Self Employed-Corona Virus Self Help

[Tilt]

Yes, tis a bit crap for a lot of people

I used to be self employed but decided to find employment as wanted to work shorter hours. I worked 30 hours 9am - 3pm. Brilliant.

All went well until very unexpected redundancy in January this year, due to management takeover.

Didn't want to bother trying to get UC and was reasonably convinced I would find another suitable job, however...........

 

So I find myself now with no real job prospects for the foreseeable due to Cv, and no income whatsoever, even though I lost my job through no fault of my own.

Looks like I will have to look at UC, But it is not enough to live on.

 

I still think I am more fortunate than some though and I have to console myself with this, but I will have to live off my savings for the foreseeable, and they will not last that long.

 

My sympathies are with you Lady E, and anyone else who has worked hard in their lives and find themselves without income, and having to use their savings up in this ghastly moment in history. 

[Lady Elanore]

Now that stuff is appearing on the interweb with the exact wording, it looks like they are not including Ltd companies in their scheme. It will save them billions

[Chris GB]

It's a welcome announcement, but I really didn't appreciate the insinuation that the self employed don't pay their fair share of tax. Sure, we have allowances and slightly lower NICs, but normally, we get virtually no benefits if our businesses fall through for any reason.

[Lady Elanore]

Looks like me and my colleagues get no benefits and no money  You have to laugh (I think 😞 ) 

[Tilt]

7 minutes ago, Chris GB said:

It's a welcome announcement, but I really didn't appreciate the insinuation that the self employed don't pay their fair share of tax. Sure, we have allowances and slightly lower NICs, but normally, we get virtually no benefits if our businesses fall through for any reason.

 

But that is cos the self employed don't (didn't) get any holiday pay of any kind, sick pay or any other similar benefits

Edited 26 March, 2020 by Tilt

[shyVRS245]

1 minute ago, Tilt said:

 

But that is cos we don't (didn't) get any holiday pay of any kind, sick pay or any other similar benefits

You forgot free uniforms, free PPE, free first aid training, free SIA licence, free milk, free coffee, free tea and free sugar my employer supply to me and my colleagues. Have to pay for my own fuel though.

[Chris GB]

12 minutes ago, shyVRS245 said:

You forgot free uniforms, free PPE, free first aid training, free SIA licence, free milk, free coffee, free tea and free sugar my employer supply to me and my colleagues. Have to pay for my own fuel though.

You should be placing that lot in your costs. You should only pay tax on profits.

Edited 26 March, 2020 by Chris GB

[gadgetman]

2 hours ago, Lady Elanore said:

Now that stuff is appearing on the interweb with the exact wording, it looks like they are not including Ltd companies in their scheme. It will save them billions

There'll be a lot of people re-evaluating this tactic. 

 

Plenty more will be looking at unemployment insurance in the future. 

 

[Lady Elanore]

We can't get unemployment insurance either  

[gadgetman]

12 minutes ago, Lady Elanore said:

We can't get unemployment insurance either  

Because set up as a limited company? 

[Lady Elanore]

Yes. Many years ago the wisdom was to go as a ltd company, as it was and still is to a slight degree, the most tax efficient way fo making a living if you are self employed. But then a couple of years ago out of the blue we got hit with a 7.5% Dividend Tax that is to be paid by the individual, not the company. It was a bit of a hit, but we shrugged it off. Now when we ask for some money of course that doesn't count. Our companies19% Corporation tax which was 20 and 21% over the last few years, doesn't count for anything either.

 

It's why it seems so wrong that we seem to be classed as tax dodging cazillionaires. i work well over the average week in terms of hours, take on all the risk of profit and loss (definitely loss it seems), no sick pay unless you take expensive private medical insurance, various other insurance are needed to work and safeguard our equipment. No pension from a big corporation to help soften the bIow of contributions, either. I make made a decent living but it was because I put a lot of effort into it and have managed to secure good work owing to my considerable experience and I like to think, good service for the customer. It feels rather hollow now we have been neglected. I've been tough times before as I'm sure we all have and tomorrow I'll start and lay down my next battle plan. In some ways the focusing of your mind is quite a fun thing to do, well it stops you worrying  

[shyVRS245]

Farmers begging for hardworkers to plant lettuce amongst other crops so we don't starve in the summer. No previous experience required, full on the spot training given and 2 metre safe distance between workers observed. Not for those with back problems however.

[Lady Elanore]

There is a new petition just started. If anyone feels so inclined or is in a similar boat, perhaps they could be so kind as to sign it

 

https://you.38degrees.org.uk/petitions/support-for-small-businesses-during-corona

[VWD]

Amanda- been there, done that ,and got the T shirt- so I'm pleased to sign. And Ill share iit on FB.

Edited 26 March, 2020 by VWD

[Lady Elanore]

Just now, VWD said:

Amanda- been there, done that ,and got the T shirt- so I'm pleased to sign.

 

 

Thanks you  

[@Lee]

Done

[xman]

38 minutes ago, Lady Elanore said:

Yes. Many years ago the wisdom was to go as a ltd company, as it was and still is to a slight degree, the most tax efficient way fo making a living if you are self employed. But then a couple of years ago out of the blue we got hit with a 7.5% Dividend Tax that is to be paid by the individual, not the company. It was a bit of a hit, but we shrugged it off. Now when we ask for some money of course that doesn't count. Our companies19% Corporation tax which was 20 and 21% over the last few years, doesn't count for anything either.

 

It's why it seems so wrong that we seem to be classed as tax dodging cazillionaires. i work well over the average week in terms of hours, take on all the risk of profit and loss (definitely loss it seems), no sick pay unless you take expensive private medical insurance, various other insurance are needed to work and safeguard our equipment. No pension from a big corporation to help soften the bIow of contributions, either. I make made a decent living but it was because I put a lot of effort into it and have managed to secure good work owing to my considerable experience and I like to think, good service for the customer. It feels rather hollow now we have been neglected. I've been tough times before as I'm sure we all have and tomorrow I'll start and lay down my next battle plan. In some ways the focusing of your mind is quite a fun thing to do, well it stops you worrying  

 

Sorry, but I have to say this.....

 

I think you have been living with a lack of understanding of how you run your business.

 

You cannot bill your clients through your ltd company (an arrangement known as a loan out company or services company) AND be self employed.

 

Lorimer letters are HMRC passes to show your clients you are a genuinely untied self employed individual, and can be paid gross of any tax. The Lorimer letter cannot be used by Ltd companies. HMRC will be very upset if you've been using it in that way.

 

Self employed aka sole traders, pay PAYE/NIC, a large portion of it up front every 6 months. They don't / can't pay themselves dividends.

 

You chose to extract your profit/income by way of a ltd company by paying dividends to avoid PAYE and employee and employer NIC.

 

You pay corporation tax of 19% and a max of 7.5% dividend tax compared with PAYE 20%-50%, NIC 12% employee, 13.8% employer. So yes, you AVOID a lot of tax, albeit legally.

 

But dividends are paid to Shareholders, not to employees, even though you may be an employee of your ltd company, in the view of HMRC.

 

Important bit: Dividends are classed as UNEARNED income, always have been. So they don't count towards your earnings. 

 

Your accountant should really have made this clear to you and its many implications, not just tax.

 

 

 

 

Edited 26 March, 2020 by xman

[Lady Elanore]

I was merely listing how my money leaves my account ffs. i have a letter from HMRC agreeing that I am self employed owing to the preponderance of evidence of my working practices. I've adhered to this for 18 years or 17 as it took a year for them to agree to it. We often call any such letter a Lorimer letter as a shorthand especially as Lorimer was a TV Vision Mixer so he is considered one of us. I will try to more correctly identify the LP10 it is merely a type of slang in the industry that covers most of our collective plights. Not factually 100% correct I get it!  I have never said Sole traders pay dividends as they can't. I try to avoid paying NIC as that's the most efficient way to run the company, if you know of a better one I am all ears. I highlighted the additional expenses I incur as they are not covered in the same way a traditionally 9-5 employed persons are (usually that is, although it appears some or so well covered these days 😞 ) I do not avoid a lot of tax?  If you were to draw a wage then you have a ceiling of around £8.6k because after that you hit NIC and other tax implications. That allowance (yes i know it is not strictly an allowance -yawn) goes up a tiny bit next year, but because the way NIC allowances have changed it's not as much as you would think. On the other hand personal allowance is/was going up to £12.5k but I am not able to access that without running into more tax/NIC issues. Although I doubt that will happen now, but you can live in hope. I am aware that dividends are paid to shareholders as I am the shareholder. No idea why you are going on about. The hope was as the chancellor mentioned grants we thought we might be covered by something like a loan/grant to the company, but when we read the actual paperwork it became pretty obvious that we are not. It is very clear and not ambiguous in its clarity when you read it. I have been annoyed at what I perceive as an unfairness in the system. We are not the only ones in this pickle, but while I have sympathy for their plight I have more concern for my own. I could lie and say I don't consider dividends as part of my earnings as for all intents purpose, it is how we eke out our living, but semantics does not hide the fact that is what all virtually all us small business do. I live off the dividends and it matters not what I call them (i call them dividends)as long as I put them in the correct column when I do my annual accounts. Maybe if I was a fat cat with a yacht and stable of hypercars I would consider dividends a nice way to buy more exotica, but in the real world, it is what we live on and the chancellor knows this. He is not a stupid man, but he did know that he was cutting us (people who work in the same way as I do-most of my profession these days) out of his latest scheme. 

 

33 minutes ago, Lee01 said:

Done

 

 

I thank you 

 

[Lady Elanore]

Actually while I am on the subject of Sole Traders et al it looks like next year more facilities companies are going to ask for ltd companies rather than sole traders. What makes it more tricky to optimise your running of your ltd company is that it already it looks like we have lost one of the medium sized facility companies and as the pool shrinks as it surely will, ( these companies have multi-million pound trucks and several million invested in gear, EVS video machine £250,000, big camera lens £80,000-200,000 etc and many of the trucks are rented so that's not going to go away too easily),  we will end up working for only 2 or three companies that remain. Making it more difficult to work within the HMRC rules without paying a serious amount of NIC on top of everything else. Nobody in the industry really wants staff and this crisis won't help that situation. 

[Lady Elanore]

Another funny thing from this virus problem is the BBC will be making quite a bit of money at the moment. I remember they didn't necessarily enough mind us going on strike as they have a fixed income, but wouldn't have to pay striking staff for that day. But big shows are expensive to make and if they don't get made the money could go somewhere else

 

pedant disclaimer: I refer to the 'olden days' when internal costings were not apportioned the way they are now

 

Extra Disclimer: A show may still have been made in those days, but it may move into the next years budget and most repeats the BBC owned in those days, so they were pretty cheap to air

 

Extra extra disclaimer: I'll think of something for when it's needed 

Edited 26 March, 2020 by Lady Elanore

[xman]

8 minutes ago, Lady Elanore said:

I was merely listing how my money leaves my account ffs.

 

No need for profanity, I am not criticising you, but pointing out how the chancellor and HMRC see things.

 

Income and Earnings are two different things. The emergency measures are to support loss of earnings and is related to your NIC record.

 

My advice, go to your accountant and discuss your options asap. There are still 9 days left to the end of the tax (and your financial) year.

 

Again apologies if I upset you, I've far more experience in this area than you think, just trying to help.

 

Back into isolation for me......bye.....

 

[Lady Elanore]

I do not need your advice thank you as it mostly consists of trying to pick at my posting for some sort of generalised comment or believed intent with my wording that I did not intend and that can more easily seen by those looking hard at it to try to find semantic faults. . I am aware of the difference of earnings and Income. I keep 4 books which show me these things. I have discussed with my accountant tonight and he agrees as it stands we are thrown on the tip. I do not disagree with your experience, but when I describe my outgoings, income, dividends, dividend tax, corporation tax or something similar, I am not going to break everything down on a microscopic level and ascribe its whereabouts in the accounting system at any time. I have agreed that I and many of my colleagues bandy about the term Lorimer letter when it is strictly only applicable to some, the LP10 to others, but we know what the idea of such a thing is stating. I have stated I will endeavour to differentiate between the two and refer to LP10 when appropriate (but I may well forget). But after 18 years or so, I have yet to fall foul of HMRC and my accountants are sticklers for accuracy and do everything by the book. Hence, I don't get half the liberties that many self-employed people take as some sort of imagined right. Generally it became a bit too 'mansplanning' for me I'm afraid. Bowling in with "you don't know what you are doing" and "your accountants aren't much cop" is not a good way to enter into a discussion, regardless of whether the wording is polite or clinically written. 

[J.R.]

Unfortunately Amanda he is right, I was self employed for many years and also ran a Ltd Company for many years, sometimes with income from both, other periods only one or another, I also did some rather dodgy trading between the two but thats long in the past & best forgotten.

 

Bottomline is if you are billing clients as a limited company then you are not a self employed sole trader (but you could also be if you were running both) any income you take as PAYE would be eligible for the government support, any dividends drawn are classed as unearned investment income full stop.

 

Think yourself lucky that you are not in fact living on investment income because your capital, your net worth would have dropped 70% in the last few weeks as my sole shareholding has.

 

Like you I paid the minimum under PAYE to keep the NIC bill down and paid advanced corporation tax on dividends, I was in fact badly advised as I missed out on many years of state pension contributions, I currently have 26 years and no opportunity to add to that, when it was 26/30 of a full pension I was happy, it had after all fallen from 40 years for a maximum pension but I never believed that windfall, its now 26/35 of a full pension and I expect it to drop further and doubt that I will ever in fact be paid a pension while resident abroad.

 

Here in France there is support for employees, most are on full pay, self employed like me get nothing but could ask for a loan, I have had no income since October last year due to circumstances then urgent operations, CV19 arrived just as I was going to re-open the hôtel, looks like it will be another 4 months yet, I still have all the outgoings to pay plus council tax and utility bills, insurances etc on two empty properties in the UK which will never be sold or relet for the duration.

 

So there is around €2K per month going from my savings before I can even eat, dinner today was 2 beyond use by date sandwiches from Lidl totalling 40cts.

 

Yes it sucks to have to live on savings but as a self employed person that should really be what we were saving for, when i was young I never understood the phrase "save it for a rainy day" now I do.

 

I sympathise with anyone just started out or in the gig economy but a career self employed person should not need to claim urgent handouts during the first week of confinement.

 

I know your industry well and realise that your situation is very different, corporate events will be one of the very last things to restart and there may also be the problem of perception like there was during the banking crisis, so I realise that you are looking at a long period without income just as I am.

 

Editted, our postings overlapped and I had not seen your reply, mine may sound a little harsh now, it was not intended to be, I hope you can turn your hand to something else while things pick up and that the confinement does not last too long.

 

good luck to you all.

Edited 27 March, 2020 by J.R.

[Lady Elanore]

 

 

I do understand the semantics of it, but in a general conversation, as in the ones I started in this thread, it looks like this. I work using a ltd company The only money that goes into this company is from my endeavours. The only money I have to live on is taken from this company. I realise I am not a self-employed sole trader and even wanted to go that way earlier this year, but the facilities companies that employ me ( yes I know they are not strictly employing me, be we know in reality they are) have insisted that I stay ltd. So you can see why Company Directors of small companies hoped they would get lumped in with the conventional self employed. We have no other recourse, as we are not recognised as being worthy by the chancellor, of any help that is of a worthwhile magnitude. The ltd model and the sole trader model have worked side by side for many many years and virtually all get paid gross. Some claim VAT in full, others claimed flat rate (although I think by now everybody has given up on that as a lost cause).

 

So you see I refer to 'me' when I mention my company more often than not as it is fairly obvious that the facilities company that is employing 'me' (yes I know they are not employing 'me') want 'me' to do the job. They will let me put a substitute in if needed (an important distinction for tax purposes as I am sure you know) as I have enough good standing that they know I would run it past them anyway and I would only use someone who was nearly as good as me....well you wouldn't want a substitute that was better.. Does that make sense? Life is too short to keep having to talk about myself in the third person when it comes to employment and I thought most would have understood where I was coming from. 

 

It's a tricky thing separating the two groups of people who do the same job and claim the same rate (Sole and ltd) and I only talk in this manner, rather than repeatedly stating that my company claims this money, because I am an individual working for myself (not meant as a legal definition I am sure you understand) also because I am being honest to how it really is. It's one of the things that winds the government up I believe. They don't like that we think of ourselves as being almost like a sole trader with the LTD company benefits. The truth of the matter is that now there is so little benefit to being a LTD company I would gladly become a sole trader. Some of my colleagues are now both to try to appease the various requirements of the facilities companies. You could be doing a football match with one company, that demands you are a LTD company, on say a Saturday and on the Sunday you could be doing another football match for a facilities company that demands you are a sole trader. Both these matches could be for the same end client ie SKY or the BBC etc. it's madness and we seem to be caught in the middle. High paid presenters being paid through shell companies is probably what started this antipathy 

 

Now that we have been overlooked (or as it may well be pointed out) my company has been overlooked, I have been left high and dry and probably hundreds of thousand, or even a million+ people also have been abandoned or should I say company directors...are they really people?. I really do see the difference between me and my company (one of the delights is when I go to see my accountant for my annual 'tutting'-they don't like us spending money on cars - There is a bit when my accountant says "and now this is the bit where you have a meeting with yourself" as he hands over paperwork for me to sign  ) it is impossible to talk in an impassioned manner, as I now obviously feel about my position/company, as some distant sterile entity and myself, as a 'third person' that runs it and makes money from it. I choose to talk about how I make money and this has upset some because I am not speaking the literal truth. I keep saying I get it, but it's not how regular folk talk about their job. 

 

Actually the more you think about it the more odd it seems. When you work the way I and hundreds of thousands (millions?) of others do, you really create two versions of yourself. The 'horny-handed son/daughter of toil' and a 'director who milks the profits'. It's weird being both people at the same time and yet in theory remaining two separate ones for business clarity.

 

BTW I saw your edit note at the bottom of your post and had read down to it without feeling you were being harsh, as you were sympathetic and subtle in your writings.     

 

  

Edited 27 March, 2020 by Lady Elanore

[Ootohere]

Treasury Ministers, Ministers / MP's & anyone from the Conservative and Unionists are only ever going to keep repeating how many they have helped, how there is a 3 month mortgage holiday and never pay any attention to questions about those getting no help.

Edited 27 March, 2020 by Roottootemblowinootsoot