Self employment support

SJB77

If I go self employed, and then we go into another lockdown within 3 months would I be entitled to the same support as someone who has been self employed for 3 years.

MattMattMattUK

SJB77 said:

If I go self employed, and then we go into another lockdown within 3 months would I be entitled to the same support as someone who has been self employed for 3 years.

No, as it currently stands the most you would be entitled to would be UC and/or nsJSA.

Pennywise

No, not for a sole trader as you'd probably be caught by the 50:50 rule if you had another source of income before starting the business and the SEISS scheme probably wouldn't be open to you until after Jan 2023 as your first year of trading would be tax year end 5/4/22 with the tax return deadline being 31/1/23!  So you'd only get UC during the next 18 months or so and only SEISS if there were still lockdowns etc in nearly 2 years time.

Your best bet would be to set up as a limited company and start putting a wage for yourself via a company payroll PAYE scheme from day 1 so you'd maybe qualify for furlough if there was another lockdown later in the year, as the furlough qualifying dates for employees have been more recent/up to date.  I.e qualifying date for employees in lockdown 1 was Feb for Mar lockdown and was October for the November lockdown.  (Hint: you don't have to pay the wage to yourself if the co cant afford it, as it can stay on the director loan account once processed and figures submitted to HMRC).

Obviously it's all speculation as no one knows what future support there'd be, but the above is based on the assumption that they'd do similar to last time.

SJB77

Thanks Penny, most helpful 

unholyangel

Pennywise said:

No, not for a sole trader as you'd probably be caught by the 50:50 rule if you had another source of income before starting the business and the SEISS scheme probably wouldn't be open to you until after Jan 2023 as your first year of trading would be tax year end 5/4/22 with the tax return deadline being 31/1/23!  So you'd only get UC during the next 18 months or so and only SEISS if there were still lockdowns etc in nearly 2 years time.

Your best bet would be to set up as a limited company and start putting a wage for yourself via a company payroll PAYE scheme from day 1 so you'd maybe qualify for furlough if there was another lockdown later in the year, as the furlough qualifying dates for employees have been more recent/up to date.  I.e qualifying date for employees in lockdown 1 was Feb for Mar lockdown and was October for the November lockdown.  (Hint: you don't have to pay the wage to yourself if the co cant afford it, as it can stay on the director loan account once processed and figures submitted to HMRC).

Obviously it's all speculation as no one knows what future support there'd be, but the above is based on the assumption that they'd do similar to last time.

Don't they? I know when it's considered the employee/recipient becomes liable to tax on payments of earnings (s18 ITEPA), but I'm not convinced it would automatically be the same for purposes of CJRS direction. Particularly when that direction states: 

6.2 An employee is a qualifying employee for the purposes of CJRS if-
(a) the employer making the CJRS claim made a payment (“the payment”) to the employee, and
(b) the payment was reported to HMRC pursuant to paragraph 22 of Schedule Al to the PAYE Regulations in a return that the employer is required to deliver in accordance with regulations 67B or 67D of those Regulations,

If that first line wasn't there and it just said a payment was reported, I'd agree with you. But IMO that first line introduces a potential problem for DLAs. WIth a DLA they're entitled to the payment, but has it actually been made? As it's an accrual, I would say that is a resounding no. 

68ComebackSpecial

unholyangel said:

Pennywise said:

No, not for a sole trader as you'd probably be caught by the 50:50 rule if you had another source of income before starting the business and the SEISS scheme probably wouldn't be open to you until after Jan 2023 as your first year of trading would be tax year end 5/4/22 with the tax return deadline being 31/1/23!  So you'd only get UC during the next 18 months or so and only SEISS if there were still lockdowns etc in nearly 2 years time.

Your best bet would be to set up as a limited company and start putting a wage for yourself via a company payroll PAYE scheme from day 1 so you'd maybe qualify for furlough if there was another lockdown later in the year, as the furlough qualifying dates for employees have been more recent/up to date.  I.e qualifying date for employees in lockdown 1 was Feb for Mar lockdown and was October for the November lockdown.  (Hint: you don't have to pay the wage to yourself if the co cant afford it, as it can stay on the director loan account once processed and figures submitted to HMRC).

Obviously it's all speculation as no one knows what future support there'd be, but the above is based on the assumption that they'd do similar to last time.

Don't they? I know when it's considered the employee/recipient becomes liable to tax on payments of earnings (s18 ITEPA), but I'm not convinced it would automatically be the same for purposes of CJRS direction. Particularly when that direction states: 

6.2 An employee is a qualifying employee for the purposes of CJRS if-
(a) the employer making the CJRS claim made a payment (“the payment”) to the employee, and
(b) the payment was reported to HMRC pursuant to paragraph 22 of Schedule Al to the PAYE Regulations in a return that the employer is required to deliver in accordance with regulations 67B or 67D of those Regulations,

If that first line wasn't there and it just said a payment was reported, I'd agree with you. But IMO that first line introduces a potential problem for DLAs. WIth a DLA they're entitled to the payment, but has it actually been made? As it's an accrual, I would say that is a resounding no. 

The other issue with this "cunning plan" is that the company/ employer would still be liable to make payments to HMRC of the PAYE liability. Sounds ridiculous to make payments to HMRC when there are insufficient funds to pay the net pay - why would anyone sane do that?

JJC1956

SJB77 said:

If I go self employed, and then we go into another lockdown within 3 months would I be entitled to the same support as someone who has been self employed for 3 years.

Simple answer is NO