well good morning I hope you can all
hear me okay this is Claire bear so I'm
the personal finance editor at the SC
this is a bit of a brave new world for
us this morning I'm coming at you from
my living room in Hackney in central
London to deliver the first of what we
hope will be a useful series for FC
leaders called Claire Barrett's business
clinic now the reason that I as the
personal finance editor doing this
because lots of readers of ft money
section I had in the FT obviously run
their own businesses and I'm being
inundated with messages from readers who
are concerned that the government
support packages for businesses at this
time are not recognizing all of the
entrepreneurs and small businesses in
Britain and so hopefully today's session
which I can get your questions
interactively through my iPad I'll be
able to respond live to a lot of your
concerns and if it's a question that I
don't know the answer to I'd still like
you to ask it because that will really
help to inform the FTS
future coverage of this highly highly
important area so I'll start off by
saying in summary over the weekend I
have had literally hundreds of emails
both to my personal email address Claire
doctorate at ft.com and to the money
Inbox
money as ft.com from readers who are
absolutely in a quandary about what they
are going to do with their businesses
many many people do not qualify for the
self-employed package of measures which
the government put out on Thursday
because they are the owner directors of
a limited company whereas the government
support package is aimed squarely at
sole traders who have very simplistic
tax returns so I'm going to start off by
talking about some of the questions that
have come in on that and responding to
those as we wait for malls to come in
now if you want to put a question to me
if you're watching this article on
ft.com
you can just put a question in in the
mint filled below the line and one of
the essays videos he magically make that
appear on my iPad well if you're
watching on the YouTube channel you can
put a comment below the line there and
the same thing will happen if I don't
get to all of your comments I think
we're gonna do a fairly regular and
video of this so we will get to the next
time and I will read them all later on
so don't be dismayed so the biggest
question is why are limited companies
left out of the self-employed help
package now there's been a huge amount
of anger expressed to me from readers
who say I have got to have a limited
company set up with my accountant
because if I didn't have that I wouldn't
be able to get work now that is
particularly the case for creative
professionals who work within the UK
film and TV industry they've been
telling me that all of the major media
companies won't help take them on to
their central suppliers list unless they
are a limited company if they were
trying to do it in their own right as a
song trader that wouldn't be allowed
because big companies are concerned
about tax rules governing off payroll
working late as ir35 and fairness
between agency staff and in-house staff
so lots of people wanting that message
to get out lots of people saying that
they're writing to their MPs and saying
you know people who run the missive
companies are rich and we need to be
helped too so and we have lots of
readers working in film and TV who are
saying I'm not going to get any help
from the self-employed scheme because
it's concentrated on sole traders so
what can I do now one of the sources of
help that you could consider if you are
in that situation is whether you could
furlough yourself under the other
government scheme for jobs interruption
this is the one that applies to PA ye
employees because most people when they
set up a limited company will receive a
nominal sum normally around seven or
eight hundred pounds a month through PA
ye to themselves as a director and then
they will receive the bulk of their
income which obviously is variable as
dividend now although you won't be able
to claim under the self-employed scheme
it is possible the Treasury say for sole
owner directors to apply to furlough
themselves through the jobs protection
scheme and then they would receive 80
percent of the PA ye element of their
income through for three months but the
catch to that as many readers have also
noticed is that if you furlough yourself
on PA ye and technically you're not
supposed to be doing any work now again
the Treasury have said owner directors
can still continue to perform their
statutory and administrative obligations
as company directors and here's the but
so long as that is all they are doing
now you don't need me to point out how
unfair that seems in contrast to the
self-employed help scheme where those
who have a trading profit of up to fifty
thousand pounds per year can claim
income assistance but at the same time
the self-employed are still allowed to
try and get work so that is a big
difference between the two schemes it
doesn't quite even out now I had a
really great comment over the weekend
from a whatsapp group that I joined for
the directors of limited companies who
as you can imagine all banding together
to try and Lobby the government to
better support their needs and to get it
out in the media about why people who
are running limited companies needs to
be understood now Colin says this issue
is essentially the question of fairness
the employee and the self-employed are
being compensated for the loss or
potential loss of income through forced
redundancy or loss of work by the
government but those running limited
companies are not why simply because our
regular income is recorded as dividends
and not PA ye but our income is only
recorded this way because of decisions
made by the government's none of us have
engineered a situation where we need
financial assistance from the government
nor one where we are told by our
accountants that we should be paid in
this manner I think Colin a lot of
people will agree with you he also makes
the poor
that it's an issue he feels of
perception if you have a limit company
people might think that you're quite a
wealthy person certainly there were some
comments by the Chancellor about the
self-employed who were left out of his
scheme and an average income may be as
high as two hundred thousand pounds per
year which again many readers have been
objecting to and taking issue with and
politically you could be seen to be too
much to be bailing out people who have a
lot of money but the reality is is that
lots of people who are running small
businesses are telling me that they
don't have a lot of money the big
problem for lots of you has been
negotiating with landlords about rent
bills and you working out how the PA why
the furlough system could work for your
own star because businesses are gonna
have to fund that themselves from now
until they can claim back the money from
HMRC until May and Colin adds that it's
not that people with limited companies
are asking to be treated differently
from anyone else they just want the same
level of security and he notes that the
income support available through both
schemes for the self-employed and for PA
ye workers is capped at two and a half
thousand pounds so lots of limited
company owners can't understand why they
wouldn't be able to apply for support
through that another anomaly that Chris
who has emailed in has pointed out says
why is it that people employed in a
company do not have a cap on their
incomes the same as the self-employed
well Chris is a very valid point the
terms of the scheme that were released
on Thursday by the Chancellor it's got a
waggle at this and my computer doesn't
go to sleep said that the self-employed
protection scheme can only be applied
for if people have a trading profit
averaged over the last three years less
than fifty thousand pounds per year now
if you were somebody who has been paid a
salary and you wanted to be furloughed
on the PA ye scheme there's no cap on
your income
the only cap on base keys is to limit
the payouts at two and a half thousand
pounds per month so unsurprisingly
lots of FC readers some who are only
very marginally over that 50,000 castle
for the self-employed one lady got in
touch with me on Saturday to say that
she averages fifty five thousand pounds
trading profit over the last three years
she's a single mother with three
children doesn't know what she's going
to do to survive financially from now on
we also have a comment here from ardent
Ramona and someone who I recognize from
the FT comment field who says I can't
understand why there is a disparity
between PA whyyy and self employed for
this safety net why is there a limit on
the earnings of self-employed people at
all they will feel the income stopped
immediately and then what whereas an
employee is protected by an employer and
has no considerations equipment they may
have bought etc we have no such
protection well selling equipment
unfortunately has been mentioned in a
few emails that I've had from people are
desperately looking for ways to get
their cash flow going so that they can
survive for the coming weeks and months
and another problem that people have
been talking to me about is how they
will keep businesses going when they
don't have very high levels of cash I've
got an email here from ian street who
says he's self-employed a sole trader
working as the landscape gardener
he's been building up his business to
twenty five years he's built up savings
going into his retirement and he's
dismayed that the government has got
nothing to offer to the self-employed
other than statutory payments I have a
mortgage he says alone dat and tax bills
and all other living cost expenses the
same as everyone else however I'm now
being treated differently to most other
working people now I'm going to read out
some links at the end of this video to
the government help websites and also a
new HMRC tax helpline number and that's
been set up because of course one of the
main avenues open to businesses who are
looking to manage their cash flow is
deferring tax payments which is
something that the government has
offered with both time to pay on tax
bills and deferring the next lot of v80
receipts
as well as information on the grants
which I can see on here people are
asking for the email address for the
government portal which I will which I
have got on here and I'm briefly read
out its www.isminc.com RC coronavirus
tax helpline for those who wish to defer
tax bills this is a new number if
brought out in the last few days which
will have much more chance of being
answered because they've been putting
lots more people on sort of help lines
but HMRC tax number is Oh 8 hundred to
four one two two two I'll read that out
again Oh 800 zero two four one two two
two and again that website and that
number can be found in the FT video
description so I'm just going to look
through the latest comments that we've
got we have been sent in a question from
Emma who is newly self-employed
unfortunately Emma you are in another
one of the group's that's fallen between
the cracks of this self-employment
scheme ever says I'm just about to
submit my first tax return so that's for
the 2019 20 tax year as I've just
started out as a freelance hairdresser
the irony is is that people like me and
never been in more need of your services
but obviously because of social
distancing I'm having to put up with my
roots but Emma says I've applied for
universal credit is there anything else
I'm entitled to as I still got bills to
pay and there's no other way of income
well unfortunately this is a situation
that many new freelancers who have been
contacting us over the weekend find that
they are in even though they have a full
year of tax receipts from the tax year
that's just about to end this won't be
counted by which you've seen that self
employment and help scheme the tax year
that you must have a return in fall if
you haven't done it you can do one in
the next few weeks is 20 18 to 19 that's
the crucial year
they will also look at payments from the
to tax years before that to work out
your average trading profit over that
three-year period if you are a sole
trader with trading profits of less than
fifty thousand pounds a year on average
you will qualify for the self-employed
scheme which will be worked out as an
average of 80 percent of your profits
for three months made one payment which
would be back dated until June now it's
not open to apply at that scheme HMRC
will be contacting people who are
eligible in the coming days but bear in
mind that the money won't be received
until early June at the earliest which
again is something that is very much
worrying readers so how can Emma and
others look at other sources of income
well lots of banks and the credit card
companies and the mortgage lenders all
saying that they will offer periods of
forbearance to people like you Emma who
are affected by the coronavirus and of
course most people who don't have
savings over 16,000 pounds will be able
to claim something on universal credit
although it isn't very much and
unfortunately the wait times
that's the clanging fast and register
for it are very high and unless you
apply for emergency payment you may get
anything for universal credit for five
weeks but I think that we do need this
information it's nevertheless useful I
have another question here coming in
from Borah stomachs who asked if the
employees have put on a zero hours
contracts what help can they get well
chorus that's a really good question the
truth of it is is that if you're a zero
hours contract your employer is allowed
to further you under the government's
jobs protection scheme for PA ye
employees but what they will do is take
your average earnings for the month of
February as the figure that they will
furlough 80% of your pay but there is a
catch here because your employer has to
be the one who applies to use that
rather than you and I've been getting
reports from many readers that not every
single employer wants to follow the
staff and certainly they can't
falsity which is one of the weaknesses
within the system there are clearly
concerns for small businesses that they
will have to meet the costs of paying
those 80% of salaries for the next few
months until they claim the money back
from HMRC that could be one of the
things that's pretty not right I'll go
on to the next question
aubergine great name aubergine says I
don't understand why this is being
framed as a creative industries
phenomena surely there are not lots more
owner directors outside this industry
who are facing the same issue for
example the tech industry building's
maintenance consulting fitness retail
etc etc Oh Jean you're entirely right
it's not just the creative industries
the problem for the creative industries
is particularly acute because so many of
them have been forced into working in
this way through using limited companies
it's just my DFT bright the story this
morning particularly looking at how
people working in film and TV are very
fearful for their future but anybody he
operates through analysis company is of
course feeling the same effects and we
covered this more generally in ft money
the weekend we also heard from lots of
people who run limited companies because
of the protection that being a limited
trader involves for example if you're a
builder or an electrician or a plumber
you must have a limited company rather
than be a sole trader in case there's
any possibility of a negligence claim in
future I had one email from a plumber
over the weekend I don't have it online
my iPad unfortunately saying I am there
for people in times of emergency why is
the state not there for me when I'm
having an emergency over my income very
very valid point and obviously we will
continue to report on all of these
issues in the coming weeks I have
another comment here from grierson 53
EFD calmly de he says my wife Cowen's a
small speech therapy practice makes me
treating young children in person or in
schools her work has completely dried up
I'm very sorry to hear that her nine
employees have been furloughed
the two owners of the business plate pay
themselves a small PAYG salary 7,000
pounds per year and used dividends as
advised by reputable accountant this
scheme has been in place for four years
and they each make around thirty five
thousand in income a year as noted in
your article the owners of businesses
can get no personal help from the
government at this stage he says they
cannot furlough as they have to fulfill
directors responsibilities well the
advice from the Treasury is you can
furlough and fulfill your administrative
and statutory obligations as a director
but you can't do anything else and then
she says she cannot tame claim for lost
income that she's been paid by dividends
well this is the sticking point you
won't be able to claim for any money
that you've had through dividends if
you'll that owner director of a limited
company but it's possible through the
furling scheme to apply and to get 80%
of the PA ye salary that you've had now
of course the way that the accounting
practices work is that most people are
only paying themselves about seven or
eight hundred pounds a month through PA
ye and of course 80 percent of that for
three months is not going to be very
much money so it's completely
understandable why so many readers are
absolutely terrified about the future
prospects for their businesses so we're
also getting lots of suggestions via
ftom of what else the government could
be doing other systems it could be
considering and a lot of people are
saying that rather than starting these
noble intentions but very complicated
and schemes from scratch should the
government be looking at a simpler
solution ie Universal income so instead
of trying to manage the benefit system
the self-employed scheme the PA ye
scheme could Universal income be an
easier and quicker way of getting people
the money they need so ft.com reader
process says typical UK bureaucracy red
tape and costs creating winners and
losers America is simply giving everyone
twelve hundred US dollar checks if
they've been registered with the tax
authorities since 2018
it will be a lot cheaper if every
British adult gets a thousand pounds per
month
a bit like universal income this UK
method is risking a turkey when the
losers to this giveaway have empty
bellies even entrepreneurs who are
making annual losses get zero
are they not hard-working enough well
thank you very much for your points
processed have another comment coming in
from David rose who is commenting on
YouTube he says I've been self-employed
since 1996 and I have submitted my
accounts up to 2019 in May 2019 I went
down the limited company route with my
wife we get taxed at source we do not
pay ourselves three paid PA ye are we
not entitled to any scheme well David I
think the question for you in your
accountant will relate to your 2018-19
tax return now you say that that was at
the point where you went into a limited
company structure so if you're still
working as a self-employed person which
is one of the conditions of HMRC scheme
it's possible that they will look at
your previous accounts and work out the
average of those but obviously for
people who have changed denomination
it's very difficult I spoke to somebody
else yesterday who was saying to me that
they had a limited company but they
still had some income coming through
their previous arrangement this is a
really really difficult area because
obviously you have a partial tax year
there of self-employment and that is for
the crucial year that they're that
they're looking for
so I would have to say that you would
have to get professional advice on that
I'm afraid another question coming in
from YouTube Tom Barnes asked why can't
HMRC tell the difference between a small
business company director taking
dividends as income and somebody else
receiving dividends as a shareholder of
a large corporation such as BP now this
is a really interesting point Tom and
thank you for raising it so one of the
reasons that's being given by experts
from why it's
too difficult for a self-employed scheme
to look at income from dividends and
look at replacing some of the directors
income that they've lost through the
disruption from the virus it's because
I'm a standard UK tax return you just
have one slot that says income dividend
income from UK companies and that
obviously could include the dividend
income that you've got from shares while
that lasts although we all know that
shares from dividend income from and
shares across the board around the
threat nearly four million pounds worth
of dividends castle cancelled last week
alone with the dividends that you get
from your own company it's all just one
figure it's mixed together now one
solution that's been touted by other
directors is looking at the
self-assessment forms which people
submit if they want to apply for a
mortgage for example they have to fill
in a special form breaking down the
sources of their dividend income so that
the mortgage lender can make a decision
about where their money is coming from
and what kind of credit risk they're
going to be in the future so some people
are saying could we not use these forms
I believe they're called si si 302 could
we not use those forms to apply for this
I mean that's maybe an idea but
hopefully those in charge could consider
now also lots of anger out there to
readers I'm just going to like on the
mouse against and my laptop doesn't go
to sleep lots of anger out there from
readers about the Chancellor's comments
on the tax treatment of self-employed
people we've got a comment here from
Molly Cockroft he says regarding the
statement that taxes will increase after
this is passed to level the field for
self-employed people if we as directors
do not receive help now how is it fair
that we will be expected to contribute
more in the future
well a really good point money and
certainly one that's been made to me
over the weekend by different readers in
different ways so a lot of people are
telling me that they don't have any
particular desire to be registered as a
limited company but because of the
nature into the work that they're doing
is a freelancer they either have to be
in a limited company aren't you talking
about professional trades people like
builders plumbers we must not limit
their liabilities all they're being told
by the big bigger clients that they work
for that they have to be a limited
company before they can engage I've even
had somebody send me on whatsapp a
picture of a government procurement
organisation saying that if you want to
work for that particular arm of
government you have to be a limited
company and a lot of this is going back
to issues that have been covering under
in the tax systems that you know more
than more than ten years we've got this
tension over of payroll working ir35
lots of people obviously set up limited
companies over the years because the
pressure has been on big companies to
stick within the ir35 rules and
unfortunately the delay that we've been
reporting on separately in the Yeti
right well you've done anything to
change that
so these are kind of big structural
questions about the British tax system
which unfortunately through the nature
of how this scheme has been hardly
cooked together and really being put
into the spotlight today now how the tax
burden could shift at the point in the
future where people are expected to pay
things back well I think I'd like to use
my time on that to point out how angry a
lot of small business that people are
that there seem to be in some way
cheating the UK tax system because of
their sutter they point out that you
know as a limited company they will pay
taxes they will pay dividend taxes on
the dividend income that they're taking
from those companies and in a lot of
cases they're also employing other
people and staff they're paying tax and
employers national insurance for them
but this real sticking point seems to be
national insurance because obviously if
you're paid as a director three limited
company and
performing services for a bigger company
than that big company isn't paying
employers national insurance
contributions as it would be if you on
their payroll but then I would stress
let's think of the people aspects to
this story if you are a freelancer and
goodness knows I've been contacted by so
many people who are in various desperate
situations if you're freelancing you're
not entitled to sick pay
you're not entitled to holiday pay
you're not entitled to any kind of
pension contribution from the employers
that you work for and one survey I've
seen says that around 70% of
self-employed people aren't making any
savings whatsoever in the pension so I
think that the perception that the
self-employed err somehow using this
limited company tax structure to achieve
some great advantage and either
financially or three the tax system is a
real misnomer because a lot of
self-employed people have denied the
benefits that people who are on peut PA
ye system you know uniformly receiving
and that is a very big difference I have
another question here coming in from
Edward bishop who asks Clare what is
your view on using the business
interruption loan scheme as a means to
keep your company going to use it for
the day-to-day running of the company
well this is an issue
Edward that various of my colleagues at
the FT including Dan Thomas have been
writing about recently the business
interruption loan scheme this is
administered by the British business
bank but they're pumping out the money
to the banks that you would normally
reach the loans during your normal
course of business so if you want to
apply for a business interruption loan
then approach the bank that you're with
with your business account that the
moment they would be the first people to
go to you now there has been a bit of a
slow start to the scheme lots of
criticism that bank staff and who are
working from home like like I am today
slightly out of the loop about the
details nowadays as she seemed to be
overcome but the next issue has turn
to personal guarantees now the FT was
reporting an awful lot last week about
this that people who have got their in
business who are applying for the
business interruption name there they
went have interest to pay for the first
year they were being asked to sign
personal guarantees on their assets or
not their actual houses that they live
in but you know their income they were
lost being pledged security and lots of
people are obviously understandably very
unhappy about that cause it was too much
of a risk so there has been some
capitulation from the bank's some of
them and they longer asking for personal
guarantees certainly for the loans below
250,000 pounds it's apparently becoming
less a standard requirement but as ever
you are our eyes and ears out there
actually readers if you want to tell us
more about the loan scheme or how you
feel you still being asked for a
guarantee and you shouldn't have to
provide one then get in touch with us
you can email the money desk with money
at ft.com
follow any of the journalists who write
in news stories on twitter and suggest
dan Thomas and that's the really great
one to follow I am at Claire bcoa ERP on
Twitter and all tweets out links to lots
of my colleagues and other articles that
we've written about this very soon now
on the subject of the business
interruption loans and speaking as
somebody I was chatting to my best
friend over the weekend because she
doesn't know whether to apply for a
business interruption known for her
business or not the big problem is when
will people have to pay the money back
if they've got zero income coming in
lots of readers have been emailing the
money desk over the weekend and saying I
have applied for one of these business
interruptions loans and my bank knew
what it was so that's good thanks for
getting the message but my back then
asked me to fill out a business plan
projecting what my income would be for
the next 12 months and how the business
would be going and one reader points out
you know I haven't got a crystal ball
well none of us have it does seem very
in Congress to have to make a business
plan in order to get this loan when none
of
really know for sure when winix gonna
have income coming in from businesses
which have been put on ice or fail at
furloughed we have been speaking to some
very entrepreneurial and business
leaders enacting money who have been
able to keep their businesses going
through the crisis by turning around
what they do
switching to postal delivery method or
changing a restaurant business into
takeaway but obviously there's a limit
to how many businesses can do that and
there's also a limit to how many people
can do their jobs from home I'm very
lucky that I am set up to even to do
this from home although it does feel
slightly strange and to be sitting in my
living room talking to you over the
screen I've got another question that's
coming from David Payne on YouTube
he asks as a small business owner with
several furloughed employees do I need
to pay the all employees upfront before
later claiming the 80 percent back later
the gap between payments and
reimbursement concerns me well thank you
David for raising that question I think
it's probably gonna be one of the last
that we'll take today and less be sudden
you get any more three so yes as a small
business owner you will need to pay your
staff that 80 percent of their salaries
obviously coming up to the end of the
month now so the crucial time for small
businesses the HMRC scheme to reclaim
via a grants which you won't have to pay
back but that that scheme to reclaim it
is not open yet but it will be and the
payments that it makes are expected to
be made in May so they are expecting
businesses through a combination of tax
deferral help with business rates maybe
even business interruption loans to fund
the cost of paying the furloughed staff
80 percent of their salary and they will
then get it back in May or thereafter so
it again you know there is a lag built
into this system now I'm going to read
out that website again where is the main
source of support that any business or
individual looking to see what help they
can go from there
business from the government which has
got the full nitty-gritty of all of
these of these schemes that website
again is www.visaplace.com UK now that
is a portal that will let you access all
of the different government help schemes
advice about business interruption loans
advice about business rates all of the
things that we've talked about with you
on the video today I'm also going to
mention again the HMRC coronavirus tax
helpline this is the number that you
need to ring if you want to defer tax
bills it is Oh 800 zero two four one two
two two I'll say that again
Oh 800 zero two four one two two two and
all of those links can be found in the
video description so two things to
mention and before I go fine firstly on
Wednesday this week at 4 p.m. the FTS
economic Titans Chris Giles and Martin
wolf are going to be engaging in a live
webinar which you can watch for more
details follow the hashtag FT Digital
dialogues
that's hashtag FT Digital dialogues that
will be on the Betty website somewhere
Wednesday at 4 o'clock and then on
Thursday my colleague Dan Thomas the FT
is executive news editor who's been
writing many stories about how
businesses are coping in the crisis he
is going to be in the hot seat taking
questions live from readers all about
the government rescue schemes as we have
been reporting on on these schemes we
know more news is happening every day
more tweets are being made more
loopholes and being found and more
information is being given so on
Thursday if you want to answer and ask
questions of Dan Thomas he will be up in
the hot seat and you can follow me on
Twitter for more details of all of these
things or tweet out lots of links when
you've come off the live broadcast today
my handle on Twitter is at Claire bean
that spelled CLA PR be well thank you
very much for
joining me today on the inaugural Claire
Barrett's business credit it's been
really great to hear from you and to
hear all of your concerns which will
better inform the FTAs reporting the
days and weeks going forward as we help
to inform you about everything that you
need to know about in the teeth of this
crisis I'm Claire Barrett personal
finance editor for the a-team I hope to
be back with you very see thanks very
much