Covid-19 Business query

[Deleted member 37751]

As I understand it a sole director could claim 80% of salary for 3 months, they would have to furlough themselves as an employee and director's duties are allowed but not professional work.

A company cannot operate without its director and all directors have ongoing fiduciary duties to their companies; I know of the "hibernation" type thing but I don't know how that would work in reality.

 

[Deleted member 6183]

A company cannot operate without its director and all directors have ongoing fiduciary duties to their companies; I know of the "hibernation" type thing but I don't know how that would work in reality.

That's what I am getting at, they can't work in the normal sense but can carry out statutory duties.

 

[Deleted member 37751]

That's what I am getting at, they can't work in the normal sense but can carry out statutory duties.

I see what you're getting at now - my reading of it is that it's a very grey area but I'm sure, in the circumstances, there'll be plenty of leeway.

Are you claiming for anything now?

 

[Deleted member 65149]

Sole trader working at home so not a bean for me.

If I was a sole director then I would just be able to claim 80% of salary which, as you know, would be naff all as most small Ltd Co directors only pay themselves around £8.5k salary.

Sole traders are self-employed, so you will probably be entitled to a grant.

This scheme will allow you to claim a taxable grant worth 80% of your trading profits up to a maximum of £2,500 a month. It will be available for 3 months, but may be extended.

You can’t apply yet; if you’re entitled to it HMRC will notify you around mid-May.

[Withdrawn] Check if you can claim a grant through the Self-Employment Income Support Scheme

If you're self-employed or a member of a partnership and have been impacted by coronavirus (COVID-19) find out if you can use this scheme to claim a grant.

www.gov.uk

 

[Deleted member 65149]

Not necessarily.

What I am trying to establish is whether a sole trader with premises (regardless of rate relief) can claim both the grant plus 80% of profits (under ave £50k PA over the last 3 years.

No, not regardless of rate relief.

It’s only under the Small Business Grant Fund (SBGF) that all eligible businesses in England in receipt of either Small Business Rates Relief (SBRR) or Rural Rates Relief (RRR) in the business rates system will be eligible for a payment of £10,000. Where such businesses are owned by the self-employed sole trader, they can also claim the 80% of average trading profits when it becomes available.

 

[Deleted member 6183]

I see what you're getting at now - my reading of it is that it's a very grey area but I'm sure, in the circumstances, there'll be plenty of leeway.

Are you claiming for anything now?

Nothing.

I'm lucky really, I could survive for the long term.

My gripe is that business is slow but not slow enough to shut up shop for a few weeks so I'm working every day but it's not especially productive.

 

[Deleted member 6183]

No, not regardless of rate relief.

It’s only under the Small Business Grant Fund (SBGF) that all eligible businesses in England in receipt of either Small Business Rates Relief (SBRR) or Rural Rates Relief (RRR) in the business rates system will be eligible for a payment of £10,000. Where such businesses are owned by the self-employed sole trader, they can also claim the 80% of average trading profits when it becomes available.

So, potentially, £17.5k in benefits for a business that could be still trading?

Bonus!

 

[Bellow]

My gripe is that business is slow but not slow enough to shut up shop for a few weeks so I'm working every day but it's not especially productive.

Same place as me. Just waiting for the self-employed scheme to turn up and cover some of the shortfall.

 

[pmcgsmurf]

If you're a director of a business you cannot furlough yourself (even though technically you're an employee) because legally every business has to have a director "working" (furloughing means you're not allowed to "work")

HMRC clarified this to the fact that yes all employees including directors can be furloughed.
Fiduciary duties etc. can still be carried out including payroll etc. while the director is furloughed.

They cannot though do work that will generate income while furloughed.

 

[W145user]

Thank you for all the replies, along with other questions raised as we went along.

We are in very strange times, and knowing what to do is very difficult.

The fact that thousands of workers who have been furloughed with the gov't paying 80% of their salary up to £2,500 per month is excellent.

Where I get confused is with the following anomalies:

A furloughed employee on £51,000 per annum gets £2,500, a self employed person with an annual profit of £51,000 gets nothing.

PAYE employees furloughed get their money now, eligible self employed people have to wait until June, which may be too late for them.

Company directors who do not take a salary only dividends, get nothing, but their employees get up to £2,500 per month.

I will finish by congratulating New Zealand, closed borders early, anyone flying in was quarantined for 14 days, country in lockdown. Total deaths 19, now one of the first coming out and getting back to normal. I cannot wait.

How all this will be paid for and where we will be over the next year or so is concerning.

 

[markjay]

I think the issue is that small businesses who have premises will be hit harder than those who run their business from home, or those who use serviced offices.

The former will have very little running costs, while the later can move out at short notice or negotiate a moratorium.

But if you have your own business premises, then there are running costs that you can't easily avoid. Rent/mortgage, BT lines, Internet, gas and electricity (though usage will be low), water bill, alarm/security, insurance, etc.

 

[Deleted member 65149]

Apparently the self-employed have to wait until June in order to give time for those who still haven’t submitted their 2018-19 tax returns to do so. So three months extra for the extreme dalliers to get in an eligibility for a grant, while the majority who were on time have to struggle while they’re kept waiting.

 

[Deleted member 65149]

I think the issue is that small businesses who have premises will be hit harder than those who run their business from home

That was no doubt the thinking. There will be some small businesses run from home and still registered for business rates, but I suspect it’s only a minority.

 

[poormansporsche]

I've got the free 10 grand sitting in my bank. Hmmmm that classic AMG that I've always promised myself is starting to look somewhat appealing

 

[markjay]

Thank you for all the replies, along with other questions raised as we went along.

We are in very strange times, and knowing what to do is very difficult.

The fact that thousands of workers who have been furloughed with the gov't paying 80% of their salary up to £2,500 per month is excellent.

Where I get confused is with the following anomalies:

A furloughed employee on £51,000 per annum gets £2,500, a self employed person with an annual profit of £51,000 gets nothing.

PAYE employees furloughed get their money now, eligible self employed people have to wait until June, which may be too late for them.

Company directors who do not take a salary only dividends, get nothing, but their employees get up to £2,500 per month.

I will finish by congratulating New Zealand, closed borders early, anyone flying in was quarantined for 14 days, country in lockdown. Total deaths 19, now one of the first coming out and getting back to normal. I cannot wait.

How all this will be paid for and where we will be over the next year or so is concerning.

The treasury always had an issue with the self employed.

Too many people use it as a way of avoiding and evading tax.

HMRC would have much liked everyone to be on PAYE...

Rishi Sunak mentioned it when announcing the package for the self-employed.... he said that self-employment will need to looked at in the future to ensure that everyone pays fair tax.

 

[Deleted member 113659]

I've got the free 10 grand sitting in my bank. Hmmmm that classic AMG that I've always promised myself is starting to look somewhat appealing

Me reading your post felt as uncomfortable as when you stroke a dog from his tail towards his head.

 

[poormansporsche]

Me reading your post felt as uncomfortable as when you stroke a dog from his tail towards his head.

Swings and roundabouts. Got my Aldi paycheque today, £700 for putting my life at risk for a month, near as fook to divorce with the wife over the potential risk to her and the kids. Virtually zero income from my self employment with fixed costs that still need paying. Mum in hospital.

Need something to look forward to to help me get through it !

 

[Deleted member 113659]

Swings and roundabouts. Got my Aldi paycheque today, £700 for putting my life at risk for a month, near as fook to divorce with the wife over the potential risk to her and the kids. Virtually zero income from my self employment with fixed costs that still need paying. Mum in hospital.

Need something to look forward to to help me get through it !

I was more meaning uncomfortable given that you got your £10k and the OP’er hasn’t.

I know how hard you've worked playing a part in providing food for the nation. (As I’ve mentioned in other threads).

 

[poormansporsche]

When all this started kicking off I upped my bank loan by 10 grand to cover my fixed costs so you could just say that is paying for the new car purchase.

I will also be eligible for the self employed grant but will not be claiming as I'm more than happy with the 10 grand.

 

[poormansporsche]

I was more meaning uncomfortable given that you got your £10k and the OP’er hasn’t.

I know how hard you've worked playing a part in providing food for the nation. (As I’ve mentioned in other threads).

Cheers mate.

Reading my first post it could be construed in bad taste with people dying and others on the breadline !