MAY | OPINION
Michael Kill, CEO of the
Night Time Industries
Association (NTIA)
Michael Kill, CEO of the Night
Time Industries Association
(NTIA), says provisions for the
self-employed are out of reach
for many who urgently need it
T
he self-employed
provision from
government was a long
time coming.
Once it arrived, it was initially
regarded as being similar to
the ‘furlough’ scheme – the
difference, however, is that this
system will not be live until
June. That is a long way off for
many self-employed people with
no work and limited cash flow!
It’s clear that the state has
struggled to bring this provision
together, with questions
remaining on the definition of
income, turnover and profit as
well as further concerns raised
on the classification of dividends.
This is clearly an autocratic
scheme, which was expedited
and arbitrary.
Many people are unhappy
with the provision, as they are
falling through the gaps for a
variety of reasons. So…what are
you entitled to?
The scheme will give people
who are eligible 80% of profit,
limited to a maximum of £2500
as a grant. It doesn’t need to be
paid back, but remains a taxable
income. Calculation is based on
a 3-year mean average of profit
up until the 2018/19 tax year. If
you only have one year’s worth
of accounts, they will act on that
single year and similarly against
a two-year record. If you have
Are freelancers being forgotten?
been operating for a shorter
period of time, prior to April
2019, they will only take into
account the total profit for the
period of trade and count that as
your annual profit, not pro rata.
You are only eligible for this
scheme if over 50% of your
earnings come from self-
employment. If it is less you are
excluded, but more importantly
you are eligible for this grant
even if you are still working.
If you have only been self-
employed since April 2019 - you
are not eligible!
If you are a freelancer, you
are deemed to be on PAYE and
are being asked to approach the
company or companies that you
work for to be furloughed. The
biggest news is that dividends
are not covered within the
provision.
There is currently no
provision for those who are the
Director and sole employee of
their own limited company – as
many in the events world are. Is
there a legal case brewing here?
Why do limited company
Directors pay corporation tax
on profits and personal tax on
dividends if the Government
are now telling us they don’t
classify this money as ‘income’
when calculating their financial
rescue packages? Yet when a
claim for Universal Tax Credits
is made, dividends are classified
as income!
I am yet to hear an
explanation other than the
fact that HMRC are not able
to determine the difference
between dividends arising
from passive investments and
dividends from work-related
income. Dividends paid to
directors of small Ltd companies
are NOT a return on investment
of capital. Surely it isn’t difficult
to identify the trail of income
streams via our tax returns.
I’ve just read a tweet from
a director of a small limited
company applying for universal
credit who says he won’t be
eligible for UC because he
receives dividends. So, either
dividends are income, or
they’re not. Which is it? The
government can’t have it both
ways.
Time is of the essence. We
need to close these gaps!
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