By all accounts this has been a complicated process and achieving some level of fairness has been extremely challenging. We had a glance at the draft legislation (which could easily change by the time it is announced at 5pm tonight) but in principle it is looking at;
> the average of the last 3 year’s net earnings (on an average monthly basis)
> tor £2917
> whichever is the lower
But what is missing is a whole load of further details and it is this that will be most important.
The number one thing is the definition of ‘self employed’. Ordinarily it would be an individual, such as a painter and decorator, sub contractor builder, associate working in a dental or chiropractic practice – so long as they are not operating their business through a limited company.
But what if you are a ’sole trader’ operating through a limited company, does that qualify?
This is important because I know a number of you are and we will want to be sure that your status is covered.
But that also leads onto ‘owners of companies’ – once again, a large number of you. So far, the only thing available to business owners is the Business Interruption Loan Scheme. That’s kind of OK, but less so when, although 80% guaranteed by the Government – the borrower remains 100% liable, and if the bank ask for a personal guarantee then you need to think long and hard if you are willing to do that. I’m not suggesting you don’t use this scheme by any stretch of the imagination but you need to understand that the Government are guaranteeing to repay the bank (albeit 80% of the debt). You, or your company, remain 100% liable for the amount borrowed, and if you have given a personal guarantee then the liability will find it’s way back to you.
We therefore need to be clear about who will be included in the ‘self employed’ category and whether or not it extends in some shape or form to Limited companies. And of course, if it doesn’t, what is available for directors?
It feels a little unfair to be criticising the Government when they are dealing with a task of this magnitude. I know that they want to keep the flywheel of the economy turning and by making ‘grants’ available to employed and self employed (even only the narrow definition) will help keep that economy moving. But what does seem a little difficult to reconcile is that whilst a proportion of the population will reach a steady state (or close to it) the business owners (the people who provide the jobs in the first place) may potentially slip back and massively increase their risk.
Let’s hope I’m wrong and the Chancellor gives a wide definition to the term self employed, or if not gives an indication of what measures are on the way. Needless to say, you will read my take on events in the next 24 hours.