The chancellor set out his plans to provide aid for the self-employed last week and although the scheme will aid many it also leaves a significant number without the support that they require at this very difficult time.
There are tax advantages obtained by operating your business as a limited company and paying a minimum salary while taking additional funds in the form of dividends.
Under Mr Sunak’s new offering for the self-employed, taxable grant aid will be provided based on profits earned in the three years ended 5th April 2019. These funds will be provided automatically and regardless as to whether the trade is continuing or not.
This is in stark contrast to the owners of small limited companies who will receive nothing unless they are in receipt of rate relief.
They can furlough themselves if the business is not trading and claim the grant of 80% of their normal salaries. This, in most cases, amounts to £133 per week. The latest guidance on the job retention scheme suggest that these grants will not be paid until June at the earliest.
This is clearly not sufficient compensation to maintain any standard of living.
There are provisions made to increase the amount of Universal Credit payable and as claims are taking 5 weeks to process then this process should be started immediately. It is possible to obtain an advance which can be repaid over a 12-month period.
Increased amounts of Universal Credit.
Management of your outgoings is also a priority and lenders are prepared to allow a repayment holiday of three months upon request. This applies to mortgage lenders, banks and finance companies.
Private landlords may also be prepared to agree some deferment of rent for a period.
Debt is a last resort and should be avoided if possible.
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