Martin Lewis joins campaigners calling on Treasury to help 3m excluded from coronavirus support

dunstonh

Why do you keep referring back to limited companies?  We're talking about self employed here as well.

Because that is the subject in question.   Self employed would not put themselves on an annual payroll.

59 of those drivers have received SEISS support, the other chap was excluded from support because he had taken a chunk of cash (I think it was £10k and presumably he had spent it) out of his pension.  No support.

Drawing money from the 75% taxable chunk of your pension is classed as income.   So, it created a £10k income increase in the tax year.     Warnings are given that drawing pensions this way will impact on means tested benefits.   So, it is correct that means tested support should not be given where he does not pass the means test criteria.  

Why is it that people do not take any notice of risk warnings

As explained previously, the support is still required because come the point of the next annual salary, in April 2021, there will be no (or very little) funds available for them to pay themselves their 2021/22 income.

It may be required next April.  However, it is unlikely unless there is a second wave.    if the business hasnt got the £9k to pay them next April then it is unlikely to be a viable business and will either fail or be shut down.    The Government cannot and should not support businesses that are not viable.

These are people who have not had to tighten their belts to live off 80% of their salary.  They are having to live off 0% of their normal salary.

That is wrong.   They get their normal salary once a year.   So, they are not restricted to 0% of their salary as they had 100% in March 2020 and wont need it again until March 2021.    

There can be no annual PAYE payments, there can be no dividends, there can be no monthly PAYE payments when they have no income and are excluded from support.

Not qualifying for support is not the same as being excluded.     They didnt need support as they had an annual salary.  CJRS was to ensure there was cashflow to keep salaries being paid to those paid weekly or monthly.   

Dividends are a return of investment income/capital paid to shareholders.  If the business is not doing well then dividends should be reduced or ceased.

If a director has chosen to run their business with dividends and annual salary as the means to remunerate the shareholders then that is done to avoid National Insurance and reduce the tax they pay.   If they have done this for 30+ years then they have saved far more than 4 months of furlough payments (which would only equate to just over £2000 for a director).

If the directors needed an income monthly, then why were they telling HMRC that they were taking an income annually?

Grumpy_chap

jimkelly said:

Why do you keep referring back to limited companies?  We're talking about self employed here as well.

"Those on annual payroll have declared to HMRC that they receive their salary as a single payment annually.  So, why do they need monthly support for 4 months after they have just taken their annual salary?"

As explained previously, the support is still required because come the point of the next annual salary, in April 2021, there will be no (or very little) funds available for them to pay themselves their 2021/22 income.

I am not sure whether this is done to troll or whether you truly do not understand.  This line of recent discussion has been about annual paid employees and this can only happen if the payment is from a Ltd Co to the employee.  Self employed sole-traders simply do not operate a payroll in a comparable manner.  Therefore, we are not talking about self-employed here as well (at least not in the recent line of discussion in this thread).

For those that do operate annual payroll from their own Ltd Co., if support is required it is in another 9 months's time (from now), but in that time the company has the ability to plan and also reduced dividend or use retained profits to support the salary payment.  It should be possible for a competently managed and viable business to plan and mitigate over a 9 month period and if that is not possible, maybe the business is not viable and should be allowed to fail.

jimkelly

The dividend discussion has been done ad infinitum on these boards.

I am talking about those who are doing everything right, they are paying themselves solely on PAYE, paying IC & NI and are not taking dividends in lieu of income.  They are doing the very thing that you have been advocating.

By doing so, their RTI data in March missed the deadline for CJRS and they have therefore been excluded from support.

Edit @Grumpy_chap standing up for people who have been left out of all support schemes is not trolling.  In fact, I would suggest those wishing to brush this subject under the carpet and ignore that there is even an issue are the real problem.

se2020

I myself have been excluded and know a couple of others in the same situation who are suffering more than me.

My self employed profit was over £50k.
My business is running mobile bars for wedding so have no work whatsoever left this year. 
I purchased industrial unit at the very end of last year which used all of my cash savings.  This has sitting tennent until june so I do not pay the rates yet.
I also have over £16k savings set aside to pay my july tax bill so no universal credit.
I have lucky found some temporary employment which covers the bills for the moment but only my personal bills. 
I have a large value of stock which will all need to be discarded within the next 8-10weeks so unless things get back to normal quickly for big weddings I will be done.
I will not be able to afford to replace the stock for the business to start again next year season so it look like my business I built over 22years is now due to fail. 
I personally know of 2 other people  in the same situation except one is not found employment enough well paid to cover all bills so will be using the July tax money to live from but have no way of paying it in january.
The other has not found any sort of employment at all.

gary83

se2020 said:

I also have over £16k savings set aside to pay my july tax bill so no universal credit.

This seems a fairly common misunderstanding/misrepresentation of Universal Credit by the excludeduk group, any savings that you can prove are intended to pay a tax bill are discounted for universal credit calculation purposes 

https://www.moneysavingexpert.com/news/2020/04/self-employed-with-cash-saved-to-pay-tax--it-won-t-be-counted-as/

dunstonh

I am talking about those who are doing everything right, they are paying themselves solely on PAYE, paying IC & NI and are not taking dividends in lieu of income.  They are doing the very thing that you have been advocating.

I very much doubt there are many directors setting themselves up to pay themselves tens of thousands of pounds once a year.  It is not logical or sensible.  It is most commonly used to take a salary to the primary threshold with dividends on top.

However, if that is what they are doing, then clearly they are not short of money at this time as they took their annual salary in March and wont need it again until next March and for most, that will leave them 8-9 months to build it up.    There may be a very small number where it is not possible but that will be an already small number taking more than the primary threshold.  

Jeremy535897

This is probably because of the fact that the £10k is taxable income and was probably taken in the period and therefore affects the eligibility criteria of being adversely affected, something which may be able to be sorted out on appeal.

No. The problem here is that taking a taxable sum from a pension scheme can cause other taxable income to exceed self employment trading income, so the 50% test is not met. It has nothing to do with the business being adversely affected, and no appeal can be made.

gt94sss2

se2020 said:

I have a large value of stock which will all need to be discarded within the next 8-10weeks so unless things get back to normal quickly for big weddings I will be done.
I will not be able to afford to replace the stock for the business to start again next year season so it look like my business I built over 22years is now due to fail. 

Someone else has addressed the universal benefit point but surely the need to replace your stock is exactly the sort of thing that the Bounce Back Loan scheme is designed to help with?

se2020

gt94sss2 said:

se2020 said:

I have a large value of stock which will all need to be discarded within the next 8-10weeks so unless things get back to normal quickly for big weddings I will be done.
I will not be able to afford to replace the stock for the business to start again next year season so it look like my business I built over 22years is now due to fail. 

Someone else has addressed the universal benefit point but surely the need to replace your stock is exactly the sort of thing that the Bounce Back Loan scheme is designed to help with?

I was turned down for UC (but this was in march) due to having savings over £16k although after my July tax bill inwould have had less than £2k in savings.
I did take advice in another thread. As the UC support would not be enough to pay even my rent I decided not to pay off the july tax bill early as i could put this money toward getting the business going again before january when they will let me hold the payment until.

I could apply for the bounce back loan to replace the stock but I am holding about half my annual turnover in stock st the moment. The loan will only offer 25% of turnover.
I have good credit and could secure additional loans for the full amount but currently the government is saying maximum of 30 people will be allowed to a wedding and that is not until the start of August. I can not break even on numbers of less than 100.
I did have bookings for every week until the end of October this year and every one has cancelled or postponed. The ones that have postponed are trying to rebook for next year which leaves me double booked and the guidance looks like I am going to have to refund all the deposits for those as well.
I am very scared of taking out large amounts in loans with no sign of large gatherings being allowed to return.

se2020

I think there is a gap in the system where the government thought any self employed with profit of over £50k a year must have plenty of money to live on.
In my case it is unfortunate timing as I spent all my savings into the business only 6 months ago and more bad timing as covid starts just as the season for weddings starts leaving me with a large amount of useless business assets and no personal income or savings. 
If there is a cap of the sess at £2500 per month I do not see why there is also a need to say no payment at all for making over £50k profit. One earner at £49,999 get the full £2.5k and the earner at £50,001 get nothing.
Yes, in hindsight I would have became limited company and not paid 40% tax rates over last 4 years.  And if I know other things now I would not have tried to develop business to expand and  provide employment to others as all the timings could not have been worse for me.