Self employed & creative accounting...

Essexyellows

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I`ve always had a job and been PAYE. Many of my friends have been self employed etc and often been "tax efficient" shall we say. Ironic that now we have various schemes in place to support business some are being caught out a bit.
If you have decided to be "tax efficient" then don`t be whining when it bites you on the a**e.

It even made the BBC.

"She is not eligible for the Self-Employed Income Support Scheme because, after taking an accountant's advice, she had set up a limited company, paying herself a basic salary of £500 per month and any further income in the form of dividends paid to her by the Limited Company. "

Same article................
"I was rejected for the Bounce Back Loan so I'm now on universal credit at £408.99 per month. It's impossible to pay rent and bills. "


Not so efficient now is it love?
 

Gary Baldi

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I can recall my accountants advice when I was self employed. GB, pay yourself a decent salary each month, it's not the most tax efficient way to do things, but it's best in the long term if you do. Use dividends for a one off annual bonus and the HMRC will like you (and likely ignore your business).
 

Wallop

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An accountant friend of mine tells me that many of his clients have sought his professional advice on how to implement the furlough scheme in their businesses and in the next breath said 'of course, we'll still let our employees do some fee-earning work'. He has had to point out that is fraud and I believe it carries a possible 10 year jail term. I think we're going to see a lot of that type of prosecution in the Autumn and with email/server records creating a clear audit trail, it's going to be an easy to prove case.
 

Essexyellows

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What got me was she was saying "I paid myself £500 a month and now UC of £409 isn`t enough"........ its only £91 difference....although she didn`t mention how much she was paying herself from the LC Dividends.

Suck it up buttercup.
 

Wallop

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What got me was she was saying "I paid myself £500 a month and now UC of £409 isn`t enough"........ its only £91 difference....although she didn`t mention how much she was paying herself from the LC Dividends.

Suck it up buttercup.
And she's moved back into her parents' house so her costs have gone down.
 

Yellow River

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I’m self employed and fill out the HMRC self assessment form each year.

I think the Chancellor’s scheme is pretty fair all things considered, and very easy to apply for and receive the grant.

My first thought when the scheme was announced was that there would be a few people out there who will have ‘adjusted’ their figures to create a lower profits and therefore pay less tax. Not too much sympathy from me for this group.

For me personally the last year was a good 12 months and I paid a decent amount of tax , the previous 2 years fairly ordinary, so swings and roundabouts as far as working out my average monthly profits for the last 3 years.

Frustratingly for me the busiest and most profitable time of the year is April to September and therefore the grant will be somewhat less than I would have had in my pocket under normal circumstances. However I’m grateful for the grant and I’ve certainly had a lot less travel expenditure in lockdown!

As for the future I think it will be difficult to make any meaningful income whilst social distancing is in place. Tricky times lie ahead.
 

horseman

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What got me was she was saying "I paid myself £500 a month and now UC of £409 isn`t enough"........ its only £91 difference....although she didn`t mention how much she was paying herself from the LC Dividends.

Suck it up buttercup.

fully get what you're saying but it's still almost 20% difference

that aside those on Paye get 80% of earnings whilst self employed get 80% of profit which the latter benefits the better off.
 

MC Yellow

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fully get what you're saying but it's still almost 20% difference

that aside those on Paye get 80% of earnings whilst self employed get 80% of profit which the latter benefits the better off.

But don’t forget that the 80% of profits is a taxable grant and so will be added to income in this tax year and taxed accordingly. The Furlough money is taxed at source in the normal way.
 

MC Yellow

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An accountant friend of mine tells me that many of his clients have sought his professional advice on how to implement the furlough scheme in their businesses and in the next breath said 'of course, we'll still let our employees do some fee-earning work'. He has had to point out that is fraud and I believe it carries a possible 10 year jail term. I think we're going to see a lot of that type of prosecution in the Autumn and with email/server records creating a clear audit trail, it's going to be an easy to prove case.

Lots of reports of iffy dealings in all of this.

HMRC are hopefully going to be very busy bunnies once all this is settled.... nail the fraudulent fuckers.
 

MC Yellow

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ZeroTheHero

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Did he not think when the phrase 'offshore trust' was used that this was sailing very close to the wind?
 

Peterdev

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I’m self employed and have always declared income received and paid taxes due well in advance. I don’t want the tax people on my back.
I had an amusing conversation with a self employed gardener who has the same attitude as me.
He said that he knew of several gardeners who claimed to be earning £7500pa...however when they tried to claim help from the government they were disappointed. They could only claim around £800 for three months.
Poetic justice to be honest
 
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