Any help for Ltd companies?

RE: Any help for Ltd companies?

bob lehner — Sat, 28 Mar 2020 10:00:35 GMT

[quote userid="6550" url="~/001/nonclinical/veterinary-practice-management/f/misc-discussions/28993/any-help-for-ltd-companies/221048"] Tax evasion is a crime![/quote]

In this part of the country - and many others I'm sure - there is a thriving 'black economy'. Self employed tradesmen who work for cash only and declare very little to the IR. They might be regretting it now as they will only be able to claim 80% of what they have declared over the past three years.

Personally I think they deserve what they get - I hate the black economy with a passion - they still expect to use the NHS etc. which the rest of us are paying for thro' taxation.

RE: Any help for Ltd companies?

Bob Russell — Fri, 27 Mar 2020 21:14:05 GMT

Tax avoidance is legal. Tax evasion is a crime!

RE: Any help for Ltd companies?

Gillian Mostyn — Fri, 27 Mar 2020 20:26:03 GMT

I tried to get him to work for free, but apparently it's illegal.

Gillian (who does no admin)

RE: Any help for Ltd companies?

Neil Wheadon — Fri, 27 Mar 2020 19:58:53 GMT

Still avoidance, however you dress it up

Neil (who does his own admin)

RE: Any help for Ltd companies?

Gillian Mostyn — Fri, 27 Mar 2020 19:57:13 GMT

[quote userid="8958" url="~/001/nonclinical/veterinary-practice-management/f/misc-discussions/28993/any-help-for-ltd-companies/221036"]So that's not tax avoidance?[/quote]

2 things:

He really does do all my admin, returns etc. Plus I really don't pay him very much! (Much less than I'd have to pay an accountant to do the same job!)
I'm not complaining that the government aren't going to pay him.

RE: Any help for Ltd companies?

Neil Wheadon — Fri, 27 Mar 2020 19:47:11 GMT

Careful Gillian because you're boxing yourself into your own argument

[quote userid="2457" url="~/001/nonclinical/veterinary-practice-management/f/misc-discussions/28993/any-help-for-ltd-companies/221033"]as well as paying hubbie for doing the admin. He's below tax threshold[/quote]

So that's not tax avoidance?

Neil

RE: Any help for Ltd companies?

Gillian Mostyn — Fri, 27 Mar 2020 18:50:55 GMT

[quote userid="8958" url="~/001/nonclinical/veterinary-practice-management/f/misc-discussions/28993/any-help-for-ltd-companies/221024"]Do you get taxed on dividends? Yes, and the threshold has been reduced significantly in the past few years. In effect I don't feel we are that far from an employed person. [/quote]

Not that far, but certainly with no NI. It is still more 'tax efficient'. . It wasn't so long ago that there were complaints about IR35 because it was going to cost more in tax.

[quote userid="8958" url="~/001/nonclinical/veterinary-practice-management/f/misc-discussions/28993/any-help-for-ltd-companies/221024"]You started recently, so why did you go Ltd? I expect in part it was to not reduce your possibility of getting work, because some practices and CVS would not deal with self employed locums. In effect a Ltd company was welcomed by all practices. [/quote]

Right on all counts. But one thing differs....I paid myself a reasonable salary, as well as paying hubbie for doing the admin. He's below tax threshold but I'm not. I pay tax.

If you paid yourself a decent salary, rather than reducing tax liabilities by taking dividends, you'd be in a better position now. I'm not judging anyone ... It was a system that was there, but it wasn't designed for sole working really. (And it was a system that your accountant recommended to you....probably why they've got an axe to grind. Bad advice?)

[quote userid="8958" url="~/001/nonclinical/veterinary-practice-management/f/misc-discussions/28993/any-help-for-ltd-companies/221024"]ou're OK, I'm OK but I suspect there will be a degree of hardship in our colleagues[/quote]

Which is heartbreaking. But the government can't be expected to do anything other than base their 80% payments on earnings that were declared and taxed. As an employee of a Ltd company, you was an employee, not self employed. (And, in my opinion, to have the self employed get as generous a payout as the employed is remarkable, considering the variability of their earnings.)

RE: Any help for Ltd companies?

Neil Wheadon — Fri, 27 Mar 2020 18:13:25 GMT

[quote userid="2457" url="~/001/nonclinical/veterinary-practice-management/f/misc-discussions/28993/any-help-for-ltd-companies/221014"]£8000 to reduce your tax bill, but then tell the government you want to be paid 80% of 40000[/quote]

Do you get taxed on dividends? Yes, and the threshold has been reduced significantly in the past few years. In effect I don't feel we are that far from an employed person. You started recently, so why did you go Ltd? I expect in part it was to not reduce your possibility of getting work, because some practices and CVS would not deal with self employed locums. In effect a Ltd company was welcomed by all practices.

You're OK, I'm OK but I suspect there will be a degree of hardship in our colleagues

Neil

RE: Any help for Ltd companies?

Gillian Mostyn — Fri, 27 Mar 2020 17:59:14 GMT

But you can't tell HMRC that you only earn £8000 to reduce your tax bill, but then tell the government you want to be paid 80% of 40000, because that's what you really earn.

And I'm talking as a Ltd locum.....

RE: Any help for Ltd companies?

Neil Wheadon — Fri, 27 Mar 2020 16:54:36 GMT

I'm sure they won't mind, this has just arrived in my inbox from a veterinary accountant

So who raises this with government, because BVA/RCVS that's the only way anyone is going to look at this.

The media has been totally silent on the fact that virtually all the historic ‘self-employed’ businesses now trade as limited companies, where the remuneration strategy will have almost certainly been a director wage of c. £8,000 pa plus dividends (or director loan account withdrawals).

For this group there is no direct support for the owners. They cannot furlough themselves, as one requirement of the scheme is no work can be undertaken by the furloughed staff and, even if they could, the support would amount to £123 per week with an £8,000 salary.

Although the Government mantra is ‘we can beat this together, we’ll put our arm around all workers and we’ll leave no-one behind’, for this particular group, which is the vast majority of our vet practice clients and a huge number of others in the UK, there is no substantive financial lifeline.

RE: Any help for Ltd companies?

Neil Wheadon — Fri, 27 Mar 2020 16:04:33 GMT

[quote userid="6550" url="~/001/nonclinical/veterinary-practice-management/f/misc-discussions/28993/any-help-for-ltd-companies/221006"]Perhaps there is a misunderstanding here![/quote]

Yes please read the original question

[quote userid="6550" url="~/001/nonclinical/veterinary-practice-management/f/misc-discussions/28993/any-help-for-ltd-companies/221006"]I do not expect my dividend income to be made up although I do take a small income as an employee.[/quote]

Precisely, the system was set up to pay yourself £719 a month and that's your 80%

[quote userid="6550" url="~/001/nonclinical/veterinary-practice-management/f/misc-discussions/28993/any-help-for-ltd-companies/221006"]Dividends lost quite a lot of their shine when they were taxed.[/quote]

In the past few years there has been a real attack on Ltd companies, dividends are only untaxed up to £2000 now

[quote userid="6550" url="~/001/nonclinical/veterinary-practice-management/f/misc-discussions/28993/any-help-for-ltd-companies/221006"]locums chose or are forced into[/quote]

I wasn't forced but it seemed sensible. CVS insist on a Ltd company status as do other practices

[quote userid="6550" url="~/001/nonclinical/veterinary-practice-management/f/misc-discussions/28993/any-help-for-ltd-companies/221006"]Umbrella companies confuse me but I suspect it is similar. [/quote]

I think they take you on as employees, so as you are PAYE, you get the 80% of salary

It's all about pressure on the government, if enough complain they might look at it. Having paid tax and never claimed benefit for 29 years I feel a bit aggrieved here, what I am doing is legal, I self assess and so my tax records are out there. I'm not above £50.000 so surely.....

Neil

RE: Any help for Ltd companies?

Bob Russell — Fri, 27 Mar 2020 15:54:33 GMT

Perhaps there is a misunderstanding here!

There is support available for businesses but that is yet to materialise. I do not expect my dividend income to be made up although I do take a small income as an employee. Dividends lost quite a lot of their shine when they were taxed.

I suspect Neil is talking about the business set ups that locums chose or are forced into. A limited company locum will put as much through the business to minimise the taxable profit. This means much of the support (business rates, staff wages etc) will not apply.

Umbrella companies confuse me but I suspect it is similar.

RE: Any help for Ltd companies?

Gillian Mostyn — Fri, 27 Mar 2020 15:53:20 GMT

The chancellor did comment yesterday on the fact that, going forward, self employed people who expect the same government help as the employed need to be paying the same level of tax. He has a point. I suppose that paying less NI and looking for tax loopholes isn't compatible with the 'we're all in this together' approach.

RE: Any help for Ltd companies?

Julie Innes — Fri, 27 Mar 2020 15:23:05 GMT

Yup, I'm pretty much gubbed and in the same boat- small practice, ltd company, live on dividends.

I can't get too worked up about it, because I did what I thought was clever/ right at the time, and now it's biting me on the bum.

The only upside is that, apart from my mortgage, the only things I spend money on is nice food and holidays, and since I can't do either at the moment......

RE: Any help for Ltd companies?

Bob Russell — Fri, 27 Mar 2020 15:10:02 GMT

Anyone claiming payback time should grow up.

I heard a discussion/question regarding umbrella companies (Paul Lewis of Money Box) last night (BBC News) and he was saying that there is no help for people using umbrella companies. Apparently these people are in the 5% or so that are not helped. The only comment was regarding claiming Universal Credit that could pay up to £1700 or so with help with housing costs.

but:

"Where will PAYE workers and umbrella workers fit in?

The issue of agency and umbrella workers in particular is far from clear. It seems that agency and umbrella workers or any other worker who is paid via a PAYE payroll may not qualify for support under the SSEP. It may be that they would qualify for support under the Job Retention Scheme"

Clear as mud! Best of luck of course Nei!

Bob.

RE: Any help for Ltd companies?

Dinu Catilina — Fri, 27 Mar 2020 14:37:38 GMT

In theory I would be but I’m not going to furlough myself as someone has to keep the practice going and do some work

RE: Any help for Ltd companies?

Neil Wheadon — Fri, 27 Mar 2020 14:17:00 GMT

80 per cent of £719/month isn't great is it.

A loan is a good idea for those that are in trouble. However I fear that the locum market will be dead until maybe September at the earliest, simply because practices will take time to recover.

Are practice owners affected in a similar way, where in effect the help isn't there?

Neil

RE: Any help for Ltd companies?

Dinu Catilina — Fri, 27 Mar 2020 14:10:59 GMT

Furlough yourself? Small business loan from council?