Coronavirus self employed grant

[Doug71]

I'm self employed (sole trader) and going to be taking some time off as I can't get supplies, people don't want me in their house and I have kids at home to look after.

Might be a daft question (I'm no businessman) but I'm getting conflicting information about the Coronavirus self employed grant that is based on business profits over the last three years.

I took the business profit to be basically the difference between the money I have had come in to the business minus what I have had to pay out to run the business.

Some people say the profit is what is left in the business after all your drawings (paid yourself).

Which is it (hopefully not the latter)?

Thanks, Doug

 

[Blackswanwood]

Doug, as I understand it is based on your trading profits which will include drawings.

 

[doctor Bob]

It's the former.
As someone who basis their wage on dividends I'm feecked. So is my wife.
Busines paying out about £7k a month on shut down at present, trying very hard to reduce this as quickly as possible, but only certain things I can do.

 

[marcros]

As a sole trader, there isn't a distinction between you and the business as such. If Doug (trading as Doug woodworking) is left with £100 after paying for materials, that is the profit that you would use on your tax returns. There are various allowances and other expenses that you would factor in. If you only transfer £50 of that £100 to your personal account as drawings, then the remainder doesn't belong to the business, it belongs to you but in a separate bank account. I am not an accountant but I believe that you have already paid tax on it, so are not paying again when it is transferred. At some point you will have transfer that other part across. This may be when work is a bit short and you need it, when you retire etc. and need to close the account.

In a limited company that remaining £50 does belong to the business itself.

I haven't seen the details of the grant but drawings are largely irrelevant. It will be the profit after allowable expenses that will be on the tax returns.

 

[marcros]

It's the former.
As someone who basis their wage on dividends I'm messed. So is my wife.
Busines paying out about £7k a month on shut down at present, trying very hard to reduce this as quickly as possible, but only certain things I can do.

I wondered about this as soon as it was announced. I imagine that there will be a lot of people falling into this area since payment in dividends is a common and certainly used to be a tax-efficient method for shareholders of small businesses.

 

[AJB Temple]

Yes, Dr Bob is right. Radio 4 had a lengthy missive on this, this afternoon. There are issues if self employed pay themselves in dividends (perfectly legal tax avoidance) or if assessable profits exceed £50k. You are assumed to be wealthy enough not to need help.

There was also quite a lot on bank support for businesses in this position as the main banks are applying somewhat different approaches. FCA and B of E meeting with the main banks tomorrow and I expect further news shortly.

Business owners need to be talking to their bankers pronto after that. Watch out for the 20% personal guarantee risk.

 

[AJB Temple]

Insolvency laws are also about to be relaxed apparently, to avoid the risk to directors of insolvent trading.

 

[doctor Bob]

My mission goal is No redundancies and No loans.
Landlord is being a right c*ck, no rent discount.
First thing to do when we get through this will be to move premises. He reckons people are still knocking on his door to rent units ............ of course they are!!!!
One truck going back next week.

 

[Blackswanwood]

My mission goal is No redundancies and No loans.
Landlord is being a right c*ck, no rent discount.
First thing to do when we get through this will be to move premises. He reckons people are still knocking on his door to rent units ............ of course they are!!!!
One truck going back next week.

That is admirable - shame about your landlord being greedy, stupid or both. A friend is going through something similar with his business but luckily has a landlord who is taking the view that helping tenants to be able to bounce back is the right thing to do.

 

[Jonathan S]

Here in Spain we where told the self employed would be helped financially as we have had to close our business's...my account has been looking into it and came back to me, we can basically get nothing!




Sent from my SM-J530F using Tapatalk

 

[AJB Temple]

Sorry to Hear that Dr. Bob. I think landlords may find enforcement very difficult indeed in present circumstances, but the really nasty ones are about unfortunately.

 

[MusicMan]

The other condition for the self-employed grant is that your self-employment profit (yes, total revenue minus total allowable expenses, before you pay yourself) should be greater than 50% of your total income. This includes any PAYE employment, pensions, bank interest etc. So those of us doing some part-time work to supplement pensions do not benefit. But I think this is fair; I'd rather it went to people whose main income is self-employment.

 

[Doug71]

Thanks guys, if it was profit after drawings I would be in trouble because 80% of nothing is still nothing.

Can't see my workshop landlord letting me off any rent, at least there is just me so no wages to pay, I own my van and machinery etc so no payments going out for them either.

I own a little house I rent out, the tenant was way behind with the rent so had to move them out which has happened at the whole wrong time, I can't imagine getting another tenant in for quite a while so am missing the income from that just when I really need it.

Lean times ahead for many people.

Best of luck with everything Dr Bob.

 

[doctor Bob]

and you Doug, most are going to be hit hard by this.

 

[Inoffthered]

I'm self employed (sole trader) and going to be taking some time off as I can't get supplies, people don't want me in their house and I have kids at home to look after.

Might be a daft question (I'm no businessman) but I'm getting conflicting information about the Coronavirus self employed grant that is based on business profits over the last three years.

I took the business profit to be basically the difference between the money I have had come in to the business minus what I have had to pay out to run the business.

Some people say the profit is what is left in the business after all your drawings (paid yourself).




Which is it (hopefully not the latter)?

Thanks, Doug

Doug,
You have probably read this already but it is worth checking regularly as the detail changes as the enormity of what the government is committing to becomes clear to them.

https://www.gov.uk/guidance/claim-a-gra ... ort-scheme

The "How to apply" section is worth reading!!