If I ruled.... in The Manifesto

I have to say, if I was the chancellor right now, I’d be following a very similar course. All I see are self employed people moaning about how they are getting no help....well it’s coming, so shut up!

So far, pretty much all the measures have just been lip service - you cannot get through to the claim lines, they specifically made it telephone-based to limit the number of people claiming per day. They must have done. There’s way more sense to set up a web form asking for relevant info, that’s all the phone lines are doing right now…

And what they are hoping is that in the meantime, the clock runs down for those businesses who were hanging on a shoogly peg anyway. So if you operate prudently, have a cash reserve, have credit checked your customers properly etc, you have enough to survive a month or two with no income.

If you run close to the wind in a risky area, you’ll go bust before any help comes in - so public money is only going to get spent on fairly stable businesses who (critically!) are at least 3 years old… in other words, they have a track record of being good at what they do. You aren’t rescuing businesses whose owners are going to get bored and go off and do something else or for who this is just a hobby business or who were going to go bust anyway.

The excuse is “ah, well it’s very tricky to assess what sole traders earn” - it’s not really, we submit our taxes annually, and they are averaging these over 3 years. It is probably harder to assess who is winning and who is losing in all this drama, but effectively everyone should be able to claim that cash now, and if by end of next tax year you’ve made more than you should have, you pay it back. So for ease:

Bob earns £12k per year usually, he sees his work totally dry up for three months, he claims £1k/month relief which is usually what he draws out the business monthly. We get to April 2021 and Bob has either earned his usual £12k or more (in which case the £3k he drew out is payable as tax) or he only earned £9k and therefore doesn’t need to pay anything back because he only took what he needed… you don’t even need to have it as 80%, you just need it recoupable if they go over anticipated profit. Even if Bob only earns £6k and draws out £6k over 6 months, it means Bob has a business at the end of it.

Edit: 80%
There is a lot of annoyance over the fact that it’s only 80% of the net take home pay being offered, but really that’s all that employees are getting. And self employed should have allowed for variation in their household budgets really. I still don’t see why it shouldn’t be 100% given that we would pay back whatever we got above normal, whereas employees potentially could get 80% via the govt funding plus a chunk of their salary from their employer.

The real issue for a lot of self employed people is they were fudging how much they earn anyway to minimise their tax. Lots will have taken directors loans or rented IP to offshore accounts etc. Personally, I think it serves them right. Whilst being perfectly legal, I don’t think it is big or clever to skip paying your tax, I don’t see how it can be anything but shameful when you’ve earned the money. So if they’ve had the benefit of doing that for years and years, serves them right they don’t get much of a pay out now.

Last updated March 25, 2020