to partnership or individual? 

Some people express doubts but it would be contrary to common sense if it were based on total profits, rather than partnership share.

Scoobs2006 said:

Hi All, 
Quick question. I've been told verbally I'm going on the Furlough List at work. We get monthly in arrears, so my March payment appears to 20% less, but here's the thing, I've had no letter agreeing to this and I've effectively worked the month of March for 20% less? I'm confused? 

They can't amend your pay in arrears. You worked for March and can't be furloughed for March.

bobbooo

MSE_Naomi said:

Self-employed workers will be able to apply for taxable grants worth up to 80% of their average monthly profits to combat loss of income due to the coronavirus pandemic, it was announced today. The grants will be capped at £2,500/mth though and not everyone will be able to claim - we've full details below on who's eligible, when you'll get the money and what to try in the meantime if you're struggling...

Read the full story:

'Government unveils help for self-employed'

Click reply below to discuss. If you haven’t already, join the forum to reply.

Does anyone know how the grant would be calculated if you started self-employment at the very end of the 16/17 tax year?

So for example, for simplicity let's say you were unemployed until you started your business in the last few days of that tax year and made just £10 in profits during that time as you were just starting out, and filed your tax return for 16/17 recording this profit. Then you continued your business to the present day and filed tax returns for 17/18 and 18/19 showing considerably higher profits.

Surely HMRC would not just take a 3 year average of your profits in this case? As that would result in a figure substantially lower than real-world yearly profits due to the small partial first-year profits wildly skewing the average, which would unfairly disadvantage newer businesses. Would they disregard the first year in this case and just take the average of profits in the 17/18 and 18/19 tax years instead, or alternatively just use the 18/19 profits?

Jeremy535897

I fear that is unfortunately how it works, but we will have to see.

bobbooo

Jeremy535897 said:

I fear that is unfortunately how it works, but we will have to see.

It would be incredibly unfair if that is how the average profits will be calculated, as it would not only disadvantage newer businesses, but completely arbitrarily it would disadvantage any business started at the end of one of the last three tax years compared to one started at the beginning of the tax year. That would be utterly ridiculous, illogical and unfair.

Jeremy535897

I assume that the Government thinks it has to use figures that have already been filed, otherwise people could deliberately manipulate them. That logic falls down for a number of reasons:

• people have always had an incentive to manipulate the figures, albeit in the opposite direction
• people could in theory still amend their SA return for 2018/19 (although it would be a very brave person indeed that did)
• people who are delinquent in filing their 2018/19 return can still manipulate the figures (the benefit of not obeying the rules in the first place)