self-employed help

[houselikeashed]

So if my profit is £51k - I get no help from the government?
Is that right?

@drmanhatten when you're self employed you are taxed on your profit as income tax. I don't pay myself paye and then take a dividend. I pay the tax on my earnings less expenses. Even if I decided to leave money in my business account as a safety net I get charged income tax on that at the end of the year.

I've worked bloody hard to build up my business, I pay a significant amount of tax, I don't do anything illegal or try avoid tax through dividend etc. I've claimed one benefit and that's tax free childcare.

I am entitled to nothing. That is not fair

It might be watching Martin Lewis on itv at 8.30. He said on Twitter he has a scheduled phone call with hmrc before the show so he might have some answers

Max dividend tax is 7.5%
Much lower than salaries, or self employed earnings which are taxed at the same rates

But I don't understand. I'm basically a sole trader, just my accountant advised me years ago to go limited. I only turn over about 18k a year and am a single parent ffs

paperhats if you pay yourself a salary you should be covered by the employee scheme.

I’m not saying I don’t sympathise. I’m saying I understand why protecting dividends is not in the oackage

chips
Us too. No income. No lump sum. Bills to pay. No savings.

Package ffs

CarlottaValdez well when you put it like that, we definitely deserve to be destitute

I honestly don’t think that and I’m a huge supporter of state help and hope we can rush through benefits or something. What I’m struggling with is the idea of providing shareholder/ investor support. What should the government do in this case? Say “oh if you really should have taken that money as income but didn’t because you didn’t want to pay income tax then we’ll pay support as if you didn’t”

How would it even work? Why shouldn’t pension funds (hugely reliant on their shareholder income) get the same support?

@houselikeashed I feel like writing to rishi and saying you've fucked over those who have done it right. Who have contributed a large amount of tax and now when we need it like everyone else we get left out. It's very unfair

So if you earn £51k as a sole trader or partner they won't support you?
Why? Do they think those people are sitting on their cash and don't have mortgages for bigger houses, kids clubs they've paid for etc? People tend to spend what they earn and not stash it while living in a tiny mid terrace and burning newspapers for heating if they can afford not to.
Plus it's those people who will be looked to to pay the tax to bail us all out.

Paper hats if you paid yourself that 18k as a salary and paid full lax on it you’re covered

If you paid dividends at much lower tax you were better off, but now are not covered

@ILikePaperHats if you pay yourself a salary on PAYE you can furlough yourself (provided you have stopped working) and claim 80% of your salary
If you pay yourself in dividends only, then there is no help to access.

Dividends tax is 7.5% and you get a £2000 tax free allowance
PAYE is 13.8% from the employer and something like 12% upwards contributions from the employee

Surely it’s obvious why help levels won’t be equal ?

I’m with Carlotta
It’s excluded people who, perhaps without understanding the implications, utilised a limited company to pay less tax

@houselikeashed you keep saying 'we' are there 2 of you? I'm no expert but if you've done it so that you both earn from self employment and therefore 2 tax returns that will bring you down to under the 50k?

chips
I'll sign your letter too.

I think this highlights that many don't really understand the risks/benefits of doing things a certain way. I work via a limited company and it's entirely reasonable to me, that the only help i'd be able to get was 80% of my PAYE earnings if I stopped working completely.

So if my profit is £51k - I get no help from the government?
Is that right?

I interpreted what he said as getting help up to £51k, but not beyond, ie that support stops at that point.

Which puts the SE in the same position as PAYE workers, for whom help is 80% of net pay and is capped at £2.5k per month, which for most people will be around £51k a year.

What @BennyVegas said
This is why everyone should have a basic understanding of how tax works, the risks and the benefits, and not just rely on the accountant to arrange their affairs.

Don’t forget Limited companies also pay corporation tax
It’s not the great saving in tax that many on here are under the impression that it is
Plus none of the benefits of employment
My DH has a small limited company if he doesn’t work or is sick he has no income

Looneytunes
We've never cooked the books. Dh earns and we pay tax on that. I work part time and do the childcare.

Lakielady
the scheme is not available to you if your profits are £50k+

Rosie yes but the overall tax bill if you use a limited company is much lower. That’s why people do it.

I agree with the point about understanding. I do feel for those who simply went with the accountants recommendation and enjoyed the lower tax bill without understanding exactly what was going on

@BillMasen it's also excluded people who earn over 50k and pay tax exactly as they should. It's not fair

I don’t get it at all. I’m here for a friend who’s not on MN. I think I’d better direct her here now as it’s beyond me. For any cash in hand though, it’s not going to be visible, so won’t be counted as income. So it’ll be her and her partner and what they have individually paid tax on?