Following the announcement last week regarding the support available for self-employed people, I thought it might be useful to summarise that and also to speak directly about those that are currently without personal financial support – business owners.
Self-employed support
The support being offered is fairly simple. It will help people that were self-employed in the tax year 2018/19. Self-employed means that you filed in the Self-Employed income boxes on your tax return. It doesn’t include LTD. company directors. It doesn’t include landlords that receive income from property. There are a few provisos and odd bits, but they are just there to prevent people from ‘doubling up’ on support. These measures will help most self-employed people to claim 80% of their average monthly profits for 3 months. The money will be in the form of a taxable grant. It’s not a loan. It is income that you will include on your 2020/21 tax return and pay tax on, if appropriate. It is intended to replace earnings lost due to Covid-19, so if you are earning as normal through this, you may choose to not take the grant income.
If you are worried about whether you qualify, drop me a line and I’ll talk you through it. If you do qualify for support, HMRC will contact you directly in June – you don’t need to do anything.
Company Directors (paying dividends)
As expected, unfortunately, there isn’t any support for people in this category. There has been support offered to businesses (detailed below) including time to pay HMRC arrangements, interest-free loans, the option to furlough your staff and retain them while HMRC pay 80% of their wages. Those are all welcome measures and will take some pressure off businesses.
But, going back to the people that own these businesses – there isn’t really any income support on offer, as things stand. If you are in the difficult position of having to close your business down temporarily, as well as furloughing all your staff, you are able to furlough yourself also. Most of my company directors pay themselves c. £720/mth, so if they are closing the business and not doing any work for/on the business, they could claim 80% x £720/mth from HMRC. Of course, some directors pay higher salaries, so this support may be more useful. I didn’t see this as a viable option when it first was released, and I still don’t – I think that directors need to be working as hard as ever right now to maintain continuity and to prepare the business for what happens after this crisis has passed. Some accountants are suggesting this course of action for their clients, so I felt I needed to mention it here.
For me, personally, I will make decisions and advise my clients based on what is ethically correct and reasonable to claim – rather than what the small print says in the government guidelines. There are calls for the government to offer some support to business owners that have been paying themselves primarily through dividends, but who knows if/when that will happen.
Personal tax payments
On account (normally due on 31st July) can be delayed until January 2021, which may be very helpful depending on how long this situation continues.
Non-financial support for business owners
Running a business and employing staff and managing the finances was a stressful way to make a living BEFORE Covid-19. Since the beginning of this pandemic – the stress levels have continued to rise for everyone (business owners included). Often, employees look to us for guidance and strength and composure, etc. so we provide that as best we can. I want to say to you all – you don’t have to be OK with all this. You can be stressed out and you can be scared and you can be worried. Other business owners will know what you’re going through and the business community in Manchester (and beyond) is largely a supportive network that will be feeling the same way you are, so don’t be shy about talking about it. Be honest with yourself and with your peers. If you would like to talk about your business or your finances or your worries or your ‘whatever’ – PLEASE pick up the phone and call me.
I am in the office on my own, and you all know me and how much I like the sound of my own voice – so you would be doing me a favour by calling me!
Not much else to report. The summaries below are still valid, so please look through them again, for any help they might offer.
We will be preparing management accounts as normal this week/next week for period end March 2020. Visibility of your finances (past, present AND FUTURE) has never been as important as now, so we will be helping business owners to forecast the next few months financials and helping them plan for this uncertain time as best they can. If you don’t normally have management accounts prepared, but would like some support on that side of things, please let me know.
Speak soon,
Tyler
Recent Comments