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Small Business Grant

By BubbaofHalifax25/3 16:18Wed Mar 25 16:18:39 2020

Views: 779

A week or so ago the Government announced £3k grants would be available for small businesses due to the Coronavirus. This was then increased to £10k.

I have been waiting for the details given that my wife's coffee shop has had to close and, financially, its going to create problems in the long run - rent, start up stock for re-opening, wages, etc. Anyway, further details have been announced and it looks like there is no criteria as such i.e. based on turnover, profit, loss, overheads, etc. It appears that every small business that does not pay business rates will get the full £10k.

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Re: Small Business Grant

By Rob226/3 10:53Thu Mar 26 10:53:22 2020In response to Small Business GrantTop of thread

Views: 263

Trying to work this one out for us. We have a holiday cottage that we get full business rate relief for as it's under the threshold.
The business isn't run as company and we just pay tax through self assessment.

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Re: Small Business Grant

By psg25/3 20:48Wed Mar 25 20:48:31 2020In response to Small Business GrantTop of thread

Views: 412

I’ve had an email from my local council tonight with a link. Check your inbox.

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Re: Small Business Grant

By DarrenG WFC25/3 18:24Wed Mar 25 18:24:05 2020In response to Small Business GrantTop of thread

Views: 528

Speak to your Landlord regarding rent, I work for a manufacturer and I asked ours last week whether they were offering us any support. They came back and asked us to make a proposal.

Rent is due this week for the quarter, I proposed delay payment until end of current lockdown and potential rent free if it's extended.

Mentioned prioritising paying staff and cash flow and wanting to keep the company going and completing the lease (if we go bust there are considerable dilapidations we won't pay).

Can't hurt to ask.

Edit- Government are also offering loans support, interest free for 12 months need to prove viability pre coronavirus. Speak to your bank.

Edited by DarrenG WfC at 18:26:33 on 25th March 2020

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Re: Small Business Grant

By SamBee25/3 19:51Wed Mar 25 19:51:56 2020In response to Re: Small Business GrantTop of thread

Views: 459

We got 2 months rent free. We're in a small business unit, so there are lots of stretched companies currently. Most simply got deferment, but we're in their good books as our IT guy helps them for free sometimes.

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Re: Small Business Grant

By Diane Abbott's Afro (The Luton Fan)25/3 18:01Wed Mar 25 18:01:19 2020In response to Small Business GrantTop of thread

Views: 530

I'm still none the wiser. I work through an Ltd and pay myself £1k a month in basic salary and around £3.5k in dividends. But my work went to zero from last Friday.

Do I get money into my business account or personal account or nothing at all?

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Re: Small Business Grant

By Ste B25/3 18:22Wed Mar 25 18:22:33 2020In response to Re: Small Business GrantTop of thread

Views: 506

It hasn’t been explained by anyone, as far as I’m aware.

My accountant is of the belief that people in our position will receive 80% of our basic wage. So £800 in your case.

She has advised I continue to pay myself as usual, and I believe applications should be made by the business to be reimbursed.

It’s a tricky one, as we are PAYE but would class as self employed in the eyes of others (my mortgage lender, for example).

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Re: Small Business Grant

By Paulio25/3 21:17Wed Mar 25 21:17:53 2020In response to Re: Small Business GrantTop of thread

Views: 390

Isn’t it ‘up to 80%’?

Can’t wait for everyone to get 40% and get the hump.

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Re: Small Business Grant

By Ian Chesterton25/3 21:56Wed Mar 25 21:56:42 2020In response to Re: Small Business GrantTop of thread

Views: 382

Yes, the more I read into it the more they are moving the goalposts.

https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/covid-19-support-for-businesses#support-for-businesses-through-the-coronavirus-job-retention-scheme

That link says 80% of wages

https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/covid-19-guidance-for-employees

That link says up to 80% of all wages costs (i.e. employers NIC and employer's pension).

Even his initial announcement was that they would pay 80% of everybody's salary, before it was then clarified as furloughed workers.

At least I have learnt a new word this past week.

Edited by Ian Chesterton at 22:01:00 on 25th March 2020
Edited by Ian Chesterton at 22:03:45 on 25th March 2020

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Re: Small Business Grant

By Ste B25/3 22:16Wed Mar 25 22:16:15 2020In response to Re: Small Business GrantTop of thread

Views: 356

Employees will get 80% from their employers. It will be too late for businesses as they'll have already paid the 80% to furloughed employees when they have their grant applications rejected.

I fully expect to come out of this with severely diminished reserves and 0% of my wages paid for.

Edited by Ste B at 22:16:42 on 25th March 2020

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Re: Small Business Grant

By Diane Abbott's Afro (The Luton Fan)25/3 18:40Wed Mar 25 18:40:42 2020In response to Re: Small Business GrantTop of thread

Views: 495

Acknowledged and I assumed that would be correct. But what’s to stop someone changing their basic salary on the whim?

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Re: Small Business Grant

By SamBee25/3 19:55Wed Mar 25 19:55:19 2020In response to Re: Small Business GrantTop of thread

Views: 446

I employ my other half basically she hits the tax free allowance. I'm going to furlough her, but not until I've given her a vast pay increase.

As a director, I don't think I can furlough myself, but might as well with long haul travel being extinct, but as I also pay myself basic salary + dividends, I don't think I can get anything myself?

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Re: Small Business Grant

By Meerkat25/3 20:11Wed Mar 25 20:11:18 2020In response to Re: Small Business GrantTop of thread

Views: 430

I think you have summed up why people like me don’t have a bucketload of sympathy for the self employed. You game the tax system and you are already planning how to exploit a system that is intended to be emergency support from the taxpayer

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Re: Small Business Grant

By Shanghai25/3 22:52Wed Mar 25 22:52:17 2020In response to Re: Small Business GrantTop of thread

Views: 346

One of my pals is a design contractor. He earns a good 80k a year, yet offically he has said he pays himself 700 quid a month, he works in an office yet has bought himself a van to use as a company vehicle etc. Not paid a penny of his student loan. Yes he doesnt get sick pay or holiday pay, but let's face it, chickens are coming home to roost for a percentage of self employed people. I dont think the majority by any stretch, but a certain class and type of self employed. Losers are the pure sole traders like cabbies and mobile hairdressers etc.

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Re: Small Business Grant

By SamBee25/3 22:56Wed Mar 25 22:56:12 2020In response to Re: Small Business GrantTop of thread

Views: 354

https://www.google.com/amp/s/amp.theguardian.com/commentisfree/2020/mar/24/britain-benefits-rishi-sunak-claimants-austerity

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Re: Small Business Grant

By Meerkat25/3 23:48Wed Mar 25 23:48:16 2020In response to Re: Small Business GrantTop of thread

Views: 316

People hoping this is only temporary will be distraught at having to use up their rainy-day funds, often saved for years for a deposit on a home.
Either it’s rainy day money or it’s saving for a deposit, it can’t be both.
It’s a tricky one though. Disincentivises rainy day funds if you end up getting less benefits than those who didn’t bother but should we pay benefits to those with loads of savings - they probably have paid in more taxes (assuming it wasn’t inherited).

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Re: Small Business Grant

By Shanghai25/3 23:01Wed Mar 25 23:01:53 2020In response to Re: Small Business GrantTop of thread

Views: 347

God I really do have my finger on the pulse dont I? Very impressed with myself

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Re: Small Business Grant

By SamBee25/3 23:23Wed Mar 25 23:23:23 2020In response to Re: Small Business GrantTop of thread

Views: 322

I'm seeing it clear as day.

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Re: Small Business Grant

By Ste B25/3 22:37Wed Mar 25 22:37:16 2020In response to Re: Small Business GrantTop of thread

Views: 363

The irony of a Tory having issues with people playing the tax system.

For a lot of self employed the savings from 'playing' the tax system like this don't really compensate for the lack of annual leave, sick pay, maternity/paternity and pension.

Edit: When I say 'like this' I wasn't referring to the sudden massive pay increase. I'd recommend against it as it would surely show up on RTI records? (As well as being a bit unethical).

Edited by Ste B at 22:43:31 on 25th March 2020
Edited by Ste B at 22:43:54 on 25th March 2020

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Re: Small Business Grant

By Meerkat25/3 23:36Wed Mar 25 23:36:28 2020In response to Re: Small Business GrantTop of thread

Views: 319

Boo hoo the self employed don’t get those things.......that isn’t the taxpayers’ responsibility to subsidise. Either charge more, accept that you aren’t paid as much, or be a permie.

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Re: Small Business Grant

By Ste B26/3 00:12Thu Mar 26 00:12:21 2020In response to Re: Small Business GrantTop of thread

Views: 318

Or you could just go self employed if you think ‘playing the system’ is so unfairly beneficial for self employed people.

Edited by Ste B at 00:20:45 on 26th March 2020

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Re: Small Business Grant

By Meerkat26/3 08:53Thu Mar 26 08:53:09 2020In response to Re: Small Business GrantTop of thread

Views: 278

Interesting morality, rip off the taxpayers because other people are getting away with it.

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Re: Small Business Grant

By Ste B26/3 13:11Thu Mar 26 13:11:32 2020In response to Re: Small Business GrantTop of thread

Views: 238

Like it or not, they're not "getting away with it" - they're abiding by the law. While some may argue that it's wrong, others may argue that it's a perk of being self-employed.

If you felt that strongly about it you should have voted at the election for a party that wanted to change it.

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Re: Small Business Grant

By Meerkat26/3 14:10Thu Mar 26 14:10:13 2020In response to Re: Small Business GrantTop of thread

Views: 229

So you want the perks of being self employed, but when that bites you on the arse you want to be treated like permies?

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Re: Small Business Grant

By skippy26/3 18:53Thu Mar 26 18:53:34 2020In response to Re: Small Business GrantTop of thread

Views: 223

Explain these perks of sole trader self employment compared to PAYE?

Not the tax rate, pay 20%/40% like everyone else.
Certainly not NI, paying Class 2 & 4 works out more than just paying Class 1.

The perk is I get to choose my work, for that I forgo the usual safety nets and perks like sick and holiday pay.
I accept those risks in the usual turn of things, particularly working in a volatile industry, but these govt enforced restrictions aren't the usual.

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Re: Small Business Grant

By Baldman26/3 21:31Thu Mar 26 21:31:28 2020In response to Re: Small Business GrantTop of thread

Views: 202

Don’t you get to charge certain expenses to tax, including journey to your places of work and a proportion of home costs if you have a home office?

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Re: Small Business Grant

By skippy26/3 23:39Thu Mar 26 23:39:02 2020In response to Re: Small Business GrantTop of thread

Views: 180

I offset my expenses to get to site etc. But not meals, unlike Meerkat's belief it's rarely worth the hassle.

Has the P111D disappeared for PAYE then?

An employee gets 100% of their expenses back. I don't get my expenses back, what I get back is 60%-80% as it's offset against my tax.

The home office, you have to have a dedicated room and you can either proportionally work out bills which is a pain in the arse or do the flat rate which works out an offset of £140.


Meerkat seems to think it's all extra money because he forgets you've forked out the 100% in advance.

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Re: Small Business Grant

By Baldman27/3 07:09Fri Mar 27 07:09:19 2020In response to Re: Small Business GrantTop of thread

Views: 150

The lunches and home office are a little bit of hassle to claim, sure. Some of the downside to self employment is hassle.

I don’t get 100% of my travel costs back. I have to pay them out of post-tax income.

And to employ me, my company has to pay employers’ national insurance. So if you and I both provide the same service to our client/employer which is valued at £1,000, you will receive £1,000 but I will only receive £878.

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Re: Small Business Grant

By skippy27/3 13:43Fri Mar 27 13:43:38 2020In response to Re: Small Business GrantTop of thread

Views: 141

I'm curious as to how you think I can pay for expenses with pre-tax income? Paying my tax in lump sums does not mean that effectively I have untaxed income.

What do you think Class 4NI is? It is effectively the employers NI. You can tell this because it is based on gross turnover and not profit and it as the same rate as employers NI. You are taxed at source, I am taxed in arrears, we are both taxed.

Class 2NI and Class1NI are pretty much the same.

For the same gross income we both get income taxed at the same rate but I will pay more NI than you personally and approximately the same NI as both you and your employer combined on that same gross income.

And unless I've misunderstood you seem to be suggesting you get deducted employers NI rather than employees.

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Re: Small Business Grant

By Baldman27/3 13:56Fri Mar 27 13:56:03 2020In response to Re: Small Business GrantTop of thread

Views: 131

“I'm curious as to how you think I can pay for expenses with pre-tax income?”

If you partially work from home and partially in an office, my understanding is that you can charge the costs of your travel to the office against your income before you reach your taxable profit. If I work from home and partially in an office, my travel to the office does not get a deduction against my income.

Isn’t class 2 less than the employee rate, and Class 4 is below the employer rate ? And doesn’t class 4 have an upper earnings limit where employers NI does not? I must admit my knowledge of these is 20 years old.

Also, you can claim relief on certain work clothes/equipment, laptop, mobile phone bill, fuel, car depreciation yadda yadda yadda.

Honestly if you are in the same tax position in self employment as you would be as an employee you might want to have a word with your accountant.

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Re: Small Business Grant

By skippy27/3 15:15Fri Mar 27 15:15:50 2020In response to Re: Small Business GrantTop of thread

Views: 116

I can offset it yes, but the money I use to pay for travel is from taxed income.

Marginally yes but employers NI is also graded based on earnings and if you're getting to UEL you're more than likely in the VAT registered category as well. It's pretty comparable for most self employed sole traders.


Have you seen the calculations for that stuff? Even if you spend the hours compiling it all yourself you then have to pay an accountant to verify your workings.

There is a cut off point for what is worth the hassle and what isn't. In my case I provide services only so travel and subsistence make up 95% of my offset. Phones were worth the hassle up to the point contracts started to offer call/text/data allowances far beyond typical usage, now effectively you need a separate phone.

I think you've fallen into the Meerkat trap of thinking the only reason people are self employed is to pay less tax, it isn't.

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Re: Small Business Grant

By Baldman27/3 15:44Fri Mar 27 15:44:35 2020In response to Re: Small Business GrantTop of thread

Views: 117

I'm not in any trap. I was merely responding to your request to "Explain these perks of sole trader self employment compared to PAYE?"

So while there are hassles and risks to self employment, we have established that:

- NI is less for self employed and there is an upper limit
- You can claim a deduction from many expenses, including meals, travel, work clothes, car, mobile, loan interest, part of your accommodation costs. It's a hassle, but you can do it

"I can offset it yes, but the money I use to pay for travel is from taxed income"
I think it's the terminology I'm using which is a bit misleading. If a self employed person is paid £50k and pays £5k to get to work, then he/she is taxed on £50k. If a self employed person is paid £50k and pays £5k to get to work, then he/she is taxed on £45k. That's what I mean when I say the £5k is taken out of pre-tax earnings in the latter case.

I've tried being self employed. It's harder and riskier than being employed, no doubt about it. But there are some perks vs PAYE.

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Re: Small Business Grant

By skippy27/3 19:18Fri Mar 27 19:18:51 2020In response to Re: Small Business GrantTop of thread

Views: 106

NI is less for self employed and there is an upper limit

The gross NI the government receive is less, the NI an self employed individual pays is more. Your employer pays your employer contribution, I pay my employer contribution. There is an upper limit for employers as well, in that beyond a certain wage the NI % drops significantly.

You can claim a deduction from many expenses, including meals, travel, work clothes, car, mobile, loan interest, part of your accommodation costs. It's a hassle, but you can do it

As mentioned this depends on the nature of your business, in my case the phrase 'spending pounds to save pennies' very much applies.

I wear a suit to work, they're not a legitimate business expense, only uniforms, costumes and PPE. Offsetting my £40 on boots every 5 years is a real perk compared to an employee that there's a legal requirement to have PPE provided for by their employer.


I understand what you mean now even if you've used self employed twice.

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Re: Small Business Grant

By Baldman27/3 21:44Fri Mar 27 21:44:57 2020In response to Re: Small Business GrantTop of thread

Views: 95

Your employer pays your employer contribution, I pay my employer contribution. There is an upper limit for employers as well, in that beyond a certain wage the NI % drops significantly.

My employer knows that he has to pay me Ers NI. Therefore has to pay me less as an employee than if I were self employed.

I thought Ers NI was 13.8% with no upper limit?

I think we’ve probably gone far enough down this rabbit hole any way. Basically there are taxation perks to being self employed but in your case you don’t get much benefit from the expenses side.

Fair enough.

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Re: Small Business Grant

By Meerkat27/3 22:06Fri Mar 27 22:06:25 2020In response to Re: Small Business GrantTop of thread

Views: 87

Small Business Grant - I always wondered what happened to Student Grant after graduating

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Re: Small Business Grant

By Meerkat27/3 19:35Fri Mar 27 19:35:54 2020In response to Re: Small Business GrantTop of thread

Views: 97

I wear a suit to work

No f###ing way! Skippy in a suit! What kind of anarchist obeys dress codes?

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Re: Small Business Grant

By Sicknote27/3 19:38Fri Mar 27 19:38:52 2020In response to Re: Small Business GrantTop of thread

Views: 96

Boiler suit?

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Re: Small Business Grant

By Meerkat27/3 19:41Fri Mar 27 19:41:11 2020In response to Re: Small Business GrantTop of thread

Views: 97

And balaclava!

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Re: Small Business Grant

By Meerkat26/3 21:40Thu Mar 26 21:40:40 2020In response to Re: Small Business GrantTop of thread

Views: 197

Don’t forget the lunches - the contractors were forever holding up the lunch queue because they insisted on receipts.

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Re: Small Business Grant

By SamBee25/3 21:14Wed Mar 25 21:14:51 2020In response to Re: Small Business GrantTop of thread

Views: 379

I wouldn't stress, I may have phrased it badly, but I'm not self - employed, and unless the govt come through soon will all be redundant soon anyway.

Might be a misconception, but if you run a company, you only take home money if you do well. I've foregone all my dividends since Brexit, so take home less than 14k for 80 hour weeks. Prior to Coronavirus I did have an asset I could sell, but alas, fair to say that's been trashed too.

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Re: Small Business Grant

By Ian Chesterton25/3 20:00Wed Mar 25 20:00:44 2020In response to Re: Small Business GrantTop of thread

Views: 438

As a director you are an employee of the company so should be able to claim for your basic salary (but not dividends).

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Re: Small Business Grant

By Ste B25/3 22:38Wed Mar 25 22:38:04 2020In response to Re: Small Business GrantTop of thread

Views: 337

I really hope this is true, but not seen anything concrete from the Govt to suggest it is.

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Re: Small Business Grant

By Dave (Barra) (David (Barrovia))25/3 19:59Wed Mar 25 19:59:31 2020In response to Re: Small Business GrantTop of thread

Views: 424

Surely they will ask to to see backdated salary data, otherwise we’re going to have an army of non-workers getting £££.

It’s meant to be there for support, not to be abused.

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Re: Small Business Grant

By Ian Chesterton25/3 20:02Wed Mar 25 20:02:11 2020In response to Re: Small Business GrantTop of thread

Views: 414

The 1st April salary review annual increase could be given as a reason.

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Re: Small Business Grant

By Ian Chesterton25/3 19:11Wed Mar 25 19:11:34 2020In response to Re: Small Business GrantTop of thread

Views: 466

They could look back at the company's previous monthly RTI submissions and it would stick out like a sore thumb that you've been declaring a monthly salary of £1,000 and now suddenly claiming £4,500 per month.

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Re: Small Business Grant

By Ste B25/3 19:40Wed Mar 25 19:40:36 2020In response to Re: Small Business GrantTop of thread

Views: 447

I think you’re right. All based on RTI.

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Re: Small Business Grant

By Meerkat25/3 18:07Wed Mar 25 18:07:33 2020In response to Re: Small Business GrantTop of thread

Views: 505

I was pondering the dividends business. They could say you just get 80% of your income, and compensating for lost dividends is too big can of worms to open.

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Re: Small Business Grant

By Diane Abbott's Afro (The Luton Fan)25/3 18:19Wed Mar 25 18:19:52 2020In response to Re: Small Business GrantTop of thread

Views: 501

They still tax me on my complete earnings - trust me I'm dealing with HMRC at the moment over a self assessment error and they are very unreasonable to deal with.

For people in my position, the fairest way is to base it on the previous 24 months of earnings averaged out, and provided up to 80%. And this is monitored through self assessment.

For the businesses themselves, I think the only way is to offer corporation tax deferrals and reductions.

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Re: Small Business Grant

By Paulio25/3 21:19Wed Mar 25 21:19:30 2020In response to Re: Small Business GrantTop of thread

Views: 373

I’m wondering how they’ll work out mine. I’m self employed for just over a year, and was PAYE up until September just gone.

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Re: Small Business Grant

By Baldman25/3 21:25Wed Mar 25 21:25:40 2020In response to Re: Small Business GrantTop of thread

Views: 365

Yeah. Someone I know started a business a year or so ago, and has put every penny earned back into stock. Zero profit, but the business was doing really well.

The business is struggling now, and needs support but I wonder if it will be forthcoming in this circumstance.

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Re: Small Business Grant

By Meerkat25/3 18:24Wed Mar 25 18:24:34 2020In response to Re: Small Business GrantTop of thread

Views: 496

Is it easy for them to separate dividends from a company owned entirely by the recipient from other dividends?
After all some people will be living off dividend income from investments, and that will plummet.

I am trying to remember that it’s people’s homes etc that are at stake and not just be bitter about the taxpayer bailing out people (not necessarily you) who have been doing everything possible to avoid paying tax.

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Re: Small Business Grant

By Baldman25/3 18:47Wed Mar 25 18:47:46 2020In response to Re: Small Business GrantTop of thread

Views: 476

“Is it easy for them to separate dividends from a company owned entirely by the recipient from other dividends?”

Yes. These are called close companies but HMRC and are taxed differently to ensure that people don’t abuse the benefits of incorporation

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Re: Small Business Grant

By Ste B25/3 17:13Wed Mar 25 17:13:12 2020In response to Small Business GrantTop of thread

Views: 574

My mates pop-up toilet roll shop he opened a few months ago is turning out to be an absolute gold mine.

I've recently had to self-furlough (I run a limited company of which I am the only employee). Still waiting to hear whether I'd be eligible for the 80% wage payments as PAYE, or whether I'd be classed as self-employed.

Given the lack of further information with regards to furloughing, and several government sources now stating furloughed employees are entitled to UP TO 80%, I do wonder whether businesses that don't apply for financial help during this period will be eligible for the full 80% grant to pay for their furloughed staff, or just some, or even none of it, as a way of deciding who really needed it.

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Re: Small Business Grant

By Ian Chesterton25/3 19:20Wed Mar 25 19:20:57 2020In response to Re: Small Business GrantTop of thread

Views: 458

It's 80% of salary up to £2,500, but they don't specify if this is gross or net.

Also you are an employee of your limited company, you are not self-employed.

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Re: Small Business Grant

By Amber Aleman (SUFC)25/3 20:29Wed Mar 25 20:29:04 2020In response to Re: Small Business GrantTop of thread

Views: 398

I'd be surprised if it's net.

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Re: Small Business Grant

By Ian Chesterton25/3 20:46Wed Mar 25 20:46:38 2020In response to Re: Small Business GrantTop of thread

Views: 389

So 80% of £2,500 is £2,000

Will HMRC then deduct tax and NIC from the 80% figure of £2,000?

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Re: Small Business Grant

By DarrenG WFC25/3 21:49Wed Mar 25 21:49:13 2020In response to Re: Small Business GrantTop of thread

Views: 365

Yes they will deduct tax and ni.

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Re: Small Business Grant

By Baldman25/3 21:51Wed Mar 25 21:51:03 2020In response to Re: Small Business GrantTop of thread

Views: 364

And employer’s NI

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Re: Small Business Grant

By Baldman25/3 16:47Wed Mar 25 16:47:50 2020In response to Small Business GrantTop of thread

Views: 601

If she had two coffee shops, would she have got 2x10k do you know?

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Re: Small Business Grant

By BubbaofHalifax25/3 17:26Wed Mar 25 17:26:24 2020In response to Re: Small Business GrantTop of thread

Views: 549

I would assume if they are both under a limited company then no, it would be just the one. But thats only a guess.

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Re: Small Business Grant

By Baldman25/3 17:33Wed Mar 25 17:33:28 2020In response to Re: Small Business GrantTop of thread

Views: 537

Yeah. When I looked on the government website it said it would be administered by the local council through the rates team. I don’t think they’ve sent our letters yet though

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Furloughed employees

By Ian Chesterton25/3 16:27Wed Mar 25 16:27:40 2020In response to Small Business GrantTop of thread

Views: 650

On the BBC News just now the business correspondent was talking about the problems of HMRC re-reimbursing the self-employed.

She mentioned it was easier to re-reimburse employees as HMRC have our bank details. NO THEY DON'T. Through weekly/monthly RTI submissions they know much we've earned and how much tax and NIC we've paid but they don't know our bank details.

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Re: Furloughed employees

By tara (ProgressiveTara)26/3 11:31Thu Mar 26 11:31:20 2020In response to Furloughed employeesTop of thread

Views: 244

You've got to claim it back like you do Maternity Pay. You won't see the money until May at the earliest.

The good news is that we have money until June......

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Guidance issued by ICAEW

By Pinner Stones25/3 20:43Wed Mar 25 20:43:49 2020In response to Furloughed employeesTop of thread

Views: 421

Rules as outlined in official statements released at 23 March 2020
Furloughed members of staff must not work for the employer during the period of furlough.
Furlough is from 1 March 2020, so is to be backdated. It will last for at least 3 months and will be extended if necessary. Note that while the scheme is backdated to the beginning of March as it is intended to support all those employed then, a firm will only be eligible to claim the grant once they have agreed the furlough with their staff and staff have stopped working for the employer. This will of course be subject to employment law in the usual way.
It is available to employees on the payroll at 28 February 2020.
All UK businesses are eligible, 'any employer on the country, small or large, charitable or non-profit' to use the Chancellor's words.
The scheme pays a grant (not a loan) to the employer.
The grant will be paid to the employer through a new online system which is being built for this purpose.
The employer will pay the employee through payroll, using the Real Time Information (RTI) system as usual, as required by the employment contract. This contract may be renegotiated but that is a matter for employment law. So RTI system reporting of payroll will continue as normal.
Scheme will be administered by HMRC:
• Relevant employees must be designated as furloughed employees.
• Employers will submit information to HMRC through a new online portal.
• As this will take time to build, businesses should look to the Coronavirus Business Interruption Loan Scheme to support cash flow in the meantime. The narrative used in the information released so far says ‘if your employer cannot cover staff costs due to COVID-19 they may be able to access support…’. This is a conditional phrase which may relate to existing funds available to the employer. We do not yet know how these might be determined, nor whether there is a bar of some description.
Maximum grant will be calculated per employee and is the lower of:
• 80% of ‘wages’. The notes published so far, use the phrase ‘wage for all employment costs up to a cap of £2,500 per month’. It is our understanding that this includes employers' NIC and pension contributions. Wages will be determined by reference to a defined period (yet to be announced).
• £2,500 per month.
Illustration
X Ltd employs Mr A at an annual salary of £24,000, so £2,000 per month. Mr A has opted out of auto enrolment.
Each month, Mr A currently receives net pay of £1,665 which is after deducting PAYE of £191 and employees NIC of £144. On this salary, the employer pays employers' NIC of £174.
The available grant for the employer is the lower of
(a) 80% of (£2,000 + £174), and
(b) £2,500
So a grant of £1,739.
The cash required by X Ltd to furlough based on maintaining the existing salary is £435 per month. It is a matter for employment law whether the employer is required to pay this top up. Discussions with employees may have agreed that the employee has agreed to a different arrangement during their furlough.
Notes to illustration based on an extended understanding of how the scheme will work
If Mr A had not opted out of auto enrolment, X Ltd would also be making pension contributions on his behalf. If so, the available grant is based on 80% of (gross salary + Employers' NIC + employers pension contributions paid), subject to the monthly cap of £2,500.
We understand that the rules for the scheme are being designed with underlying reference to employment law. If the individual is still under contract, Mr A can expect to receive his salary in full. The £1,739 grant paid to X Ltd should not be taken as the new maximum cost of employment to the employer unless the contract has been redrafted.
Subject to the employment contract and any amendment, the salary which the employer actually pays the employee during the furlough period may be different to the pay paid used as the reference period and upon which the grant figure is based.
Pubco - a scenario
In the following illustration, the business has already closed as instructed by the government. We have had a number of enquiries along similar lines and are seeking clarification of our understanding of the rules apply.
Mr & Mrs Fuller are the tenants of a pub. They have a substantial wet and food trade as the pub is in a coastal location and does good trade over the Summer. The pub is open all year round.
Mr & Mrs Fuller operate the pub through a limited company (Pubco). They take salaries of £8,600 each and withdraw profits of £30,000 each in the form of dividends. They live above the pub and work long hours being in the pub every day.
Pubco employs three permanent staff supplemented by extra seasonal staff in the Summer months and at Christmas.
The pub closed on 20 March as instructed by the Prime Minister. and following the Chancellor’s announcement on 20 March, Pubco has furloughed its staff other than Mr & Mrs Fuller who are still living above the pub and dealing with the company administration. The contracts of employment of the other staff have been varied to permit furloughing and the three permanent staff members have agreed to accept a pay reduction to 80% of the previous level. The seasonal staff for this year have not yet been hired.
Our understanding is that Pubco will be eligible to receive the government grant support under the Coronavirus Job Retention Scheme for the monthly wages of the 3 permanent staff members. No grant support is available to support the living costs of Mr & Mrs Fuller.
Mr & Mrs Fuller will need to look for alternative support while the pub remains closed.
Coronavirus Job Retention Scheme: ICAEW Tax Faculty further details
Introduction
https://www.businesssupport.gov.uk/coronavirus-job-retention-scheme/ says “Under the Coronavirus Job Retention Scheme, all UK employers with a PAYE scheme will be able to access support to continue paying part of their employees’ salary for those that would otherwise have been laid off during this crisis. This applies to employees who have been asked to stop working, but who are being kept on the pay roll, otherwise described as ‘furloughed workers’. HMRC will reimburse 80% of their wages, up to £2,500 per month. This is to safeguard workers from being made redundant. The Coronavirus Job Retention Scheme will cover the cost of wages backdated to March 1st and is initially open for 3 months, but will be extended if necessary”.
The ICAEW COVID-19 hub is at https://www.icaew.com/insights/coronavirus. The tax section is at https://www.icaew.com/insights/coronavirus/uk-practical-business-advice-covid-19.
The following paragraphs describe our understanding of the scheme and are our proposed guidance for member.
Which businesses are eligible?
1. Eligible businesses include charities and not-for-profit organisations and will include single director companies, although the same rules will apply as to other businesses. The grant applies to all UK based businesses.
Owner/managed companies
2. Many owner managed company director/shareholders pay small salaries and the balance of income as dividends. The scheme does not extend to dividends. Only the salary is relevant to the scheme.
How is payment going to work in practice?
3. We understand that the employer will pay the contractually agreed amounts as required by the employment contract in the usual way. This will involve paying the employee, and HMRC the PAYE and both primary and secondary National Insurance Contributions. The grant will be paid directly to the employer. We do not know how this will operate for employers which use a payroll agency.
4. Employers will claim the grant through a new separate portal to be built by HMRC.
What is the £2,500 maximum grant based on?
5. The £2,500 monthly grant covers all employment costs, ie, salary, employer pension contributions required by auto enrolment (if applicable), and employer NIC.
6. The earnings period to be used to determine the maximum grant has yet to be clarified. For new employees in particular, options will be needed and also for seasonal staff. However, clearly there will need to be a base line and options being considered are likely to include:
a. Average for a prior period such as 12 months to 1 March or perhaps the month of February alone for a new employee.
b. For seasonal workers, it might be possible to use the same period last year, such as three months March, April, May 2019.
c. For those working irregular hours or say, on reduced pay (eg, maternity or sick leave) a different previous period may be needed.
Will entitlement to other employment benefits continue during the period of furlough?
7. The rules for the grant will not displace the existing employment contract. So for example, we would expect the entitlement to holiday and sick pay would depend on the contract.
Employees eligible.
Employees eligible
8. Eligible employees are those on the payroll on 28 February 2020. It has yet to be clarified whether or not those re-employed under a new contract will qualify, although the policy intent would seem to support this would be reasonable.
9. We have had many questions asking if workers can be moved in and out of being furloughed if work becomes available to an employer and then ceases again? This has yet to be clarified, but we consider it very likely that they will. The scheme is being designed to allow for flexibility so that furloughed staff can be brought back to work to replace those still working who later become sick. We anticipate that this will be seen as difficult to regulate an anticipate that a minimum period of furlough leave may be built in as a requirement before the person van return to work. So we anticipate that the rules will specifically make provision for:
a. Sickness cover where a continuing employee is now off sick and a furloughed worker can provide cover.
b. Where employees agree to share shifts to enable more of them to continue to be paid.
This will again depend on the employment contracts of those affected.
10. The matter of which employees an employer decides to furlough will be a matter for negotiation with staff and employment law.
11. The impact on job sharing employees and the decision to furlough will be a matter for negotiation with staff and employment law.
12. We presume that, subject to anything different stated in the employment contract, eligible employees would also include apprentices and agency workers.
13. We do not yet know whether the scheme will include deemed employees under the off payroll working rules.
14. An employee does not have to accept furlough if offered, but the employer could then make the employee redundant instead using the usual employment law procedure.
15. We understand that staff can study while they are being furloughed.
16. It is a condition of the scheme that the employee must do no work at all during the furlough period. The intention of the scheme is to allow employers to pay staff who are without work. HMRC will of course have visibility of pay records.
Employees with more than one employment
17. While we understand that an employee who is furloughed can do no work at all, our current understanding is that the employee can hold a separate employment with a different and unconnected employer which will be unaffected.
Additional information
https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/covid-19-guidance-for-employees
https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/covid-19-support-for-businesses

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Re: Guidance issued by ICAEW

By Ian Chesterton25/3 22:27Wed Mar 25 22:27:11 2020In response to Guidance issued by ICAEWTop of thread

Views: 348

Thanks Pinner, very helpful, I will have a lot of reading to do to advise my clients.

In your example of the £2K salary, where the total costs is £2,174 and the employees net pay is £1,665, and the Grant received is £1,739 - how much does the employer actually pay the furloughed worker?

£2,174 costs less £1,739 Grant = £445 shortfall.

So is the employee paid £1,665 net pay less company's shortfall of £445 = £1,220?

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Re: Guidance issued by ICAEW

By Pinner Stones25/3 20:48Wed Mar 25 20:48:07 2020In response to Guidance issued by ICAEWTop of thread

Views: 414

2.5k is supposed to include NI Ers and pension contributions by the company.

Dividends are not included and we have to see what support HM Gov will provide for self-employed tomorrow. Remember, if you are director of a company on min/low basic salary and receiving dividends, you are not self-employed. This is a big gap in the rescue package so far.

Edited by Pinner Stones at 21:16:04 on 25th March 2020

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Re: Furloughed employees

By Ste B25/3 17:16Wed Mar 25 17:16:04 2020In response to Furloughed employeesTop of thread

Views: 579

From what I understand, HMRC aren't reimbursing any employees - it's a grant given to the employer.

The employer continues to pay the employee, and the employer claims it back off HMRC.

It'll still be tough though, as there are potentially three paydays between now and when businesses might receive their money.

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Re: Furloughed employees

By Ian Chesterton25/3 19:04Wed Mar 25 19:04:22 2020In response to Re: Furloughed employeesTop of thread

Views: 471

AIUI, the employer doesn't pay the employee until they get the grant from HMRC as they may not have the cash due to the cessation of trading.

Is the 80% of salary up to £2,500 gross or net? The employer may not know the actual figure they are getting until they get the Grant from HMRC. I have read that the employer can pay you the difference between the Grant and your actual salary but they are not obliged to.

Also, does the employer still deduct your workplace pension based on your full salary and pay the employee and employer contributions over to the pension provider?

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Re: Furloughed employees

By Ste B25/3 19:23Wed Mar 25 19:23:29 2020In response to Re: Furloughed employeesTop of thread

Views: 454

The employer carries on paying the furloughed worker as per contractual agreement, just a lower amount than usual. The amount is thought to include NIC and pension but not clarified.

The system isn’t expected to be in place until end of April so means that businesses may need reserves to cover the next three paydays before they receive a grant. Emergency loans are available for businesses that don’t have that available.

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Re: Furloughed employees

By Ian Chesterton25/3 19:58Wed Mar 25 19:58:50 2020In response to Re: Furloughed employeesTop of thread

Views: 429

What systems will be in place to stop employers claiming the 80% Grant for furloughed workers but they keep the employees on working normally?

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Re: Furloughed employees

By Ste B25/3 22:19Wed Mar 25 22:19:55 2020In response to Re: Furloughed employeesTop of thread

Views: 345

I assume they'll be able to tell from RTI that these workers haven't been paid 80% of their basic wage.

An employee wouldn't risk taking part by accepting a temporary paycut to be involved in a scam against the government.

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Re: Furloughed employees

By Ian Chesterton25/3 22:32Wed Mar 25 22:32:01 2020In response to Re: Furloughed employeesTop of thread

Views: 347

As far as I can work out, using Pinner Stone's ICAE&W guidelines, that salary is calculated in full as normal and RTI's submitted accordingly. The employer doesn't reduce the salary to 80%, otherwise HMRC would be paying 80% of 80%, rather than 80% of a full salary.

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Re: Furloughed employees

By Pinner Stones26/3 11:00Thu Mar 26 11:00:02 2020In response to Re: Furloughed employeesTop of thread

Views: 252

That's how I read it. 80% of the salary, upto 2.5k, but it includes NI Ers and auto enrolment.

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Re: Furloughed employees

By Pinner Stones25/3 20:49Wed Mar 25 20:49:12 2020In response to Re: Furloughed employeesTop of thread

Views: 387

Think this will be very difficult to police, but there will be a moral issue, surely. I would hope that those that do, are fined massively if they are caught.

Another thing to police will be those that are furloughed but still made redundant at the end of the process. What will the Gov do about that when it has been used merely as a delaying tactic.

Edited by Pinner Stones at 20:50:25 on 25th March 2020

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Re: Furloughed employees

By DarrenG WFC25/3 20:14Wed Mar 25 20:14:16 2020In response to Re: Furloughed employeesTop of thread

Views: 407

Nothing announced but our bank thinks they will do due diligence and check email traffic and similar.

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Re: Furloughed employees

By Puds (Chuds)25/3 19:04Wed Mar 25 19:04:09 2020In response to Re: Furloughed employeesTop of thread

Views: 463

Correct.

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Re: Furloughed employees

By Meerkat25/3 17:05Wed Mar 25 17:05:31 2020In response to Furloughed employeesTop of thread

Views: 575

They do effectively have our bank details as they can push it through the companies and PAYE

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Re: Small Business Grant

By Shanghai25/3 16:24Wed Mar 25 16:24:37 2020In response to Small Business GrantTop of thread

Views: 631

Tory bastards!!!!

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