Yes it’s a really clear summary. But tweaks are unlikely I’m afraid. 1/n
The package is, on the whole, generous and therefore expensive. As @ClaerB says, it has been put together at great speed in a complex area. It can’t be perfect and there will be hard cases. 2/n
First the £50k threshold. There was always likely to be a ceiling, although cliff edge is harsh.
Employee JRS has no ceiling but employee can do no work if furloughed. Self-employed can claim if business is affected but can still continue to earn. So more flexibility.
3/n
Employee JRS has no ceiling but employee can do no work if furloughed. Self-employed can claim if business is affected but can still continue to earn. So more flexibility.
3/n
Claim is possible if either:
- 2018/19 less than £50k
- average of last 3 years less than £50k
Will help if 2018/19 was unusually low (or maybe high)
4/n
- 2018/19 less than £50k
- average of last 3 years less than £50k
Will help if 2018/19 was unusually low (or maybe high)
4/n
NB limit is precisely £50k - £49999 will qualify; £50000 will not.
And 2 incomes in a family can both claim if below limit; single earner just above limit cannot. 5/n
And 2 incomes in a family can both claim if below limit; single earner just above limit cannot. 5/n
(Not clear what happens if 2018/19 return is amended, which can be done within 12 months of filing. Absolutely not the time for aggressive planning, but impact of routine amendments not known yet).
6/n
6/n
Lack of help for new businesses is harsh and I know @CIOTNews are discussing possible solutions with HMRC.
But data is much less certain (no return filed yet) and many will have low incomes so UC may deliver similar cash more quickly.
Remember 80% of a loss is zero.
7/n
But data is much less certain (no return filed yet) and many will have low incomes so UC may deliver similar cash more quickly.
Remember 80% of a loss is zero.
7/n
The big issue is owner-managed limited companies, particularly personal service companies. I wrote a thread here (there have been a few changes since but it still explains the basics).
8/n
8/n
People with PSCs are in substance self-employed but are technically employees of their PSC.
So they can’t claim under self-employed scheme, but may be able to get (limited) help under the employee JRS. 9/n
So they can’t claim under self-employed scheme, but may be able to get (limited) help under the employee JRS. 9/n
They can only claim for 80% of the amount paid under PAYE. Most take a small salary and the rest as dividends - the dividend amount will not qualify. 9/n
(Sorry two 9/n tweets so this one is 11/n. The perils of not pre-drafting!)
There was also a technical concern about whether a sole director could be furloughed. This has now been fixed per @rbeccabeneworth - confirmation from HMRC awaited.
Furloughed director can do no work but will be allowed to do admin duties. 12/n
Furloughed director can do no work but will be allowed to do admin duties. 12/n
Could Govt be more generous and include dividends for PSCs and other owner-managed companies?
Yes in theory but probably not in practice. 13/n
Yes in theory but probably not in practice. 13/n
How could they do it?
- define relevant companies, either using existing close company definition or more likely a new, narrower definition (eg sole director/shareholder?)
- allow those companies to elect for self-employed scheme instead, based on reported company income
13/n
- define relevant companies, either using existing close company definition or more likely a new, narrower definition (eg sole director/shareholder?)
- allow those companies to elect for self-employed scheme instead, based on reported company income
13/n
Sorry numbering wrong again - two 13/n so this is 15/n. Need a cup of tea!
First problem is defining relevant companies. Existing close company definition is too wide and includes some major businesses (I know one with over £100m turnover).
Any new definition would either be fairly simple (and still miss some people) or be complex. 16/n
Any new definition would either be fairly simple (and still miss some people) or be complex. 16/n
Second problem is a mix of technical and political.
The technical point is that HMRC consider that many PSCs should pay the IR35 charge - effectively PAYE.
This bleeds into political- PSCs have (legitimately) saved tax and NICs in the past so HMRC has less sympathy now
17/n
The technical point is that HMRC consider that many PSCs should pay the IR35 charge - effectively PAYE.
This bleeds into political- PSCs have (legitimately) saved tax and NICs in the past so HMRC has less sympathy now
17/n
Of course, any PSC or owner-managed company could have paid a full salary to directors, instead of dividends. That would have given a higher JRS claim now.
But it was routine to pay all or part in dividends.
18/n
But it was routine to pay all or part in dividends.
18/n
(Another technical point - if a company has paid IR35 charge, is that PAYE for JRS? Not at the moment per guidance published so far.) 19/n
PSCs and other owner-managed companies are still a big gap in the support systems.
But fixing this will be difficult and is likely to have little political support, due to the long history of tax battles and PSCs.
(I am not being unsympathetic but realistic here)
20/n
But fixing this will be difficult and is likely to have little political support, due to the long history of tax battles and PSCs.
(I am not being unsympathetic but realistic here)
20/n
I am sure PSCs will want to lobby. But if possible please use trade and professional bodies - who are already in discussions with HMRC - rather than bombarding individual MPs or setting up petitions.
To fix this quickly (if it can be fixed) will need rapid access to HMRC
21/n
To fix this quickly (if it can be fixed) will need rapid access to HMRC
21/n
And finally - my firm @BlickRothenberg guide to self-employed scheme. Hope this is helpful.
22/22
blickrothenberg.com/insights/detai…
22/22
blickrothenberg.com/insights/detai…
Hello @threadreaderapp - please unroll. Thanks
