From comfortably off to benefits overnight - I can’t believe this is happening to us

[greatbighillofhope]

My husband and I own and run a business together which has closed due to corona. We have overheads that still must be paid and also suppliers to pay. We could never foresee a scenario where we would be unable to trade other than fire or flood. Even in the case of illness/death we could still trade as we employ staff who could keep it going for periods without either of us. Regardless, we have insurance cover for all those eventualities.
Because we cannot trade now our rainy day savings are more than wiped out paying our continuing overheads and suppliers. We have gone from being entirely secure with a good income to having absolutely nothing overnight.
We have been 26 years in business, we have declared every penny of income and paid every tax in full and on time.
Thanks to Rishi Sunak’s bizarrely unfair self employed support scheme our family can claim nothing. I feel so let down, left behind and forgotten about.
It is incredibly unfair that someone whose business has been only mildly affected may still be eligible, can now claim 80% and also continue to trade. Why do we get nothing In this scheme when we have nothing to live on?
I have put in an online claim for universal support. I think our family could be eligible for around £500 per month (including carers allowance as our son has special needs). it won’t cover our expenses as our lifestyle is based on a much higher income. We can cut down on many things of course but It won’t even cover our fixed costs.
But, I cannot get through by phone to UC to book a telephone appointment. I tried all day yesterday, but the line keeps cutting off. at one point I had been on hold for 1.5 hours before it just cut me off. What else can we do?

It's an awful situation to be in. Sorry I have no advice. Hope you find a solution.

I’m so sorry and I totally empathise. Those crowing about tax dodging with dividends have no idea about the overheads small companies have compared to employees. Or that some clients only employ you if you’re a ltd. I am going to get £0 after 5 years in business. I am limping along now and no idea what will happen in a month’s time any more. All I can do is work my arse off while caring for 4 children and living in isolation as I’m on ‘the list’. It completely sucks.

And employees with a lack of sympathy can bog off.

i have a Ltd co. I’m in similar circumstances- I take a low tax efficient salary and dividends. However for those saying this is bad. I also pay a lot of corporation tax, which isn’t paid by self employed or PAYE but those that have a Ltd company.

The only help I will get is the loan scheme or to defer my vat payments but these must be paid back. My office is shut, I still have to pay £10k per annum business rates as I’m not in retail and I won’t get w business grant. I just hope my company can stay afloat during this time or we’ll be in big trouble as a family.

We are in the same boat. My husband has a Ltd Company and earns over the £50k threshold. Normally we would have savings but we moved into our new home and have had a few issues that needed sorting. I am currently on maternity and no longer earning statutory pay. He is our sole provider and when what little we have left is done then we are ruined with a 10 month old baby. I can't claim benefits as on Mat Leave and cant go back to work early because of lockdown. God knows what will happen. A few months ago we had a new home, new baby and although not much money life was good. I am beside myself with worry.

I haven’t read all the pages of this thread I hope somebody has confirmed that your profits will be divided into two. When does your business accounting year run? I don’t know if it’s a thing, just thinking up possible solutions but if it’s say April to March and you haven’t already submitted accounts could you retrospectively change this last trading year to soletrader and one of you be an employee?

Sorry but that's the penalty of taking dividends instead of salary, you dont pay Nationsl Insurance so that affects your ability to claim benefits. I am shocked that with a profitable business you are struggling so early in this situation.

Op in a partnership it’s based on your individual earnings not the earnings of the partnership. Providing neither of you earned more than 50k per annum over the last 3 years you will both be eligible. You could furlough all your employees. The business interruption loan is also worth considering to tide you on until the self employed scheme kicks in, in June.

I wonder why he capped it for those over 50k does he think its been stashed? Ridiculous. All that tax and all those peiple youve employed - for this.

i would just panic if ii were you

I am in a similar situation have a business doing well, pay £30k in VAT per year, then corporation tax on profits then if i want some of the money for myself dividend tax. So directors are taxed 20%, then 20% then pay employee pensions/other contributions (which is a stelf tax)then 7.5 or 12.5% on dividends. So trust me when i say directors invariably pay way more tax than the average employee. The government have pulled the wool over all our eyes, the directors have been well and truly stitched up. And Rishi Sunak had the cheek to say we have to pay more tax next year to even things up. Rishi, then even it up so my TOTAL tax bill is equal to the employed. My take home would double overnight. Only people in our position truly understand this, so paying tax in dividends has come home to roost is an extremely disrespectful thing to say to those who will be picking up the bill next year.

@Carol44 - the OP has very clearly said that they are a Partnership not a Limited Company. Partnerships make Distributions, they do not pay Dividends.

I am shocked someone so ill informed felt the need to comment and kick the OP when they're down rather than be constructive.

I think it’s appalling they’ve instilled this means test on supporting the self employed. It’s the same situation we were in re. getting the 30 free hours childcare- DH earns above the £100k threshold while I earn a pittance in comparison. Yet many of our friends have combined incomes coming to £150-£190k but still qualify, when our combined falls far short of that but because it’s calculated if 1 person earns above it- that’s it- we don’t get it.

OP I hope you manage to get the support you need.

Hercwasonaroll The self-employed get no sick pay, no employer maternity / paternity pay, no holiday pay, no employer pension contributions. Many are forced by clients to form Ltd companies in order to get work. Someone who’s an employee (benefitting from all of the above) earning £200k will get £2,500 a month, funded by tax payers including self-employed tax payers. Your glee that “years of dodging tax is coming home to roost” is offensive.

Yes you will get carers allowance but only one of you I think unless both of your children get dla then both could claim for one child each. You can't earn over £120 a week each though. You might be able to get universal credit if you have savings under£16000.
We have also had to close our business, which was family run & none of us have any money we are all in the same boat

If you have set up your UC account then put urgent requests in your journal for an appointment saying you cannot get through. I would ring first thing and hold on all day. Before this happened, a wait of an hour was not unusual with UC ... before coronavirus.

@LittleGift well said!

SparkyBrad the threat from Sunak is what has pissed me off the most. “You’ll get no help but mark my words you’ll pay for it later”

Before coronavirus I once had to hold for an hour and a half.

directors invariably pay way more tax than the average employee
but isnt that because directors earn more?
Or are you saying that there is no tax advantage to being a director, in which case why chose to be one?

Chocolate50, thanks. It’s fair to say this is bothering me a bit.

@carol44 even if they did take dividends they pay class 4 national insurance, look it up. Get no sick pay, holiday pay may not even pay into their own pensions. Yet still have a legal obligation to ensure their employees have all theirs paid from turnover of the business. I suppose unless you run your own business you have no idea how unfair the tax system is and it’s weighted in favour of the employed earning under £50k. There has to be an incentive for business owners as the stress of running your own company isn’t worth it.

@littlegift - Where did you get that threat? Sunak appears never to have said anything like that.

But people do still run their own businesses. Knowing the difference in this family I’d rather director than employee.

I know it doesn’t feel like that now if the rug has been pulled but it can be beneficial.

people make their choices according to their perception of what is to their best advantage.
Now there has been a global crisis and we are all having to take emergency measures, the circumstances which kept certain groups in a privileged position no longer apply...of course they would like the govt to compensate them in a way which restores that privilege but is that reasonable?

He said in his address something along the lines of “in light of the help we are giving to the self-employed, we will have to review the way they are taxed in the future”. I’m paraphrasing but it was something like that.