HUGE FLAW IN SELF-EMPLOYMENT GRANT SCHEME

slacky1230

i do to feel its wrong if your income is more than 50% of your self employed income your not eligible for the grant but if you are eligible the years your income was more than 50% than your self employed income they count these years. When calculating they need to take full years of being self employed not part years. Doesn't seem to be consistent but i see it as a way to bring down the money they've promised to pay the self employed

olive_tree

Any women who had a baby in the past 36 months will be disadvantaged due to being on maternity leave and thus reducing their turnover for that year, or even possibly two consecutive years!! Its going to affect us all in different ways but I am grateful for being eligible for something! 

Grumpy_chap

The three year average does prevent fraud to a certain extent.  Given that they use the 2018-19 as the last of the three years and allowed people extra time to submit that tax return (if not already done) after the SEISS was announced.  If it just used 2018-19 then there is the possibility that some that were late in submitting the tax return would have put inflated figures in just to get the larger grant.  (Though that would be at the expense of paying extra tax for 2018-19.)

I am not sure that all the other 'injustices' listed are necessarily so.  For example the 50% earnings threshold is there, presumably, so that if someone has a regular job and makes a couple of grand as an extra through, for example some on-line auction site stuff, they are not then just given free money.

SEISS allows you to still work, but CJRS does not.

The comment about people only maybe getting 50% earnings (at the £2.5k cap) rather than 80% also applies to CJRS.  I guess that has to be set at some point, otherwise we would have TV stars on self-employed contracts earning massive salaries now claimng 80% of that massive salary as SEISS (and still able to work and earn a generous sum too).  Would that be fair?  I think the £2.5k cap in payout is what the Government deem as sufficient for most to keep their heads above water and perhaps it is also thought that those with far greater profits should have greater personal financial resilience.

Even at 80% or £2.5k, if not working and no commuting costs, no coffees / lunch out etc, many people will be as well off in total as if they were still working.

I think we should focus on the fact both SEISS and CJRS are actually extremely generous schemes and their existence is practically a miracle.

theone999

Given that as far as I'm aware, my accountant submits annual accounts and not monthly means that there is no data to do it monthly even I wanted to. 

Jeremy535897

theone999 said:

Given that as far as I'm aware, my accountant submits annual accounts and not monthly means that there is no data to do it monthly even I wanted to. 

No, the point is that if you only traded for say 6 months in 2016/17, your profits should be averaged over 30 months not 36. Your accounts for 2016/17 prepared by your accountant would be for 6 months. The reason this is not acceptable is it cannot be automated.

John_

bobbooo said:

Jeremy535897 said:

This was known about and raised in March. It is nothing new. The scheme is designed to be as automated as possible or it would  be overwhelmed. The easiest way to achieve this was to design it so it just has to look at two figures on each of three returns. Altering it to take account of months of trading would make automation impossible.

Using the median instead of mean average yearly profit would not have to take into account the number of months of trading per year. It uses exactly the same figures as the mean, but is in fact a simpler 'calculation' - you just order the yearly profits in ascending size and take the middle value. There is absolutely no logical reason whatsoever to use the mean average here, when the median is fairer, and actually simpler to calculate.

This is a flaw in the scheme that will unfairly impact many people, yet can be easily fixed with this simple change in the calculation.

Median would not necessarily be fairer, though. I suspect that it’d help you, but harm others, which is why you prefer it.

It’s free money from the government that you don’t need to work for, in compensation for something that is no-one’s fault. It’s not a good look to whine about being given a handout and saying that you want more.

Percy1983

As with all these things will have winners/losers, they have to make a rule based on figures they can access.

bobbooo

Some really bizarre responses here on what is a money saving forum. It's not free money, it's income support ultimately funded by us, the tax payers, who have endured years of austerity under this government. The tax system is effectively collective payment in yearly instalments by citizens in exchange for services and insurance against hardship and ill health in the future promised by the government. They have promised to pay 80% of monthly self-employed profits, yet for many this will not be the case, and could be closer to just 50%. If this was an insurance company that payed out 30% less than they promised, this site would be in uproar. But because its the government they get a free pass? Mind-boggling.

As I said, there's an easy fix, that requires exactly the same tax return data HMRC are currently proposing to use, with no extra figures like start dates or monthly earnings needed - changing from the mean average to the median yearly profit, which is an inherently fairer value, as unlike the mean it is not skewed by extreme values (like very low first-year profits), and so is more representative of typical yearly profits. This is just a statistical fact, and should have been obvious to the government when devising the scheme.

I was hoping in the details of the calculation there would be some other way HMRC would account for this oversight. For example, by only using a yearly profit value if it is above the personal allowance. Or by ignoring tax returns for partial years by looking at the stated start date of the business on the submitted form, then just averaging over the remaining years. Or by simply ignoring first year profits altogether. But they haven't - a first 'yearly' profit of as little as £1 could be used in a 3-year average calculation, which is absurd.

The final, full details of this scheme and the calculation were only made public just over a week ago, so there has been little time for scrutiny, lobbying or protesting (I doubt the police would see the latter as a 'reasonable excuse' for breaking lockdown rules anyway would they?). The scheme was initially meant to start at the beginning of June, so I thought there would be more time to question the government on its details and pressure them for change if necessary. I imagine this short time between finalising and implementing the scheme was at least partially to limit this scrutiny.

John_

If you’ve “endured” austerity then you’re not a net payer to the system, so to you, yes, it’s just more free money to add to the previous free money and services that you’ve had.
It’s not clear what you want people to say here, it’s a quickly implemented scheme, so it’s simple, and the other methods of calculation would be equally unfair, but just to,others, rather from you.
We’ll be returning to normality in a few months, and millions of people will be worse off at the end of it; that’s what it means to have the economy hit.
Live off your savings for now. If you don’t have enough, and get hungry, then sell some things to buy food.
Don’t look to the state to get you through the lean times. It may be nice if they do, but it’s never a good idea to rely on it.

bobbooo

John_ said:

If you’ve “endured” austerity then you’re not a net payer to the system, so to you, yes, it’s just more free money to add to the previous free money and services that you’ve had.
It’s not clear what you want people to say here, it’s a quickly implemented scheme, so it’s simple, and the other methods of calculation would be equally unfair, but just to,others, rather from you.
We’ll be returning to normality in a few months, and millions of people will be worse off at the end of it; that’s what it means to have the economy hit.
Live off your savings for now. If you don’t have enough, and get hungry, then sell some things to buy food.
Don’t look to the state to get you through the lean times. It may be nice if they do, but it’s never a good idea to rely on it.

The vast majority (including me) will be a net payer into the system over their lifetime, which is the only exchange that matters. I've just explained why the median is an inherently fairer metric than the mean. If you think there are common situations in which the mean would be fairer (to everyone, the government included), please give a specific example. The last point is the only one I agree on - its never a good idea to rely on a Tory government to keep its promises and get everyone through the tough times. That doesn't mean we should all lay down and give up holding them to account over their failings.