Read part 1 here
Covid-19 has turned the UK business world on its head in many sectors. The government is offering support, but is that support being spread evenly?
The newly introduced Coronavirus Job Support Scheme is either creative or complicated – depending on your perspective – and requires employer commitment as well. It works like this: If an employer is going to cut an employee’s hours/pay this scheme will lessen the financial hit for the employee.
The employer is encouraged to keep the employee on the same amount of money with the government picking up two thirds of the difference. For example, an employee earning £20,000pa has their hours cut by 30%, resulting in a drop to £14,000pa. This scheme will see the government paying two thirds (£4000pa) of the shortfall if the employer picks up the other third (£2000pa) meaning the employee stays on their £20,000 salary. For many people this may mean the difference between security and anxiety during this crisis. It also means more money circulating, which is a positive all round.
The scheme to help self-employed people works along similar lines. You need to lodge a claim that outlines how you have been disadvantaged by the virus. You will be assessed on average profits over the last three years. However, this only applies to sole traders, partnerships and LLPs. If you operate as a limited company, you won’t get it. In the past there have been clear, tangible tax benefits to operating as a limited company. That isn’t so much the case now, though. It begs the question: have people who opted for this particular corporate structure been effectively penalised? It seems a fairly arbitrary decision and I suspect it will hurt a lot of people.
Part 3 to follow.