well good afternoon and welcome to
ft.com
latest live Q&A with me Claire bear on
the FTS personal finance center and I
edit the weekend money section so I'm
coming to you live today from my living
room in Hackney as you can see around me
we're all working from home at the FT at
the moment I'm sure you are too but that
does not prevent us from listening to
all of the problems that you're having
with running your businesses claiming
help from the government's various
support schemes and trying to get
through the current crisis and we are
here we hope to give you as much advice
and support during that process as we
can now over the weekend we published
various different articles showing how
people are finding accessing help from
various avenues and the bad news is that
lots of people are falling between the
cracks of the various help schemes and
the government at the moment doesn't
seem to be prepared to but but the good
news is is that lots of commentators
including me they're out there fighting
for more to be done so I'm going to
start today with a summary of the main
things that readers have been getting in
touch with me over the weekend about we
have of course got the live YouTube
questions so you can post a question
which I'll answer I've got an iPad here
which magically the FT video team is
able to send me your questions on here
so I can see them and respond so either
comment at the bottom of the article or
on your YouTube questions and that
question will get to me
they'll be online for just over half an
hour today so since the last Q&A that I
did a week ago there's been a renewed
urgency in the communications I've been
getting from readers all of you out
there watching about what they're going
to do about their businesses so just to
summarise those key groups who are
currently excluded from the help schemes
that the government has put in place
most of the people who are getting in
touch with me are the newly
self-employed those people have been
self-employed for less than a year
ironically the new tax year starts today
and even if you've got
one year's worth of tax records that
won't be enough for you to claim help
under the government self-employed
scheme they want peoples have already
filed a twenty eighteen to nineteen tax
return self-assessment form and they
will be contacting you to apply for the
self-employment and grant assistance if
you are eligible and to be eligible you
need to have trading profits of less
than fifty thousand pounds per year so
that's the second group with people who
are excluded from the government help
schemes self-employed people who have a
profit of more than fifty thousand
pounds per year some of them by very
marginal and amounts I've had lots of
really heartbreaking emails from people
who over the course of three years where
the averages works out from their
earning just above that fifty one
thousand in one case which means you
won't get any support whereas if you're
earning fifty thousand or less you could
technically qualify for up to two and a
half thousand pounds per month for three
months back dated until March so that's
the first two groups another third and
the most significant group of people who
say they're not being offered very much
helped by the government are the
directors of limited companies for you
pay themselves predominantly via
dividends
now the government scheme doesn't
recognize dividend income as income it
recognizes it as an investment income
now nearly three hundred thousand people
have so far signed an online petition
that change.org asking for this to be
addressed
most of them directors who believe that
the dividend income the way that they
take income from their companies should
be recognized lots of them are pointing
out they have to trade as limited
companies in order to get work from
other bigger companies it's not
something that's being done to massage
and their tax contributions and small
business groups and also trade unions
such as Beck T which works for on behalf
of people who work in the TV and film
industry are stepping up their lobbying
now there has been some movement since I
last came on screen some of the rules
have been tweaked about the business
interruption loans in particular and the
government has clarified the rules
the support schemes in the last week
that the biggest question that's been
coming in to me from readers
particularly those self-employed or
limited company directors who consider
themselves to be self-employed the big
question is could there be more to come
could the government tweak things again
to include some of those excluded groups
within the supports being so just to
give you a flavor of some of the
questions and comments I've had ft
reader RI W using his initial says I
cannot understand how the self-employed
grant is fair or how the fifty thousand
pound castle figure was arrived at if
you earn a little over fifty thousand
pounds which is hardly a fourteen you
can go just as broke as someone who
earned a little under and that cut off
of course does not exist for the PA ye
furloughing scheme which could
technically payout two and a half
thousand pounds a month to PA ye staff
who are earning way more than fifty
thousand pounds now ft we'd a team o
another self-employed person emailed to
say he didn't qualify for self-employed
help as his profits were above that
figure of fifty thousand pounds that he
comments both of my staff have been
furloughed but I am left to keep my
business running on the income of ninety
six pounds a week which is that the
amount that you can get through
Universal Credit will statutory sick pay
he says this scheme is grossly
discriminating against the self-employed
I have friends a couple who jointly
earned in excess of a hundred thousand
pounds who are both paid via PA ye they
have been furloughed so their income is
five thousand pounds per month meanwhile
I have the same if not higher level of
outgoings she's a big problem people who
are writing in and no income to cover
them so as I said earlier by far the
highest volumes of emails and messages
that I've had have been from owner
directors of limited companies now they
span all kinds of sexes I've heard from
mortgage brokers from architects from
landscape gardeners from people who work
in more traditional trades electricians
plumbers carpenters people builders
people who need to have a limited
company status to protect them from any
you know future legal action that also
ironically includes small firms the
Countians who are having to field all
kinds of calls from worried clients but
at the same time their limited company
structure means that they are paid by
dividends and also unable to access help
now a big group of them have got
together they've started a hashtag on
social media hashtag forgotten limited
where they're all telling their stories
individually of how their business is
being affected as definitely worth
checking out and they're demanding equal
and fair support for all taxpayers and
encouraging people who are Louis's
company directors to write to their MPs
lobby for change
well another person who has been
speaking up over the weekend in support
of limited company directs this is John
redwood the Tory MP for working him and
also ft money columnist now he has
published a blog post over the weekend
and he's urging the Treasury to include
the newly self-employed in its scheme up
the earnings limit for the self-employed
to above 50,000 pounds and the crucial
one to take directs as dividends into
consideration when giving people support
on their income now mr. redwood says the
government needs of the downloadable
simple forms now that permit people to
apply for money on a self-certified
basis with adjustments made later in the
year now what he gets is the urgency
that businesses need assistance and that
urgency is coming through to me loud and
clear in all of the emails and messages
that you've been sending me now this
idea of self certification is that quite
at odds to the system that government
has proposed at the moment it basically
would mean we'll give you the money
first and ask questions later
now that would undoubtedly save more
businesses but it would also be more
expensive require more taxpayers money
to be paid out and the government and
then have to direct resources after the
event into auditing checking making sure
that none of those claims were
fraudulent we've already heard from the
Chancellor that he's worried that there
would be huge opportunity for fraud if
this rosin scheme were relaxed so could
they for example threaten absolutely
huge penalties to anyone who was caught
and
using the rules one way around it and
another point that John redwood makes in
his blog is that he's hearing from lots
of constituents who run their own
businesses who are very concerned that
the scheme for furthering PA ye staff is
yet properly up and running we know it's
coming but there's going to be a delay
obviously in between the businesses
applying for the financial support to
furlough their staff on 80 percent pay
and they're still as of today isn't any
form that people can download to apply
from that scheme itself is it's being
set up businesses will have to pay their
staff and then claim the money back it
probably won't be until May when they
will get the money now mr. redwood has
says the government needs to speed up
the applications and decisions on the
furlough scheme for businesses otherwise
more companies will conclude that they
have to make people redundant to save
costs if you want to read any of the
things on this blog you can find it
online at John redwoods diary
now the government's position on all of
this because we have contacted the
Treasury today essentially there's no
movement that I can report back to you
on owner directors of limited companies
as things stand the FT understands that
much this boils down to the complexity
of separating dividends that somebody
would receive from their company from
dividends that they might receive from
other investments like shares in BP
although you could be really mean and
say well with the extent of dividend
cutting going on in the footsie there
aren't really all that many dividends
shareholders to be excited about right
now saying the self-employment help
scheme it's important to know is largely
self automated in the sense that because
the government has built in that time
lag they know who is going to be
entitled to claim for help and they will
be able to approach the self-employed so
you should look out for a letter in the
coming weeks asking you if you want to
apply for that assistance scheme and
then you put your application in now if
you can trust that with what the limited
company directors are saying quite
rightly well we've improved by showing
our company accounts or a covering
letter from our accountants or an SI 302
form that the
we're receiving our from our own
companies we can certify that but
obviously that would involve people
sending a lots of information back the
other way to HMRC saying I'm entitled to
claim and all of this of course builds
in more time more administration a
longer wait
even if you qualify for the
self-employment help scheme you've gotta
wait until early June the government is
saying for the money which frankly is
going to be too late for some and the
government has also reiterated its
position that company directors who want
to furlough the small PA way PA ye
element of their pay can do that they
can still perform their basic functions
as a director but no more so you could
technically use that payment of normally
around seven hundred pounds eight
hundred pounds people put through as PA
ye if they're a company director so you
could get 80 percent of that but you
would have to further yourself and kind
of put your business on ice now this is
a point that Martin Lewis the money
saving expert has picked up and he's
been arguing today that the government
should consider to tweak that
requirement for limited company
directors to distance themselves from
the business now that would bring that
scheme in line with the rules of the
self-employment income protection scheme
where sole traders are still allowed to
seek work even when they are receiving
income from the government now Martin
Lewis says a tweet to the guidance could
allow numerous company directors to
continue to communicate with their
clients and get work ready for when
their furlough ends so that they can
restart at speed now I'm sure everyone
would agree that is what the economy
needs so this whole topic as I'm sure
you will imagine has generated a huge
amount of readers debate and it's also
generated some direct questions so I'm
going to start off today with a question
from FT reader jaws if you want to ask a
question either put it on the bottom of
the article or write it in the YouTube
comments and that will get sent to me
nor do my best to answer it so let's
start off with Josh so josh says I run a
small business Claire but my commercial
landlord insists on charging us a
hundred percent of our rent even though
our building is closed what can we do to
apply pressure
well I'm gonna take a sip of water Josh
before I answer you on this all this
talking gets to you so the short answer
is with landlords you've got to
negotiate and you are maybe in a better
position then you think the boss if your
landlord says to you well you've paid
you late you've paid your rent late I'm
gonna kick you out this begs the
question who they're gonna get in now at
the moment residential property market
has effectively shut down because you
can't do valuations you can't do
viewings etc etc same technique applies
to the commercial property market so if
that happens and they get the space back
then the landlord's going to be liable
for the business rates on that unit as
well under the empty rates rules which
is something they're probably not all
that keen to take on and also look at
the situation with where rents are
likely to go in the event of a recession
I've been reporting on the commercial
property market for more than 20 years
and I can tell you as soon as a
recession bites the first thing to start
falling our commercial rents now your
landlord would have agreed of rent with
you in happier times if they can
negotiate with you - maybe defer part of
that payment or give you a rental window
or 50% rate rents for a while they're
still going to be getting more back than
they would be if they took the risk of
emptying the unit and trying to find
another tenant now of course commercial
landlords have got big pressures on them
as well not least pressure from banks
who they're lending from and they won't
want to you know that they want to do
everything they can to secure as much
income as they can now I spoke to a
proxy lawyer earlier about where you
would stand in terms of the terms of
your lease and unfortunately by the
letter of the law landlords can almost
certainly oblige you to keep paying and
they matter what's happened normally if
there is a rent Suspension Clause
specified in your lease it would be to
do with something like
you know a catastrophic failure of power
in the building or flood or fire or
something like that similar terms and
conditions in fact to business
interruption insurance which all kinds
of businesses are finding just won't pay
out either under the coronavirus so well
they you can't go back to your lease and
say contractually we feel we're not
obliged to pay negotiating clearly is in
the interest of both parties if you can
try and do a deal and I would love to
hear from any readers out there who have
either starting negotiations with with
landlords or are trying to do that let
us know how you've got on now another
group of people who have got in touch
with some comments at the over 50s now
the FT demographically has lots of
readers over the age of 50 and lots of
them have been going in touch to say
that they are newly self-employed they
have been either offered redundancy from
their own employers that they've taken
or perhaps jobs have come to an end and
they've thought well setting up a
consultancy that's the way that I can
make things work economically and then
obviously if they're newly self-employed
in the past year and they don't have the
accounts needed to prove that they can
qualify for the government self-employed
income protection scheme so one reader
sensible questions says for many people
who are age 50 plus we've been employees
for 30 years and have paid huge taxes in
their lifetimes it's virtually
impossible to get a full-time PA ye job
so they are forced into self-employment
to limit their liability rather than to
pay less tax and perhaps use a company
as their self-employment contractor and
I've got another comment here from the
ferryman who says he runs his own
limited company he doesn't qualify for
any help on the income he receives from
dividends and he says while taking a
swipe at the self-employed the
Chancellor does not seem to discriminate
against corporations which have been
minimizing their taxes over the years by
every loophole known to man including
offshoring profits to low-tax
jurisdictions or aggressive transfer
pricing schemes
he says I would love a permanent job but
it's not so easy for older workers in
some professions
hence self-employment is literally the
only option well some interesting
comments there and keep them coming in
we've got another 15 or 20 minutes left
to go I'm just gonna refresh my screen
so that my laptop doesn't fall asleep
and prematurely end or broadcast so I'm
just going to take her to have a look at
some of the questions that have been
coming in well I have been talking
unfortunately there are some about
redundancy let's have a look at this one
from dvd-rw he says self-employed people
earning one penny over 50,000 pounds
over the last three years and not
eligible for the government
self-employment grant is there any
chance this will change what channels
can self-employed people use to lobby
for fair treatment well great question
is there any chance this will change
well we hope so certainly lots of people
are lobbying for it and lots of people
are writing to their MPs now obviously
Parliament isn't functioning as it
normally does at present but lots of the
feedback I'm getting from readers is
that MPs are receptive to constituents
concerns certainly a couple of readers
have been in touch with me over the
weekend with letters that they've
written to their MP and they've emailed
me again today said that they've heard
back and this has given them cause for
hope
other things that can be done well there
are various different trade unions that
represent different business groups
there are lots of people for example
from within the TV and film industry who
you know entirely reliant on freelancers
those freelancers routinely have to set
themselves off as limited companies in
order to deal with the big media players
and certainly lots of those
organizations back - there are others
are putting forward pretty comprehensive
arguments to say if you do nothing and
let this situation persists then lots
and lots of people are going to be left
pocket this is going to create a big
problem for this particular industry so
maybe there's an industry lobby group
obviously the FT will continue to write
and talk about these matters now next
question comes in from Christopher Welch
and he asks hi Claire I got made
redundant last month I'm sorry to hear
that Christopher terrible timing I just
got the statutory minimum payment and no
options for furlough so moving towards
setting up as a freelancer and being
self employed in the data / FinTech
space
are there any government schemes out
there to help those who are trying to
start small companies right now well
interesting that you should say that
Chris because small startups there was a
story on ft.com and this morning which
I'll tweet out and after I finish this
this need to broadcast if you can't find
it talking about how the startup economy
is just going to be changed beyond all
recognition by this crisis certainly
with smaller startup companies that have
investors those investors that
invariably going to be tapped for more
cash but for somebody in your situation
if we were talking about this you know
three months ago or six months ago
before the coronavirus crisis said that
happened then you know you might have
looked to crowdfunding platforms
machines a brilliant idea that's one way
that you know certainly in the personal
finance section retail investors have
been very eager in past times to put
money into companies that they think
I've got a really great idea in search
of a return but unfortunately as I'm
sure you can imagine lots of those sorts
of retail investors have really pulled
their horns in right now now one option
that you might not be available that
they might not be aware of is that the
people who've been redundant or let go
by a company the government did publish
some guidance over the weekend saying
that if a company was - had let you go
was to rehire you again then they could
apply - then furlough your pay through
the PA ye 80% scheme now in practice
again I'm happy to take your comments on
this but to my mind it doesn't really
sound like something that a lot of
companies are gonna want to do you go
through
a sort of contacting people who they've
let goes they can back on their books
taking on the admin of them applying and
forward funding that pay until such time
that they get the money back but they're
depending on your own circumstances
Chris maybe that could be an option for
you and it's worth talking to your
employer otherwise I wish you luck
another question here selim asks i claim
i partly resigned from her job in early
february and was about to take another
one towards the end of march she works
in the travel industry or this don't
sound good sir
sadly the new position was withdrawn and
her previous company had already
accepted her resignation and issued a
p45 what there are options at the moment
that she has no income from the 1st of
april and it's highly unlikely and this
will change anytime soon given the
situation within travel and tourism well
so I cut a part of the answer in my
previous question and I again I will
tweets out the links to the government
guidance page on their suggestion that
the previous employer can take back on a
member of staff that they had let go and
then apply to furlough them it's
definitely worth your while wife asking
her former employer if they would
consider to do that otherwise what could
she do well she could try and apply for
a job somewhere else in a different
industry not necessarily get her any
income coming in any quicker
otherwise you're looking at the benefit
system now in ft money at the weekend I
co-wrote with Lindsay Cooke a very big
piece looking at your financial rights
you can claim benefits what type of
benefits are available to you and the
two main ones and to consider would be
Jobseeker's Allowance
now if you are claiming the new-style
job seekers allowance then that is a lot
more flexible in terms of what your
partner can earn and what savings you
can have while being supported on that
benefit the downside is it's not very
much money I think from memory about 72
pounds a week but you can still claim it
in many cases with the problem with
universal credit that lots of readers of
finding you've been emailing me in it's
that if you have savings of more than 16
and pounds either yourself or in
partnership with somebody who you live
with a couple then you're not eligible
to claim and also if your partner is
working that can also affect your
ability to claim so lots of people are
finding there's not much money out there
for them to claim another question
coming in from John Rowbotham hello John
he asks still not clear to me what
furloughed directors can do is paying
bills including wages a statutory juicy
but we're just paying the government now
John this is a really interesting
question because playing devil's
advocate here if I was a company
director and I thought well I'm going to
furlough myself because this is the only
chance I've got of making any rescue
money from the government the business
is going to fold otherwise be able to
secure however much like I'm gonna get
five hundred six hundred pounds a month
and now under the rules of the scheme
one not to do anything more than my
statutory administrative duties as a
director so what exactly does that
involve but also how is the government
going to check up on these people I'm
not saying you should break the law I'm
just saying how are they how are they
going to know if you're continuing to
respond to emails from people who might
want to you know to see work from your
company or dealing with creditors or
trying to deal with suppliers which is a
really big problem for lots of the
limited company directors who so
urgently seeking help because they've
still got to maintain all of the
expenses of their business they've still
got to pay salaries they've still got to
you know pay the rental commitments on
you know properties that they're renting
equipment that they're hiring vehicles
you know the list goes on and on so in
terms of the specifics of what
administrative and statutory duties
means there was a little bit of extra
information that popped up on the HMRC
web page which again all tweets out
after this session goes that goes off
there which was spelling out that if
there was more than one director people
would have to vote to make sure that the
director he was furloughed understood
what there
diminished responsibilities with BB if
it's just you if you're a sailor company
director then I do appreciate it's very
very difficult and very difficult
frankly for the government to tell what
you are doing a very good question John
thank you very much what else do we have
here we have a question from Firefly who
asks what would be a simple solution
Claire that you would suggest to
policymakers in response to the
government's claims that it's too hard
to calculate or differentiate directors
income dividends taken from their small
limited company well thank you for
asking that Firefly I think in this area
simple solution unfortunately doesn't
exist it is a real problem within the UK
tax system which is you know hugely
difficult as you know there are all of
these rules that the treasury's have to
very bravely try and negotiate when
creating these different schemes and I
think that one of the biggest problems
for them with the director dividend
issue is that it kind of falls into the
bucket of too complicated now as I was
saying earlier on your tax return the
space that you get to declare your
dividends is the total of any dividends
that you've received from like shares
that you might happen to hold and
dividend income that you've received
from your own company and you may not be
the only director there may be other
directors who they're getting a slice of
that dividend income so the solution for
that is while the government can't know
at a top level what that is your
accountant could tell them now there's
an SI 302 for which people who are
self-employed all directors of limited
companies would use as like proof of
income to a mortgage company they're
applying for finance or you know
anything like that that even doesn't
break down the specifics but a covering
letter from an accountant and a page of
the relevant accounts from that company
would obviously make that distinction
clear but the problem for the government
is is that that's a huge amount of admin
if they're trying to devise a process
for people to be able to apply to things
and for forms to be checked before
money is paid out then that's obviously
why cycles things to check quite a lot
of things that accountants to do another
problem that was raised with me earlier
on by a dreaming of tax correspondent is
if HMRC are sending letters through the
post through business premises if you're
working from home as most of us are then
you're not going to be there to get the
post to that business premises which is
another worry for the future and where
that doesn't answer your answer your
question but that is basically where
where we stand
John redwoods solution of course is give
the money first ask questions later
in summary it would be better to throw
money at saving businesses rather than
having to pick up the cost of businesses
going bust or the staff being claiming
benefits afterwards which is an
interesting solution that there's really
not much time to to debate this because
companies are facing these impossible
financial demands as it is if the debate
goes on for too much they're not going
to be companies to save Danny Heeley
asks I am a shop in Hatton Garden very
nice Hatton Garden which has business
rates of 83 thousand pounds a year
before rate relief kicks in so I do not
get the business rates relief grant I am
the sole director with my company so I
do not qualify for help there I have
been told there is no help available
from the government is there any help
for sole directors paying more than
fifty one thousand on business rates
well Danny as we were discussing earlier
on I mean the only help that soul
directors overcome he can legitimately
claim is under the job retention scheme
they could furlough themselves the PA ye
element of their pay which was normally
around 700 and 800 pounds a month is
that's where accountants structure
things so that you have a small income
coming in every month it's both below
the personal allowance and then you can
take a dividend for income that will
balance out the peaks and the troughs of
your business now again if you follow
the PA ye element that you'll pay then
under the current rules of that scheme
you can't do
work for that company even if you are a
director you limited your statutory and
administrative GCSE there's a director
rather than working for the company so
this really is a significant black hole
I'm sorry to hear that
you fall into the business rates black
hole as well I've had various emails
from different retail businesses in
London in fact favor that we can D say
just by dint of the fact that they're in
London their business rates bills are
higher so they don't come into that cap
on business rates that will help
different retailers restaurants etc okay
one final question here from Sam which I
will ask unless I get any really good
ones coming in in the next few minutes
Sam says I work as a consultant through
a limited company which I'm the sole
director of I pay myself a mixture of
dividends and salary from the limited
company since the travel ban I've not
been able to travel to consult on
projects resulting in a complete loss of
all contracts and income until countries
lift restrictions am I entitled to the
grant paid to the self-employed based on
my dividend / salary income well address
this in a few different parts and
firstly even though every single limited
company director in your situation here
one speaks to classifies themselves you
know kind of spiritually you could say a
self-employed technically is the
director of a limited company you're not
eligible for the government's
self-employed scheme because you have a
mixture of PA ye and dividends which you
take your income from through the
company so they they define
self-employed as people who are sole
traders who could in a tax return have
quite simple tax affairs so you're not
entitled to anything under the
self-employed scheme however the PA ye
element of your pay you could
technically apply to furlough yourself
under the governance job retention
scheme whereby you can get 80 percent of
your pay for 3 months but it would be
that small element that you're
classifying as PA ye but in terms of
would you be entitled to do that and
certainly because you can't do business
you can't travel you can't do any work
that's what it's for so my advice would
be speak to your accountant and see how
much that would beat what do you think
it's worthwhile doing okay well I think
that is just about it the questions in
the meantime so I'm gonna wrap up for
the day it's always really really lovely
to hear from Ft readers even though many
of you many of you are in a position of
crisis at the moment we want to do what
we can to help those reporters we're
there to knock on doors to ask the
questions that people don't want asked
and to generally make a nuisance of
ourselves on your behalf so I would urge
you if there's something else that you
would like us to look into something you
would like us to consider we do look at
all of your emails even though I might
not have time to reply to all of them
but you can get in touch with me via the
money team email address it's a very
easy one to remember money at ft.com
I'll say it again money at ft.com if you
want to follow me on Twitter where I
will be tweeting out any articles that
we publish so that my colleagues Chris
Giles and Dan Thomas and the
parliamentary report in seen publishing
on these issues you can follow me my
twitter handle is at Claire B Claire
misspelled CLA e on one of these days
I'll tell you why I spell it like that
in the meantime thank you very much for
joining me today and I hope to see you
back here soon on the next Ft live video