Government unveils help for self-employed - MSE News

bobbooo

Jeremy535897 said:

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)

The cases I'm talking about (starting your business at the end of the 16/17 or 17/18 tax years and then continuing to run until the present day) do use figures that have already been filed. In order to be fair, in these cases HMRC should not count tax years with partial profits like these and just take the average of profits for the full tax years filed within the last three years. Averaging partial with full-year profits would be entirely illogical and unfair. These cases are distinct from people who started their business part way through the 18/19 tax year, for whom HMRC have no other full filed years to go on so have to use the filed figure for that year.

wwattina

Does anyone know if you claim Universal credit in meantime whether u will have to pay this back when u get self employed grant?

Hermann

wwattina said:

Does anyone know if you claim Universal credit in meantime whether u will have to pay this back when u get self employed grant?

From the guidance...

https://www.gov.uk/guidance/claim-a-grant-through-the-coronavirus-covid-19-self-employment-income-support-scheme

You can make a claim for Universal Credit while you wait for the grant, but any grant received will be treated as part of your self-employment income and may affect the amount of Universal Credit you get. Any Universal Credit claims for earlier periods will not be affected.

wwattina

I read that but is not clear, if you get grant in a lump sum in June does it only effect UC after that If they say this is for march, april, may then you would be overpaid on UC you have previous received this needs to be clarified 

Moxley

wwattina said:

I read that but is not clear, if you get grant in a lump sum in June does it only effect UC after that If they say this is for march, april, may then you would be overpaid on UC you have previous received this needs to be clarified 

Universal credit is calculated monthly based on your income in that month. An increase in income this month doesn’t make last month’s amount an overpayment. You shouldn’t have to repay.

Jeremy535897

bobbooo said:

Jeremy535897 said:

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)

The cases I'm talking about (starting your business at the end of the 16/17 or 17/18 tax years and then continuing to run until the present day) do use figures that have already been filed. In order to be fair, in these cases HMRC should not count tax years with partial profits like these and just take the average of profits for the full tax years filed within the last three years. Averaging partial with full-year profits would be entirely illogical and unfair. These cases are distinct from people who started their business part way through the 18/19 tax year, for whom HMRC have no other full filed years to go on so have to use the filed figure for that year.

My point about manipulation was in response to people asking why 2019/20 could not be included. My bullet point about amending a SA return has, in the latest guidance, been addressed. That guidance now gives examples, and you can view it at:
https://www.gov.uk/guidance/claim-a-grant-through-the-coronavirus-covid-19-self-employment-income-support-scheme:
https://www.gov.uk/guidance/how-hmrc-works-out-total-income-and-trading-profits-for-the-self-employment-income-support-scheme

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.

Jeremy535897 said:

bobbooo said:

Jeremy535897 said:

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)

The cases I'm talking about (starting your business at the end of the 16/17 or 17/18 tax years and then continuing to run until the present day) do use figures that have already been filed. In order to be fair, in these cases HMRC should not count tax years with partial profits like these and just take the average of profits for the full tax years filed within the last three years. Averaging partial with full-year profits would be entirely illogical and unfair. These cases are distinct from people who started their business part way through the 18/19 tax year, for whom HMRC have no other full filed years to go on so have to use the filed figure for that year.

My point about manipulation was in response to people asking why 2019/20 could not be included. My bullet point about amending a SA return has, in the latest guidance, been addressed. That guidance now gives examples, and you can view it at:
https://www.gov.uk/guidance/claim-a-grant-through-the-coronavirus-covid-19-self-employment-income-support-scheme:
https://www.gov.uk/guidance/how-hmrc-works-out-total-income-and-trading-profits-for-the-self-employment-income-support-scheme

Thanks for the links. Unfortunately as I feared it looks like HMRC will be using the mean average of the last 3 (or 2) years’ profits, regardless of whether any of those years were partial and so not full-year profits. This means for example, that someone who started being self-employed on the last day of the 16/17 tax year would only receive approximately 50% of their true yearly profits (80% of what is effectively two years’ profits averaged over three years, so 80% of 66% ~ 50%), whereas someone else who started their business a day later, on the first day of the 17/18 tax year, with exactly the same yearly profits, would receive the 80% that everyone should be getting.

This is absolutely absurd, unfairly and arbitrarily punishing those who started their business partway through the tax year for no logical reason whatsoever, except to limit the government’s pay-out. It's scandalous. I really don’t understand why this hasn’t had any media attention. Please MSE and Martin Lewis can you call the government out on this and campaign for change just as you commendably did with the furlough/rehire issue. MSE_Naomi can you please pass bring this to Matin Lewis’s attention?

Edit: This problem could easily be solved by instead of using the mean average of the last three yearly profits for the grant calculation, to use the median of these profits, and if there are only two years of tax returns available, to use the higher of the two profits.

Fluffalump12

Sadly there are still plenty of people slipping through the holes in the help available for self-employed.  I know of a couple that he is still working, she is self-employed. But, only started self-employment March 2019.  She is therefore entitled to nothing.  No UC because of his income, no Self-employment grant because she doesn't have the necessary years of tax returns having only started just over a year ago.  His money pays the mortgage, the bills, keeps the car on the road for him to get to work, her wage was buying the food.  Now no money = no food. They will have to stop paying utilities and risk them being cut off, or stop paying the mortgage so they can eat.  Another example is my son. He worked hard to set up a business over the last 9 months, now because his partner works he cant claim anything.  With her paying all the household bills, mortgage, her car payments, mobile etc, she cant pay the food and his van insurance, his mobile.  So he tried to claim.  Cant get a penny.  Just 2 households mentioned here that now cant eat. How many more around the country are being let down.

Grumpy_chap

Why is it that the first thing these two households you mention feel they need to cut back on is food?

I know, whenever I need to 'tighten my belt' financially, there are many things we find to cut back on before food.

It also seems as though these two households may not have accessed the support (other than SEISS) that is available in relation to coronavirus:

• mortgage  / loan payment holidays
• delay tax payments
• bounce back loan

unholyangel

bobbooo said:

Jeremy535897 said:

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)

The cases I'm talking about (starting your business at the end of the 16/17 or 17/18 tax years and then continuing to run until the present day) do use figures that have already been filed. In order to be fair, in these cases HMRC should not count tax years with partial profits like these and just take the average of profits for the full tax years filed within the last three years. Averaging partial with full-year profits would be entirely illogical and unfair. These cases are distinct from people who started their business part way through the 18/19 tax year, for whom HMRC have no other full filed years to go on so have to use the filed figure for that year.

And that would result in some people claiming they only traded for part of the year (due to sickness, holiday or whatever), in order to inflate their earnings. Should we also be disregarding non working days? What about someone who is only part time self employed than someone full time? 

There are always rules to prevent outright abuse of schemes like this. Unfortunately sometimes those fraud safeguards also disadvantage others. Sometimes they also get an advantage though - for example someone who would end up ineligible if it was apportioned to actual trading time.