Freelancers

I work on a freelance basis for various clients doing specific health and safety consultancy. I am the sole employee of my Ltd company and pay myself a minimal salary and top up with dividends, i.e. the standard practice for those in my situation.
Like everyone else at the moment, my work will suffer but I'm a bit confused by what help has been allocated by the government amid the recent announcements. Obviously I need to speak to the accountant and see what he recommends but I wonder if any of you guys are in the same boat?

Yep I’m in exactly the same situation (single director ltd company). My work is currently steady, I’m lucky in that most of it can be done remotely and one of my clients has been particularly supportive with a few extra days on a project related to Covid19. Who knows how long that will last though.

I’ve managed to build up a bit of a buffer over the last couple of years so will survive for a while. To be honest I’m expecting bugger all support from the government. I’m just going to tighten my belt and thank my lucky stars I don’t work in a pub.

A lot of my friends are in a similar situation. So interested to be able to pass anything onto them.

The contracting thing always bothered me to be honest. I would site next to people doing the same role earning 3 times the day rate and paying barely any tax. Whenever i asked them about it they said that we didn't get the same security so needed to put some away for a rainy day etc.

I would imagine you will get support like everyone else but it might be based on declared income.

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Originally Posted by JPCain86

A lot of my friends are in a similar situation. So interested to be able to pass anything onto them.

The contracting thing always bothered me to be honest. I would site next to people doing the same role earning 3 times the day rate and paying barely any tax. Whenever i asked them about it they said that we didn't get the same security so needed to put some away for a rainy day etc.

I would imagine you will get support like everyone else but it might be based on declared income.

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Unfortunately the ‘contractors’ working full time for a single company (ie definitely not contractors) have wrecked the system for everyone else. The situation you describe led to most of the benefits being stripped from genuine independent consultants like myself (I have six clients on my books currently) making it tougher to survive, particularly in difficult times. Take tax, for example - with corporation tax and personal I pay not far off what I would as PAYE now. Four or five years ago there were tax benefits that helped folks like me, not so much now.

Anyway, sorry for drifting away from the original topic. It’s certainly unclear what support there will be for people like me currently. Hopefully something will be announced today

Government assistance is 80% of employee’s monthly PAYE up to a maximum of £2500 in assistance . Divis not included in payroll so can’t use that.

I'm in the precise position myself. Finished my last project at the end of December, took January off and was in the process of pinning down the next project during February. By the beginning of March absolutely everything had ground to a halt, and it does seem a bit bleak in terms of the next few months.

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Originally Posted by Casper

Government assistance is 80% of employee’s monthly PAYE up to a maximum of £2500 in assistance . Divis not included in payroll so can’t use that.

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Does that apply to my (director's) salary which is about £800 per month?
Wonder then if March salaries will suddenly be increased to allow a higher claim.... Hmmm

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Originally Posted by Man of Kent

Does that apply to my (director's) salary which is about £800 per month?
Wonder then if March salaries will suddenly be increased to allow a higher claim.... Hmmm

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I would say that if it's a PAYE salary then it should apply - talk to your accountants pronto and get the full info (when it is known of course). I would guess that they would take an average of say last 6-9 months rolling.

If you have offices and you pay business rates then you would be eligible for the grant(s) depending on rateable value.


B

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Originally Posted by Brian

I would say that if it's a PAYE salary then it should apply - talk to your accountants pronto and get the full info (when it is known of course). I would guess that they would take an average of say last 6-9 months rolling.

If you have offices and you pay business rates then you would be eligible for the grant(s) depending on rateable value.


B

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I do my own payroll through HMRC website and pay NI and PAYE.
No business premises, just a home office set-up.

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Originally Posted by Man of Kent

I work on a freelance basis for various clients doing specific health and safety consultancy. I am the sole employee of my Ltd company and pay myself a minimal salary and top up with dividends, i.e. the standard practice for those in my situation.
Like everyone else at the moment, my work will suffer but I'm a bit confused by what help has been allocated by the government amid the recent announcements. Obviously I need to speak to the accountant and see what he recommends but I wonder if any of you guys are in the same boat?

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I thought most of the benefits of dividends had been taken away now??

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Originally Posted by redmonaco

I thought most of the benefits of dividends had been taken away now??

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They have over the higher rate tax band. Up to £50k there’s still benefit

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Originally Posted by redmonaco

I thought most of the benefits of dividends had been taken away now??

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Some tax is paid on dividends but not as much as normal paye. When you consider that, plus corporation tax, plus what paye I do pay, there's hardly any benefit to be had.

Same situation I know how it feel

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Originally Posted by Brian

I would say that if it's a PAYE salary then it should apply - talk to your accountants pronto and get the full info (when it is known of course). I would guess that they would take an average of say last 6-9 months rolling.

If you have offices and you pay business rates then you would be eligible for the grant(s) depending on rateable value.


B

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If he's furloughed can't work for his company. Who will deal with HMRC, end furlough etc.

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Originally Posted by Brian

I would say that if it's a PAYE salary then it should apply - talk to your accountants pronto and get the full info (when it is known of course). I would guess that they would take an average of say last 6-9 months rolling.

If you have offices and you pay business rates then you would be eligible for the grant(s) depending on rateable value.


B

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I agree. I reckon they’ll look at last quarter’s PAYE and work out assistance from that. Otherwise everyone claiming will just happen to be on £38k p.a

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Originally Posted by Casper

I agree. I reckon they’ll look at last quarter’s PAYE and work out assistance from that. Otherwise everyone claiming will just happen to be on £38k p.a

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It is Feb's payroll they will use.

I feel for you guys still running a limited company. I did it for 3 years and recently returned to being an employee in Nov 19.

I missed being part of a team vs the hired help & wanted to feel part of a business again. That said, with the IR35 changes, despite me having 2-3 clients a year my role was more staff than consultant, so would have taken a hit there.

With this going on now, as long as I pass my 6 month review Weds then I’m relatively relaxed. If I hadn’t moved across & wound the business up, I’d be starting to worry despite having enough for a year in the company.

Fingers crossed they realise that dividends are effectively part of your income and not the £800 a month actual salary. Hope it all works out well for you guys.


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A lot of freelancers have lost their entire income because of the restrictions. Eg not much call for actors when you've shut the theatres.

It'll be interesting to see how they'll do sole traders - just take the 2018-19 net profit from January's return, and carve x% of that into 12 months, and put a ceiling on it?

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Originally Posted by Der Amf

It'll be interesting to see how they'll do sole traders - just take the 2018-19 net profit from January's return, and carve x% of that into 12 months, and put a ceiling on it?

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As a sole trader, that seems a fair way of doing it, to me.

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Originally Posted by Der Amf

A lot of freelancers have lost their entire income because of the restrictions. Eg not much call for actors when you've shut the theatres.

It'll be interesting to see how they'll do sole traders - just take the 2018-19 net profit from January's return, and carve x% of that into 12 months, and put a ceiling on it?

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Originally Posted by Kris

As a sole trader, that seems a fair way of doing it, to me.

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I don't think it's that simple, as (without opening Sage to check) I'm pretty sure that wages and dividends are treated as costs. In other words, profit can be minimal after those deductions.

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Originally Posted by MB2

It is Feb's payroll they will use.

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Thanks. I missed that.

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Originally Posted by Der Amf

A lot of freelancers have lost their entire income because of the restrictions. Eg not much call for actors when you've shut the theatres.

It'll be interesting to see how they'll do sole traders - just take the 2018-19 net profit from January's return, and carve x% of that into 12 months, and put a ceiling on it?

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I’m assuming I’m on my own through this and have rejigged my finances so I have enough cash.

Any government support will no doubt be a series of loans so I won’t take those.

My biggest fear is we are in the final phase of a house sale for my father in law who has moved into a care home. If that falls through and the market tanks it’s a massive problem for his future.

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Originally Posted by Casper

Thanks. I missed that.

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This is for my PAYE employees - I assume you realise but thought would clarify. The portal isn't up as promised apparently (I currently don't need it but know someone who needs to get 60 people on it asap)

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Originally Posted by learningtofly

I don't think it's that simple, as (without opening Sage to check) I'm pretty sure that wages and dividends are treated as costs. In other words, profit can be minimal after those deductions.

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No wages or dividends in my tax return, just a net taxable income once expenses have been deducted from gross income.

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Originally Posted by Der Amf

No wages or dividends in my tax return, just a net taxable income once expenses have been deducted from gross income.

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Why do you think that tax returns would be used to determine grant allowances (although I hope you’re right)?


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Originally Posted by learningtofly

Why do you think that tax returns would be used to determine grant allowances (although I hope you’re right)?


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I'm just wondering how else they would assess the income of people with highly irregular income streams.

Imagine an actor who in one tax year does one very nicely paid tour for three months, some teaching during academic terms and a few shifts in a pub during slack times. How can you efficiently work out what they're now missing out on?

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Originally Posted by Der Amf

I'm just wondering how else they would assess the income of people with highly irregular income streams.

Imagine an actor who in one tax year does one very nicely paid tour for three months, some teaching during academic terms and a few shifts in a pub during slack times. How can you efficiently work out what they're now missing out on?

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Yes, that’s been worrying me too. Hopefully there’ll be some clarification sooner rather than later.

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Originally Posted by Mj2k

Fingers crossed they realise that dividends are effectively part of your income and not the £800 a month actual salary.

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I don’t think there is any commercial rationale for that structure. It’s always been about paying the minimum amount of Income Tax and minimum/zero employer’s and employee’s National Insurance Contrbutions.

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Originally Posted by learningtofly

I don't think it's that simple, as (without opening Sage to check) I'm pretty sure that wages and dividends are treated as costs. In other words, profit can be minimal after those deductions.

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Dividends aren’t a business cost, they are a distribution of post-tax profits to shareholders - who may or may not be directors or employees.

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Originally Posted by David_D

Dividends aren’t a business cost, they are a distribution of post-tax profits to shareholders - who may or may not be directors or employees.

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Yes, I probably phrased that badly. I’m sure they show on my P&L, though - I need to have a look when I get a minute.

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Originally Posted by learningtofly

Why do you think that tax returns would be used to determine grant allowances (although I hope you’re right)?


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Tony, I understood our only qualified for a grant if you had rateable premises, has there been a change I’m unaware of?

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Originally Posted by Captain Morgan

Tony, I understood our only qualified for a grant if you had rateable premises, has there been a change I’m unaware of?

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I used the term “grant” on the basis that any relief will not require repayment. In terms of freelancers there’s been no update as yet, I’m afraid.


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Ah okay I thought I’d missed something about the grant for business with rateable premises being expanded. Oh well.

Was hoping for an announcement today for help for freelancers and self employed, did I miss it or was nothing said?

Nothing has been said as far as I'm aware, however this legislation seems to be included in the Corona Virus Bill which is going through house.

I don't think the actualities of it have been worked out yet, as i understand from watching the news today the treasury are trying to work out how to apply it to those who are self employed as well as being in full time employment

https://publications.parliament.uk/p...rev.14-18.html

Still, at least it gives a good indication that Freelancer and Self-employed aren't being forgotten.

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Originally Posted by Kris

Nothing has been said as far as I'm aware, however this legislation seems to be included in the Corona Virus Bill which is going through house.

I don't think the actualities of it have been worked out yet, as i understand from watching the news today the treasury are trying to work out how to apply it to those who are self employed as well as being in full time employment

https://publications.parliament.uk/p...rev.14-18.html

Still, at least it gives a good indication that Freelancer and Self-employed aren't being forgotten.

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I have been told it is coming - 2900 per month cap, based on last 3 years accounts.

So, as I see it, we're screwed. Company owners drawing dividends are excluded from any grants.

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Originally Posted by Man of Kent

So, as I see it, we're screwed. Company owners drawing dividends are excluded from any grants.

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Why don’t you take salary? Presumably to reduce tax liability and no NI to pay?

Swings and roundabouts.

In principle are your dividends different from PLC shareholder’s dividends?

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Originally Posted by Man of Kent

So, as I see it, we're screwed. Company owners drawing dividends are excluded from any grants.

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Exactly what I feared.

HMG/HMRC in shafting contractors/PSC shocker, given the IR35 farce I’m surprised the hopes were higher.
Perhaps in another week they might face enough pressure to act but I’m not holding out much hope.