Well…..we finally got an announcement which initially I thought was great news for the majority of you, until I looked more deeply into the details!
It now appears to be good news for the ones who are sole traders and not set up as a limited company.
That is because there is a section within this new announcement that states:
Those who pay themselves a salary and dividends through their own company are not covered by the scheme.
I am truly devastated at the moment for those of you who do not qualify. I did not imagine they would even consider isolating directors like they have.
Also, any sole traders who have not submitted a 2018/19 tax return are also not eligible, meaning anyone who started trading after 6th April 2019 will not qualify for this grant. This is equally devastating for them.
Until anything changes, my advice for all clients is therefore as follows:
DIRECTORS AND SHAREHOLDERS TRADING THROUGH A LIMITED COMPANY
As mentioned, you currently do not qualify for any reliefs unless you can get the business property grant mentioned in previous emails.
This new self-employed legislation does state that your salary may be covered by the 80% Job Retention Scheme if you are operating a PAYE scheme. We are still looking at this as there is much divided opinion as to whether a Director can truly be a furloughed worker. Obviously this is a very difficult condition for a director to meet as they almost always still need to be working within their company, even if the income has stopped or slowed down. We will try to update you on this further and see how we can suggest for you to qualify for this.
Having said that, even if we do manage to qualify for this, it would mean only receiving 80% of the small salary we all currently declare as it excludes dividends!
The only other support potentially available at the moment is Universal Credits. This is an area that as accountants we normally have no dealings with so it is hard to comment in much detail. I have been looking into the way it works and its possible that most may not get it due to the qualifying criteria. Several things are taken into account such as savings and partners income.
The only thing I can suggest with regards to Universal Credits is to contact HMRC and see what you can and cant qualify for, or to try to apply online using the following link
If you do qualify then we understand the maximum amount is £94 a week. However you may be able to apply for advance payments meaning the potential to receive some money within 5 days.
SOLE TRADERS NOT USING A LIMITED COMPANY WHO STARTED TRADING AFTER 5TH APRIL 2019
As with the Directors there are also no reliefs yet available for this group of clients as you also have been left without any support. This is because the new legislation mentioned today only includes self-employed workers who have submitted a 2018/19 tax return.
Other than the possibility of applying for Universal credit mentioned above. Please therefore attempt the application using the link above in case you do happen to qualify.
SOLE TRADERS NOT USING A LIMITED COMPANY WHO STARTED TRADING PRIOR TO 5TH APRIL 2019
For those of you that do qualify, I will be in touch shortly on an individual basis to discuss how much you may potentially be able to claim. Please note however that they have suggested this money will not be accessible until probably June. There is the potential to maybe bring this forward but even if they do, I would only imagine it to be by a week or two.
In that case your main aim is to plan how to survive on any current money/income you have at the moment.
As mentioned above, you also have the potential to claim for Universal Tax Credits using the same link.
Whichever of the 3 groups above you are in, it brings us back to doing all you can to get through these 2 or 3 months until trade can hopefully begin to return to normal. As previously mentioned, this all comes down to managing cashflow.
Please do not forget that we are currently offering free help with regards to cashflow planning!
The other thing to consider is how you can potentially adapt your business during this period. An example is the sensei who runs my daughters Karate class, is now streaming them live online.
I appreciate not all trades will be able to adapt at this moment in time so maybe focus on things you can get in place ready for when you can return to trading. Such as creating or improving your website, putting systems in place, or creating online training courses. There must be things you have always been meaning to do in your business but never had the time to do them. Now’s the time. Then we can all hopefully kick on when things get back to normal.
Unfortunately that is all I have for you tonight. The few hours since tonight’s announcement have probably been the most draining few hours since this madness started (and that is really saying something!).
I will keep you updated as I find out more.
I would also urge you all to sign this petition too and share it anywhere you can.
Who knows, a bit of pressure may make a difference!
As usual, if you have any questions, please let me know and I will answer them the best I can.
Our best wishes and stay safe.