• Visitors can check out the Forum FAQ by clicking this link. You have to register before you can post: click the REGISTER link above to proceed. To start viewing messages, select the forum that you want to visit from the selection below. View our Forum Privacy Policy.
  • Want to receive the latest contracting news and advice straight to your inbox? Sign up to the ContractorUK newsletter here. Every sign up will also be entered into a draw to WIN £100 Amazon vouchers!

You are not logged in or you do not have permission to access this page. This could be due to one of several reasons:

  • You are not logged in. If you are already registered, fill in the form below to log in, or follow the "Sign Up" link to register a new account.
  • You may not have sufficient privileges to access this page. Are you trying to edit someone else's post, access administrative features or some other privileged system?
  • If you are trying to post, the administrator may have disabled your account, or it may be awaiting activation.

Previously on "furlough, small dividend in 2020?"

Collapse

  • oliverson
    replied
    Originally posted by d000hg View Post
    By "big losses" you mean "smaller profits". "Big losses" are what companies are facing as they dump staff, face spoiled inventory, bankruptcy. Not having to pay more tax on your profits.

    Again - this is funding for CV-affected businesses. If you aren't affected by CV, you should not be claiming it. Neither should you be seeking to become CV-affected or find a loophole to claim.

    Same would go for a self-employed person who is lucky enough not to be hit by CV, maybe an author or landscape gardener or whatever... the point is not every SE person automatically claims 80% of their normal income but that it's there if their income is impacted.

    Talking about "clawing back" is exactly why contractors have such a bad reputation as greedy tax-dodgers and get no sympathy when we ARE penalised in new taxes.
    You don't think the decimation of an entire sector due to IR35 is a 'big loss'? Also, it's all relative. Around £ 3k off the Flat Rate Scheme + £ 7k dividend tax is a big loss to somebody earning maybe £ 150k a year. I say fight fire with fire. If you're entitled to that package of assistance grab it.

    Leave a comment:


  • rsw
    replied
    Originally posted by Paralytic View Post
    To be clear, have your hours been cut in half, or has your contract been terminated? If you're still doing *any* (non-director duties) work through your Ltd company, you cannot furlough yourself and claim back 80% of salary.

    Is it is just your hours that have been cut, you have to decide whether to terminate the contract with your client before you can furlough yourself. Is the amount you'd now invoice (which you can take as salary and dividends) greater or less than 80% of the salary you'd be able to claim if you furloughed?
    Thank you for your constructive reply.
    They offered to change the contract all of a sudden by reducing hours by half. But I have to agree to that first.
    If I refuse, the company would be idle, and hence why I'm asking about furlough.
    I am asking a genuine question - unlike some of the cases we hear about on the news where they furlough just to save money.

    If I refuse the new agreement, then there is 0 income. But April and May of last year I was paid 500 each. Hence with furlough it'd be 400 for the next 2 months, instead of agreeing to the new sudden contract change that will see it go down to 250.

    I'm not sure if I'm explaining myself clearly...

    Leave a comment:


  • d000hg
    replied
    By "big losses" you mean "smaller profits". "Big losses" are what companies are facing as they dump staff, face spoiled inventory, bankruptcy. Not having to pay more tax on your profits.

    Again - this is funding for CV-affected businesses. If you aren't affected by CV, you should not be claiming it. Neither should you be seeking to become CV-affected or find a loophole to claim.

    Same would go for a self-employed person who is lucky enough not to be hit by CV, maybe an author or landscape gardener or whatever... the point is not every SE person automatically claims 80% of their normal income but that it's there if their income is impacted.

    Talking about "clawing back" is exactly why contractors have such a bad reputation as greedy tax-dodgers and get no sympathy when we ARE penalised in new taxes.

    Leave a comment:


  • oliverson
    replied
    Originally posted by d000hg View Post
    It should be made clear - all these measures are there to help those who genuinely need them. Furlough is not a way to get free money or for a company to cut its wage bill except where they genuinely need to due to CV.

    The measures have been rushed through so quickly they are likely wide open to abuse but no accountant should be advising or helping clients to take advantage of them.

    My accountant already told me he's had a rush of clients asking him to retrospectively apply big pay-rises, etc. Use some common sense here. If you have genuine need, claim what you can. If you don't, don't try to find a way to game the system.
    Some might look at this as an opportunity to claw back some of the big losses of the last few years with the war on contractors:
    • Flat rate VAT Scheme
    • Dividend Tax
    • IR35

    If it wasn't for these measures, perhaps contractors might have a more substantial warchest than they currently have.
    Last edited by oliverson; 3 April 2020, 14:21. Reason: additional blank line removed - I'm a stickler for things being right!

    Leave a comment:


  • d000hg
    replied
    It should be made clear - all these measures are there to help those who genuinely need them. Furlough is not a way to get free money or for a company to cut its wage bill except where they genuinely need to due to CV.

    The measures have been rushed through so quickly they are likely wide open to abuse but no accountant should be advising or helping clients to take advantage of them.

    My accountant already told me he's had a rush of clients asking him to retrospectively apply big pay-rises, etc. Use some common sense here. If you have genuine need, claim what you can. If you don't, don't try to find a way to game the system.

    Leave a comment:


  • northernladuk
    replied
    Personally I'd do the work if for no other reason than to keep my sanity and avoid the paperwork. I also have a slight issue looking for free hand outs if I can work instead, particularly with the amounts we are talking here. Must be so little. I wouldn't risk the contract being completely canned if they find out they managed without you.

    OK bad timing but could be a chance to look for more work to supplement your income as well.

    Leave a comment:


  • Paralytic
    replied
    Originally posted by rsw View Post
    A couple months. This is because the only client I still have left decided to cut down the number of contracted hours by half. So perhaps best is to furlough
    To be clear, have your hours been cut in half, or has your contract been terminated? If you're still doing *any* (non-director duties) work through your Ltd company, you cannot furlough yourself and claim back 80% of salary.

    Is it is just your hours that have been cut, you have to decide whether to terminate the contract with your client before you can furlough yourself. Is the amount you'd now invoice (which you can take as salary and dividends) greater or less than 80% of the salary you'd be able to claim if you furloughed?
    Last edited by Paralytic; 3 April 2020, 12:13.

    Leave a comment:


  • rsw
    replied
    Originally posted by wattaj View Post
    Corporation Tax? VAT? WTF?
    Corporation tax (19%) is due on profits, which is mainly equal to the dividend payout.
    Not VAT registered as turnover is like 10% of the VAT threshold as you can tell from my post.

    Mind language please?

    Leave a comment:


  • wattaj
    replied
    Originally posted by rsw View Post
    Hi,
    since PAYE is an expense, so tax (19%) is due on the dividend only. I already accounted for that. I rounded the figure a bit for ease of description. The dividend already taken falls on the company's previous tax year, and the one to be paid falls in the new one (the company tax year does not coincide with the fiscal one for employees).

    Is it ok to go on furlough and still take a dividend on april 6?
    Corporation Tax? VAT? WTF?

    Leave a comment:


  • rsw
    replied
    Originally posted by ladymuck View Post
    How long are you planning to furlough yourself for? What do you expect to achieve from it?
    A couple months. This is because the only client I still have left decided to cut down the number of contracted hours by half. So perhaps best is to furlough

    Leave a comment:


  • rsw
    replied
    Originally posted by northernladuk View Post
    Where are your taxes?
    Hi,
    since PAYE is an expense, so tax (19%) is due on the dividend only. I already accounted for that. I rounded the figure a bit for ease of description. The dividend already taken falls on the company's previous tax year, and the one to be paid falls in the new one (the company tax year does not coincide with the fiscal one for employees).

    Is it ok to go on furlough and still take a dividend on april 6?

    Leave a comment:


  • ladymuck
    replied
    How long are you planning to furlough yourself for? What do you expect to achieve from it?

    Leave a comment:


  • oliverson
    replied
    Originally posted by northernladuk View Post
    Where are your taxes?
    Ha ha ha. I was thinking about you as I was reading the post. Lol.

    Leave a comment:


  • northernladuk
    replied
    Where are your taxes?

    Leave a comment:


  • rsw
    started a topic furlough, small dividend in 2020?

    furlough, small dividend in 2020?

    Hi,
    I run an ltd company. The company made just around 7000 in total the whole year.

    I've paid myself 2000 in dividends and 4000 in salary in 2019/2020.
    I kept 1000 on the side to pay as dividend on April 6 2020 (to be part of the dividend allowance of 2020).
    I have one single client left and the client wanted to half the work on April 1 and reduce the contract to just £250 a month. I asked for a day to think about whether to agree to the new terms or cancel the contract.

    My questions are:
    - Can I put that contract on pause for a few months (if the client accepts, and cancel if not), and put myself on furlough starting April 3?
    - In April and May of this past year I had paid myself 500 each. So on furlough that'd be 400 instead of the 250 above. That is better than accepting the new terms. And since pay was not the same every month this past year, I assume then one can claim the pay of April and May 2019 instead of average?
    - Most importantly, I had been awaiting that 1000 dividend, and wanted to declare and pay it on April 6 2020.
    Can this still be done if I furlough myself? With no income coming in anymore and then claiming the 80%, is it still ok to pay myself that 1000 dividend?

    Thank you for your advice.

Working...
X