Coronavirus relief - where do I fit in?

[Barksy]

Evening,

I'd appreciate some advice - my situation is this:

- I'm the director of a limited company
- I'm on the payroll as an employee
- I pay VAT and Corporation Tax
- I don't have premises
- I work at home or go to coffee shops etc.
- I run an e-commerce company with no stock. Just a couple of laptops
- My official address is a virtual office

I used to have a serviced office with SBRR but moved out due to financial problems. I never even thought that I had to tell any official body about home working.

Where do I fit in? My business has pretty much died. It seems that everyone but me (and I'm sure I'm not unique) has a grant or 80% or whatever.

Thanks Kev

 

[Gordon - Commercial Finance]

At the moment, I looks like the EFG loan scheme might be an option. There’s very limited information out there about any of the options at the moment so there will be an element of “wait and see”.

Do you have any regular monthly overheads you can get a payment holiday from? Personal expenses including mortgage, car payments etc can be requested to and then you can put your payroll on hold potentially.

 

[philipthechilip]

If you pay yourself using paye, would it be possible to pay yourself up to £2500 per month with 80% covered by the government?

Obviously this may depend on the amount of cash you currently have in the business, and other factors. I'm not sure what the criteria is for this.

 

[Gordon - Commercial Finance]

I'm not sure what the criteria is for this.

No one is sure at the moment, even the guy that announced it today. We just need to wait and see

 

[Barksy]

If you pay yourself using paye, would it be possible to pay yourself up to £2500 per month with 80% covered by the government?

Obviously this may depend on the amount of cash you currently have in the business, and other factors. I'm not sure what the criteria is for this.

Hmmm... I currently pay £715 plus dividends, which of course I am taxed on, which gives me about that much a month. So, possibly, it's just switching it around and doing it via PAYE instead. Can anyone offer anything else on this?

Does this 80% scheme apply to businesses outside of pubs, restaurants and gyms?

Thanks.

 

[Gordon - Commercial Finance]

Hmmm... I currently pay £715 plus dividends, which of course I am taxed on, which gives me about that much a month. So, possibly, it's just switching it around and doing it via PAYE instead. Can anyone offer anything else on this?

Does this 80% scheme apply to businesses outside of pubs, restaurants and gyms?

Thanks.

No one knows!

 

[Barksy]

At the moment, I looks like the EFG loan scheme might be an option. There’s very limited information out there about any of the options at the moment so there will be an element of “wait and see”.

Do you have any regular monthly overheads you can get a payment holiday from? Personal expenses including mortgage, car payments etc can be requested to and then you can put your payroll on hold potentially.

Mortgage only; we got rid of the other debt last year and this year was supposed to be a new dawn. Yeah right.

I still have to live and it seems unfair (if it is the case) that people like me (directors of limited companies with no premises but still paying CT, VAT, personal taxes) might have to take loans when others get grants and 80% of their pay. And I appreciate there are probably yet more in other circumstances with no help either. Bit of a hodge podge and a mess all considered.

Thanks.

 

[Barksy]

No one is sure at the moment, even the guy that announced it today. We just need to wait and see

Thanks. Seems that way.

 

[Boshy]

Thanks. Seems that way.

I'm in a very similar situation as well. Just me and my wife as directors and sole employees and we have only a virtual office, online-based business and we pay ourselves 719/month.

As directors, we're not even considered self-employed so I'm not sure if we'll get ANY assistance from the government during these times.
It's frustrating.

 

[Gordon - Commercial Finance]

Mortgage only; we got rid of the other debt last year and this year was supposed to be a new dawn. Yeah right.

I still have to live and it seems unfair (if it is the case) that people like me (directors of limited companies with no premises but still paying CT, VAT, personal taxes) might have to take loans when others get grants and 80% of their pay. And I appreciate there are probably yet more in other circumstances with no help either. Bit of a hodge podge and a mess all considered.

Thanks.

I sympathise, in fact I empathise because I’m in the same boat.

Ask for a mortgage holiday. I don’t have a mortgage so I can’t do that, but the council didn’t respond to my query about a payment holiday so I cancelled my direct debit to them. Probably get a payment holiday on the cars too.

There are loads of people in this situation - you just need to figure out ways to cut costs and ride it out.

Those that are “entitled” to grants and wages paid seem to be waiting around and assuming that the government will do what they said they will do. A very dangerous assumption.

 

[Gordon - Commercial Finance]

I'm in a very similar situation as well. Just me and my wife as directors and sole employees and we have only a virtual office, online-based business and we pay ourselves 719/month.

As directors, we're not even considered self-employed so I'm not sure if we'll get ANY assistance from the government during these times.
It's frustrating.

In the coming days and weeks if people like yourselves make enough noise that the gov can hear, maybe they’ll announce something to help us, but the imaginary money tree is getting bare already.

Don’t hold your breath and wait for a government bailout - cut your costs, do what you can to get through it without government support.

 

[philipthechilip]

Does this 80% scheme apply to businesses outside of pubs, restaurants and gyms?

It applies to ALL businesses regardless of size or sector.

But the question is, does it apply to people who have previously received their income mostly in dividends.

Is switching your primary income source from dividends to paye 'cheating'?

They need to clarify this.

 

[UrbanRetail]

I've contacted all lines of credit, hp, mortgage, the lot and basically said I need 3 months or I'll have nothing to give them.

They were all happy to wait.

 

[UKSBD]

It's quite ironic really

All those years Directors have artificially been paying themselves low wages to avoid paying National Insurance and now wanting their share of where National Insurance goes.

To add, not rubbing it in or throwing stones, as I've done it too.
Maybe after this people should look at themselves

 

[Barksy]

It applies to ALL businesses regardless of size or sector.

But the question is, does it apply to people who have previously received their income mostly in dividends.

Is switching your primary income source from dividends to paye 'cheating'?

They need to clarify this.

They need to clarify A LOT.

As for other comments: I don't have much to cut but luckily my wife has a really good job and we can just about get by on her salary. Even if I got some of the £715 pm it would make a difference. We can't do much anyway so costs should be lower so even that would help.

Anyway - thanks for the thoughts, good luck to everyone and let's hope this is over soon.

 

[Barksy]

It's quite ironic really

All those years Directors have artificially been paying themselves low wages to avoid paying National Insurance and now wanting their share of where National Insurance goes.

To add, not rubbing it in or throwing stones, as I've done it too.
Maybe after this people should look at themselves

We also pay extra tax on dividends that was introduced as a remedy to this. Which of course I pay. Swings and roundabouts - we still end up paying it. I keep it at the £715 because I don't have regular profits. Anything extra I can pay is dividends, and again taxed to account for the NI.

I don't see why my loss of earnings is in some way less of an issue than those of a bar worker. I pay my taxes and I need to live, same as anyone else.

 

[philipthechilip]

They need to clarify A LOT.

As for other comments: I don't have much to cut but luckily my wife has a really good job and we can just about get by on her salary. Even if I got some of the £715 pm it would make a difference. We can't do much anyway so costs should be lower so even that would help.

Anyway - thanks for the thoughts, good luck to everyone and let's hope this is over soon.

So where do we go from here - where is the best place to get answers to these questions? HMRC helpline?

Also how do we opt in for the 80% of paye grant?

 

[Mr D]

We also pay extra tax on dividends that was introduced as a remedy to this. Which of course I pay. Swings and roundabouts - we still end up paying it. I keep it at the £715 because I don't have regular profits. Anything extra I can pay is dividends, and again taxed to account for the NI.

I don't see why my loss of earnings is in some way less of an issue than those of a bar worker. I pay my taxes and I need to live, same as anyone else.

Extra tax on dividends?
Thought it was reduced tax.

Last time I looked it was lower rate plus a small tax allowance.

 

[Mr D]

So where do we go from here - where is the best place to get answers to these questions? HMRC helpline?

Also how do we opt in for the 80% of paye grant?

Wait for a week or two until more info is released.

 

[Barksy]

Extra tax on dividends?
Thought it was reduced tax.

Last time I looked it was lower rate plus a small tax allowance.

You used to pay the dividend with no tax because it had already been paid - Corporation Tax. So you got a credit for the CT so that there wasn't double taxation.

You still do but pay at least 7.5% extra dependent on your tax band. Which is roughly equal to the NI that was previously avoided.

 

[Mr D]

You used to pay the dividend with no tax because it had already been paid - Corporation Tax. So you got a credit for the CT so that there wasn't double taxation.

You still do but pay at least 7.5% extra dependent on your tax band. Which is roughly equal to the NI that was previously avoided.

Must admit I've only come across the 7.5% tax bit.
The corporation tax is paid by company, not from my income.

 

[Barksy]

Must admit I've only come across the 7.5% tax bit.
The corporation tax is paid by company, not from my income.

Yes, and that means that that income / profit has already been subject to tax (CT) and the director gets a credit for that. So you didn't pay any personal tax on the divi unless you went into the higher rate.

I will admit that I was a beneficiary of this for a long time, but it's a long time since paying yourself dividends was a massive tax break. So we pay our tax or NI in some way now. Not sure about the exact numbers to see if there is still some benefits but we do pay extra.

 

[UKSBD]

About 18%

Less if your company claims the NI allowance

 

[Perfect Windows]

It's quite ironic really

All those years Directors have artificially been paying themselves low wages to avoid paying National Insurance and now wanting their share of where National Insurance goes.

To add, not rubbing it in or throwing stones, as I've done it too.**
Maybe after this people should look at themselves

Picking on NI contributions as though they are some kind of separate ring-fenced insurance separate from general taxation is laughable. We've probably paid more tax than most of the UK employed population.

I've been very content to pay myself taxed dividends from our company's taxed profits (the ones left after we've collected and paid Value Added Tax), thank you. (As it happens, we service domestic customers only and couldn't increase our prices when we passed the limit, so we took the VAT hit; it's straight off our bottom line.) We also have a policy agreed with our accountant where we want him to minimise our bills without doing anything artificial whatsoever to avoid tax. I've always accepted that we need to pay our share to have a functioning economy. We use the roads, we should pay for them. So we've paid our share with (and I kid you not) a feeling of being contributors.

A government ignoring us in the current crisis shouldn't be surprised if this hits them hard when this is all over.


** I have to disagree: you do rather seem to be "rubbing it in". You're over more than one thread on this subject making your "made your bed now lie in it" comments.

 

[lesliedocherty]

If you pay yourself using paye, would it be possible to pay yourself up to £2500 per month with 80% covered by the government?

Obviously this may depend on the amount of cash you currently have in the business, and other factors. I'm not sure what the criteria is for this.

There must be a caveat in there or every employer could pay themselves and all their staff £2,500, the application process will be interesting.

 

[Newchodge]

It applies to ALL businesses regardless of size or sector.

But the question is, does it apply to people who have previously received their income mostly in dividends.

Is switching your primary income source from dividends to paye 'cheating'?

They need to clarify this.

I anticipate it will be based on your pr4evious RTI returns. If your PAYE income was 700 per month, claiming it is 2,500 per month is not cheating at all. It would be fraud!

 

[UKSBD]

** I have to disagree: you do rather seem to be "rubbing it in". You're over more than one thread on this subject making your "made your bed now lie in it" comments.

I'll be hit just like everyone else, as I do it.

I've always felt a tinge of guilt about doing, re-inforced by the fact I've really needed the NHS and benefits system for the last couple of years.

If I get back to the position, I'll hopefully pay myself a fair price for what I do via PAYE
If that means paying a little extra in NI then so be it.

I'll still look for legal tax loopholes, look to get everything I'm entitled to, but screwing the NI system is something I'm seriously going to think about stopping.

 

[fisicx]

Boris said all the money will come from borrowing. So no matter what happens we are all going to be paying for this for years and years.

As the weeks progress there will be new measures announced widening the financial support packages. They have already indicated they are looking at helping the self employed so you may just have to be a bit patient.

There are still plenty of jobs available - all the supermarkets are recruiting. Maybe it's time to look for alternate means of earning some money.

 

[Freelancer87]

Evening,

I'd appreciate some advice - my situation is this:

- I'm the director of a limited company
- I'm on the payroll as an employee
- I pay VAT and Corporation Tax
- I don't have premises
- I work at home or go to coffee shops etc.
- I run an e-commerce company with no stock. Just a couple of laptops
- My official address is a virtual office

I used to have a serviced office with SBRR but moved out due to financial problems. I never even thought that I had to tell any official body about home working.

This is me

There has to be some help for people in this situation.

 

[Mr D]

Picking on NI contributions as though they are some kind of separate ring-fenced insurance separate from general taxation is laughable. We've probably paid more tax than most of the UK employed population.

I've been very content to pay myself taxed dividends from our company's taxed profits (the ones left after we've collected and paid Value Added Tax), thank you. (As it happens, we service domestic customers only and couldn't increase our prices when we passed the limit, so we took the VAT hit; it's straight off our bottom line.) We also have a policy agreed with our accountant where we want him to minimise our bills without doing anything artificial whatsoever to avoid tax. I've always accepted that we need to pay our share to have a functioning economy. We use the roads, we should pay for them. So we've paid our share with (and I kid you not) a feeling of being contributors.

A government ignoring us in the current crisis shouldn't be surprised if this hits them hard when this is all over.


** I have to disagree: you do rather seem to be "rubbing it in". You're over more than one thread on this subject making your "made your bed now lie in it" comments.

Your customers pay the VAT you collect.
You only pay the VAT you pay to your suppliers of goods and services. What do your customers get for the taxes they pay you?

 

[fisicx]

There has to be some help for people in this situation.

There will be. A mortgage holiday and universal credit. What else do you need?

 

[Ian J]

If you pay yourself using paye, would it be possible to pay yourself up to £2500 per month with 80% covered by the government?

Doubtful. The Government aren't that stupid and any payments will be on historic wages or salaries as already notified to HMRC. My guess is that any director giving himself a quick pay rise will be told to go whistle

 

[Perfect Windows]

Your customers pay the VAT you collect.
You only pay the VAT you pay to your suppliers of goods and services. What do your customers get for the taxes they pay you?

As I explained in my post, they don't really pay the VAT. When we VAT registered we couldn't charge 20% more. So work that paid us £20 two years ago now nets us £17.60, with £2.40 (12% flat rate) going to HMRC. The VAT collected is a reduction in our turnover, not our passing on extra cash collected from the customer.

I woudl agree with you entirely if we worked with commercial customers. We'd have added 20% VAT to our invoices, collected it and passed it on. They would have been paying it.

 

[Perfect Windows]

Doubtful. The Government aren't that stupid and any payments will be on historic wages or salaries as already notified to HMRC. My guess is that any director giving himself a quick pay rise will be told to go whistle

Indeed. So unless the government clarifies that and maybe allows drawings to be taken into account when calulating salaries, they are going to have owners of limited companies going bust left, right and centre. To assume that PAYE salary is all a company owner lives on would be naive in the extreme.

Still, as Johnson famously said, "F*** business"

 

[LTDcompanier]

There will be. A mortgage holiday and universal credit. What else do you need?

What if you rent and/or can't live off of UC, which is about £100 a week?

 

[Newchodge]

What if you rent and/or can't live off of UC, which is about £100 a week?

Housing benefit, or charity, or the streets. It is what has been happening to huge numbers of the population for years. Some of us thought it was unfair then. It is equally (not more) unfair now.

 

[UKSBD]

What if you rent and/or can't live off of UC, which is about £100 a week?

UC is a combination of benefits

You get a weekly living amount, housing benefit, most of council tax paid, etc.

If you are renting it will be far more than £100 a week

edit to add: try using the entitledto calculator and see what it says

 

[Freelancer87]

There will be. A mortgage holiday and universal credit. What else do you need?

Oddly enough, I won't qualify for mortgage relief because I'm in arrears (a hangover from having to short pay myself during some rough months). And as for UC, I'm not sure how that will pan out.

If I had premises, it looks like they are just handing money out to help.

It's all very frustrating.

 

[fisicx]

@Freelancer87 - so what is it you actually want? Cash to buy bread and potatoes?

 

[UKSBD]

Oddly enough, I won't qualify for mortgage relief because I'm in arrears (a hangover from having to short pay myself during some rough months). And as for UC, I'm not sure how that will pan out.

Not 100% sure about this, and probably more to it than you initially think, but.
If you put your house on the market you may be entitled to housing benefit for up to 6 months.

No idea on the details or what is involved though, they must monitor it to ensure people don't pretend to be selling