Morning all
Hope everyones surviving the zombie apocolypse. I know everything is relative and that as people are really ill and dying, the last thing you're probably concerned about is a bunch of chin-stroking 'creative' types and how they're managing to put organic hummus and Argentine Malbec on the table.
But...
The way that certain industries are geared up is that a lot of people are freelance, working on short term assignments and contracts. The majority of us doing this pay our tax and NI pay on a PAYE basis, exactly the same as any full-time employee.
Now the government, in its ultimate wisdom, has concluded that as such our status isn't actually as employees, but that technically we're not self-employed either.
The upshot of this being that technically we don't actually exist, so we aren't entitled to access either the employee or the self-employed funds. There are over 2 million of us and 90% of us now have no income at all. I know that everything I was working on was immediately shelved and god only knows where my next job will be coming from. I doubt it will be happening any time soon. So, as of last week, and for the forceeable future my income will be a big fat zero pounds.
Hurray!
There's a petition to the government to try and get this rectified, in the hope that come the other side of this there are still people wot draw pictures who haven't starved to death.
I know that signing an internet petition is like howling into a shipping container, but anything is worth a try at the moment.
Thanks in advance, you lovely lot.
It's all just, like... SOOOOOOOOO NOT FAIR!!!!
That’s bonkers (and there was a time where I was working in just that way, in the same industry). I’ll go sign…
Hang on, I still had to fill in all the self assessment stuff at the time… surely you do as well? If you do any other work you should be declaring it, and if you don’t do any other work then that makes a mockery of your ‘not an employee’ status and your ‘employer’ is pulling a fast one.
What? So you’re self employed and are honest with your taxes yet somehow the government doesn’t cover that?
Madness.
i’ll sign it.
Actually Kelvin that’s a good point.
Yes the film / TV industry has taken a major humping in this respect - an almost entirely freelance / self employed workforce but an HMRC stipulation (which they only phrase as 'advice' but is treated like the word of god) that many of the lower paid roles need to on PAYE. Despite having had dozens of PAYE engagements throughout the year many / most are on nobodies books for the purpose of furloughing but also aren't deemed 'self employed' either within the terms of that channel of support.
The industry as a whole is at a dead standstill really but sadly we're not all in the same boat and its the lowest paid with the least resource to fall back on that are the ones who have fallen through the cracks. Not least as we've just come to what is usually the lean period - productions usually wind down through Christmas every usually kicks back up again now. So most people have already been living off their savings for a couple of months already.
Its absolutely insane. I have an agency sort all my tax and NI out (like most people in my industry), for which they take a fee. I pay tax and NI on everything I earn on a PAYE basis exactly the same as a full-time employee.
So if the government want to know what I've earned, its all there in black and white on my P60, the same as a full-time employee.
It does really grate that we're doing PAYE and are entitled to nothing, yet people who are classed as self-employed and will no doubt have been paying a lower rate of tax than me will be entitled to furlough themselves and recieve 80% salary from the government
like I said...
It’s all just, like… SOOOOOOOOO NOT FAIR!!!!
Hang on, I still had to fill in all the self assessment stuff at the time… surely you do as well?
Yes but if more than 50% of your income for the year is PAYE you're not judged as 'self employed' within the terms of the support available. In my line of work most people are a bit of both as a '7 day rule' means productions pay short engagements gross and anything a week or more PAYE.
Crew members could be engaged for months on end or they could be 'dailies' - drafted in for key points in a production. So their annual accounts are a jumble of PAYE and SE and the balance between both can vary wildly.
will no doubt have been paying a lower rate of tax than me
Are your employer NI contributions being paid by anyone? Are you paying Class 2 NI?
Yes but if more than 50% of your income for the year is PAYE you’re not judged as ‘self employed’ within the terms of the support available.
What a mess.
For Binners.... Be on the look out for grant assistance through other channels for creative industries. North of the border there are hardship / bridging grants being distributed to the film / arts sector via Creative Scotland and what looks like the same scheme for film/tv in England and Wales through the BFI so I'd keep an eye out on Arts Council England announcements and maybe local enterprise companies too.
Yes but if more than 50% of your income for the year is PAYE you’re not judged as ‘self employed’ within the terms of the support available.
But you're not classed as an employee either, despite paying your tax and NI in exactly the same way
It's a proper Catch 22 situation.
And as we all know "that's one hell of a catch, that Catch 22"
I have an agency sort all my tax and NI out (like most people in my industry), for which they take a fee.
Aren’t you technically an employee of the agency then? Can’t they furlough you?
Signed. If binners goes under then Greggs goes under and we all lose out.
One thing that might come out of this is people having enough savings to cover them for a few months of unemployment. Has always been good advice and people may now start to actually do it (rather than buy that new car they don't need)
PP - they're not technically my employer, no. They're acting as an agent on my behalf.
The way I work, I can be working at an advertising agency in Manchester a couple of days a week, then maybe working from home on technical illustration work for a manufacturer, then maybe I could do a three month stint at another company producing literature. I'm literally here, there and everywhere. Suits me. I love it!
So as things can get complicated financially, with so many clients (I'm a right slag!) to keep life simple, The agency (Lucy, who's lovely and extremely good at her job) invoices each individual client and when they pay, puts all my tax and NI through on a PAYE basis as well as sorting my pension payments etc, for which she takes a commission.
Its a standard arrangement that keeps things simple for everyone, that is a model the entire industry is built on (there are over 2 million of us in this situation). Unfortunately, the government have deemed that this makes us neither employees, nor self-employed.
To go back to Catch 22, its like we're Doc Daneeka once McWatt crashes the plane which he's officially on, but isn't
From that point on he exists, yet he doesn't. We're in the same boat.
Nice Kerley, nice.
I pay tax and NI on everything I earn on a PAYE basis
Serious question..... why is this? Why are/do such freelancers not simply work as self-employed?
So as things can get complicated financially, with so many clients
in what way is this different to a 'normal' self employed person? Is there some tax advantage?
Could you not just invoice your clints on a weekly/monthly/project basis?
(still serious questions)
One thing that might come out of this is people having enough savings to cover them for a few months of unemployment
Much easier said than done I'm afraid!
One thing that might come out of this is people having enough savings to cover them for a few months of unemployment.
Great advice. Where do they get that money from?
Why are/do such freelancers not simply work as self-employed?
if you read what I put above mate, that should explain. Its to keep things simple. The bottom line is that I'm a one man band. I can't be arsed doing paperwork and tax returns and invoicing with my time when I'm working for multiple clients and it's messy. So paying somebody else to sort my tax and NI out on a PAYE just keeps things simple while I get on with the buisiness with the crayons.
There are millions of us working like this.
We've paid all our tax and NI and we're more than a little bit pissed off right now
Is there some tax advantage?
No, quite the opposite. If I wanted to do it the other way, I'd be paying less tax, but it'd considerably more faffing about. Lifes too short. Its just to keep things simple.
I have no issue with the amount of tax I pay
Well... I didn't until this week.
Signed
OK. I still don't understand why it's done through PAYE though, but I'm dumb!!
Hope it gets figured out for you.
Signed
Serious question….. why is this? Why are/do such freelancers not simply work as self-employed?
In some cases its a situation that has been created as part of the measures put in place to restrict 'disguised employment' - high earning employees pretending to be a business when in fact they only have one client. That has lead to a lot of arbitrary arrangements and definitions and in a lot of cases genuinely freelance practitioners have ended up bearing a lot of unintended consequences. Up til now thats only been an administrative burden (being paid PAYE and having to do tax returns anyway) and a cashflow issue (having income deducted as tax and refunded again later when that could have been a useful resource in between times).
In this situation it has created a catastrophe. I hope all the IT Contractors who created this situation for everyone else are busy adding to that petition 🙂
In Binners' situation operating through and agency not only helps him reduce his admin time and concentrate on the work that earns the money its removes the uncertainty clients have as to whether they are taking the correct due diligence steps in engaging a freelancer and avoiding a wrist slap for making the wrong call. It saves a dance or an argument at the start of every job
Well described @maccruiskeen.
Its a form of employment/relationship that benefits everyone involved, client and freelancer, by making life simple and uncomplicated (not to mention legal and non-dodgy, tax-wise). The agencies that we go through are specialists, concentrating in specific areas, and they know their stuff
That's why there are over 2 million of us doing it. If you work in certain industries (like mine) its just the norm.
And while the government have been happy with that and collect all our taxes, apparently we have dissapeared along with all the tax we paid while we were working.
I'm certainly going to be reviewing my tax affairs with a more **** YOU!!!!! attitude when all this is done
Might be worth checking the small print of the HMRC advice, but I think the 'employer' can furlough contractors (i.e. the ones ir35 is designed to catch). So if you were mid way through drawing a set of instructions for a big Swedish flat pack manufacturer and the job was canceled, the big Swedish flatpack manufacturer can furlough you through the same scheme even though your not an employee?
Apologies if that's wrong, I'm on a fixed term contract (PAYE) which runs out in the summer (and only has 1 weeks notice within that anyway) so did a bit of digging into the details. Might be worth contacting your 'employers' to find out?
Signed.
Hope kerley is still stockpiling and panic buying like the rest of us should've, but didn't and are all dying.
Great advice. Where do they get that money from?
Its part of being able to do the job. Just like buying software, or tools, or a van, or whatever your business needs. If you truly are freelance then you will have down time and you ideally should charge enough and save enough so you have a bit put by to cover illness, holidays, quiet patches, and anything life might throw up. Easier said than done, and it takes time to build up a pot so I really feel for people just starting out, also people who have their quiet time just after xmas so have just cleaned out their just-in-case money.
Back to the OP, it does suck just how many people are falling through the cracks. If only Corbyn had got in and we had better workers rights 😈
If you truly are freelance then you will have down time and you ideally should charge enough and save enough so you have a bit put by to cover illness, holidays, quiet patches, and anything life might throw up.
All very true. You plan for the peaks and troughs. Unfortunately the timing of this couldn't possibly be worse. I work on the basis that things start getting busy in October, then it gets really bonkers in November, then December is mental, working crazy hours.
Then January is absolutely dead. Absolutely nothing. Tumbleweed blowing through. We normally book a holiday for January as there is usally **** all work about (with Brexit looming, we didn't bother this year). February is also dead, then things start picking up in March, then ratchet up through April, busy summer, then on to the really busy bit at the back end of the year.
Most freelancers will have been working on this basis that after 2 very fallow months, not earning much in Jan/Feb, they'll be getting busy again about now.
I'm lucky in that I landed a big illustration project mid-Jan which meant I've built up enough reserves to see me through the next couple of months (in theory anyway. I'm still waiting for the invoice to be paid). A lot of freelancers won't be so lucky.
My main issue is that us freelancers will all have no income at all now (there really is absolutely NO work out there at the moment), while we're paying the same tax and NI as people, employed and self-employed, who are having 80% of their salary covered.
And by any mertic, that's not very fair, is it?
Have signed but on the proviso that we don't get any more of those just out on my bike posts flaunting your insecure employment status.
Sounds reaasonable 😀
Did someone say IT Contractor (OK, consultant)? https://www.bbc.co.uk/news/business-52206832
^^^ saw that ski-chalet article this morning, more click-bait shite, not what you expect from the BBC (or is it?)
If only Corbyn had got in and we had better workers rights
Or my dog started crapping £5 notes. It was equally likely
Signed.
Does this not apply to you Binners?
If you’re an agency worker (including if you are employed by an umbrella company)
Where agency workers are paid through PAYE, they are eligible to be furloughed and receive support through this scheme, including where they are employed by umbrella companies.Furlough should be agreed between the agency, as the deemed employer, and the worker. As with employees, agency workers should perform no work for, through, or on behalf of the agency that has furloughed them while they are furloughed, including for the agency’s clients.
Where an agency supplies clients with workers who are employed by an umbrella company that operates the PAYE, it will be for the umbrella company and the worker to agree whether to furlough the worker or not.
From https://www.gov.uk/guidance/check-if-you-could-be-covered-by-the-coronavirus-job-retention-scheme
I think you need to have a chat with Lucy.
Signed Binners
Tried to sign it but when I follow the link to verify my email it says "We're sorry, but an error occurred and your signature was not confirmed. Please contact our help desk." I've had this before the change.org, and the helpdesk said it was because I wasn't signed in. Is that normal? I understand that you need to register and sign in, etc, before you can start a petition, but to sign one?
Signed. Sports cameraman here, so no work for the foreseeable future. Still owed a bit of money but that won't last too much longer. I will then be living off my Vat and tax money I've been diligently put away, but next year when they want it all back (and IR35), thats when things will start to get interesting. Lets face it, there is a recession coming so next year, I suspect, will be quieter so harder to play catch up with putting money away and pay the normal bills.
Signed, hopefully this is a loophole that will be sorted soon.
signed.....
NewRetroTom - Lucy’s been great throughout, keeping me posted.
She isn’t an ‘umbrella company’. In her words it’s like ‘shifting sands’ trying to make sense of the governments instructions as it’s changing by the day. Again, in her words, it’s ‘vague, confusing and contradictory’
It sounds like a total *ing shambles, to be honest.
At the end of the day she is not my employer, so she can’t furlough me. But according to the government, because I pay my tax PAYE, then apparently, despite being self-employed by any other logical definition, I’m not my employer either
Like I said ... that Catch 22 is the best catch there is
And thank you for signing everyone. We’re hoping to get it sorted. Falling through the cracks is one thing, when there’s 2 million of us falling through, that’s one *ing big crack! (Fnarr fnarr)
Binners I still don't fully understand your situation. You mentioned above that you get a P60. Is this always from the same business, or do you get lots of different P45 from every business you work for?
If it's the former then I think your employer should be able to claim under the Coronavirus Job Retention Scheme and you can be furloughed.
The agency (Lucy, who’s lovely and extremely good at her job) invoices each individual client and when they pay, puts all my tax and NI through on a PAYE basis as well as sorting my pension payments etc, for which she takes a commission
So you tell Lucy what work you've done, she invoices the client for that work and pays you (less her profit and your tax, pension and NI) through PAYE.
And you get one P60 a year from her.
I cannot see how she is not your employer.
(And does she pay employers NI? If not, who does)
Hi Binners. I have worked in recruitment for a third of my life.
As you are PAYE with a single fee payer, you are entitled to be furloughed by the agency.
It was the same for paye workers when the legislation changed a few years back entitling you to a pension, auto enrolement. My company at that time had over 100 temps paye, we not only had to sort them a pension (delegated to now pensions) but as it made our company bigger the auto enrolement date was sooner.
Lucys agency needs to furlough you.
Yes the film / TV industry has taken a major humping in this respect
Tell me about it, we were stopped on day 2 erecting a steel frame for a TV series. When it kicks off again, it’s likely my client will loose the studio space as the next production will be due in there.
Another one we were due to put up on March 28, might now need to be postponed for 12 months , as by the time it’s completed it will be the wrong time of year for filming 🙄. The guys I use to put them up are all using their vans to deliver for Amazon at the moment.
On the plus side, it should be crazy busy when they do start up again
So if you arent actually employees, this means their IR35 legislation cannot capture you ?
They cannot have their cake and eat it.
Signed...
@Steelbike- you say the Gov can't "have their cake and eat it" just you wait. When they push IR35 through and other "clamp downs" on the self employed sector, there will be a massive negative media spin put on us all to sway the general public against us.
Done
#PrayForBinners
#PrayForGreggs
Thanks very much for the advice guys. And thanks everyone for signing. I’ll get on it after the weekend. It does seem to be a grey area.
The Guardian were saying yesterday that the government are going to have to clarify all this as ‘slipping through the cracks’ is one thing, 2 million taxpayers left out in the cold is another thing entirely
Now signed, using a different email to the one that failed. Change.org have some kind of automatic sign up that's so transparent they don't mention it, so when it fails it's not obvious how to fix it.
Good luck in resolving it either way, binners. I am not sure that receiving a P60 makes the sender your employer. I get a P60 for pension payments.
the government are going to have to clarify all this
True of all the schemes they’ve announced so far. Companies are still not 100% clear how/when they will get the funds for the wages they are paying their furloughed staff, and freelancers on self assessment are in a similar position. Hope you get things sorted Binners, but we really are all in this the dark together.
They (government) really need to sort the loopholes out, I could furlough myself but as I’m Ltd that amounts to just over £500 a month, I might get a few bits of work coming so will hold off stopping the business entirely.
Like a lot of people in my situation I have a basic salary and then top up with dividends. HMRC have access to all the info on What your income is so can work out if you could/should be supported.
And being Ltd isn’t some huge tax avoidance scam, I’m only ltd because a lot of the agencies I work for would not let you invoice as a sole trader even though you might only do a few 1-2 day shoots a year and not on some 6month IT type contract.
You still pay corporation tax and are then taxed again at a lower rate when the company pays you.
I just don’t see the logic of giving help to some and not to others even when they both pay similar amounts of tax on similar incomes.
HMRC have access to all the info on What your income is so can work out if you could/should be supported.
Well they sort of can and can't. In trying to run a comparable scheme to the furlough and SE their concern is that they can't distinguish between payments to a director from their own company and dividends from other investment. WE know the difference - its in all the evidence we keep as business owners but the submission to the HMRC doesn't make any distinction.
The schemes that already exist revolve around already submitted information - past SE returns and current PAYE records. That stops business making up employees / their wages or someone claiming for a business income they don't really have.
But for one-person companies that information doesn't exist in a way already submitted - so that creates several obstacles. Its difficult to come up with a programme that can't easily be gamed, theres no relable existing metric (so even if a system could be devised it would still be unfair and arbitrary and people would still fall through loopholes) and because theres not really any existing returns that make the personal profits / investments distinction theres no real way of knowing what a scheme would actually cost - even though they'll know what the total tax take from Dividends is - they don't know what portion of that is directions of small businesses.
For the freelance PAYE folk I wonder whether the way through might be to take NI payments as a metric - if people have had a mix of employers and a mix of PAYE and SE then the most reliable measure, over say 3 years, would be their combined NI contributions. But again theres nothing really similar to that for one person businesses.
Signed! Good luck fella.
Thought I'd cheer you up Binners.
On the 20th March, Easy Jet paid out £174 million in dividends to it's shareholders, including £60 million to it's co founder Stelios.
This week the government gave Easy jet £600 million from the Covid 19 emergency fund.
So stop moaning mate and remember we're all in this together yeah?
Signed
Easy Jet have only been loaned that money by the government. Better that than the company become insolvent and thousands of jobs being lost. Stelios also said he was willing to support the company but only if the massive Airbus order they've just placed is cancelled/postponed etc. as there is no way they can now afford it.
mjb,
So Stelios is basically blackmailing the government.
Easy Jet hadn't prepared for a rainy day. They spunked all their profits on dividend payouts. If you're an airline a pandemic should be top of the list in terms of risks to your business. You should either keep some cash in reserve or take out insurance.
Wimbledon has been taking out pandemic insurance to the tune of £2 million every year for 17 years [£34 million total]. They are now looking to receive something like £150 million in an insurance payout.
Let the airlines fail. New airline companies will emerge. The old Easy jet planes aren't going to vanish into thin air [unless they're Boeings], new airlines will buy them and staff will be recruited by the new, perhaps more prudent owners. [Whoever runs Wimbledon would do a better job of running an airline than Stelios. might even be a better airline to work for.]
Would you lend £600 million to a company in a deep hole that'd just given out £174 million in bonuses during the middle of a pandemic? Would you trust them to pay it back? If so, would you be my bank manager please/ Pretty pretty please....
Sorry for the thread hijack, this belongs on the 'We're all in this together yeah?' thread. But if it bumps it up to the top of the page and gets more signatures to the freelancers cause then it's all good.
It's Corporate Socialism I tell ye.
Does sound like Lucy should be looking into things a bit further for you, I'd be pushing that avenue an awful lot further, and possibly going above her head if a satisfactory answer doesn't present itself.
Good luck and fingers crossed, sounds like a possible bit of hope.
Signed
The completely and utterly forgotten and shafted newly self employed .... 😆 (struggling to understand how 16 months is new mind you...)
Not to worry, got my first email in 2 weeks today, I'll get 25 quid from that, should see me through this. 😆
Update:
Martin Lewis has got the chancellor to clear up some of these vague grey areas. Looks like your agency can now furlough PAYE freelance staff. Phew!
There's the answer question 7, calling me an untrustworthy fraudster!!! (2nd video)
Cheers Rishi, nice to feel loved! 😆
That's hopefully good news Binners, I've signed the petition anyway. Now Rishi needs to sort something for us small (micro) business (2 man here) who mainly pay themselves in dividends. They have my previous year's tax returns so why can't they use the figures on my P60. Most small business owners like myself are not rich. I earn nearly half of what I did in my previous job and the same as I did £15 years ago.
You can't have it both ways.
Paying yourself a small wage and taking the rest in dividends is usually done to avoid tax. These people can't then expect to get bailed out as if they had paid themselves a decent wage because they choose not to.
You can’t have it both ways.
Paying yourself a small wage and taking the rest in dividends is usually done to avoid tax. These people can’t then expect to get bailed out as if they had paid themselves a decent wage because they choose not to.
Not quite. People who are running small companies are not paying 'no tax' or operating as a company to avoid tax they're operating as a company because they are running a business. Don't conflate that with the motive for Disguised Employment of high earners using LTD co's in order to wriggle round higher tax rates (with savings for both for the employer and the employee)
People who run real businesses are managing their cash flow and are constantly having to judge when they take money out of the business to live off so take a low monthly wage (or a low annual wage payment) and draw the profits they can afford to when its prudent to do so. Those dividends have already been taxed before they're drawn and they're taxed a second time when you draw them.
At a high income there may be a meaningful tax benefit compared to a normal salaried job (although theres a fairly chunky dividend tax for high incomes now - but at more typical business incomes the difference isn't that stark.
But where people are running a bonafide business the their accounting costs are pretty high - more than the tax saving for anyone under the higher tax threshold - all other things being equal you might as well be a sole trader once those costs are paid. But for reasons other that tax theres often a need to trade as a Ltd Co
But thanks for the piss in the chips anyway.
Matt24k don't conflate disguised employment with genuine small / micro business. Mind you the government appears not to know the difference so you can't expect Joe public to.
People who run real businesses are managing their cash flow and are constantly having to judge when they take money out of the business to live off so take a low monthly wage (or a low annual wage payment) and draw the profits they can afford to when its prudent to do so.
Matt24k isn’t entirely wrong though is he. As a director of a small Ltd company myself ( most of my clients won’t work with sole traders), my accountant advises me to take a salary which is above the NIC threshold, but low enough to not have to actually pay any NIC’s. (So technically you are avoiding that “tax” if you do the same as me. Also avoids the company having to pay employers NIC’s too.
This is offset of course to some extent by the corporation tax you have to pay if you have made a profit ( and accounting fees 🙄) And of course dividends are taxed at a lower rate.
It’s not tax avoidance , just being tax efficient. Overall, I save some money doing it this way, but thankfully, still have to pay a shit ton of tax (corporation and income) each year.