RISHI HAVE YOU FORGOTTEN US?
MY WIFE and I are Thatcher’s children who grew up idolising the Richard Bransons of this world. We’ve always believed that hard work leads to wealth for your family and society. I am actually a member of the Conservative Party. But I’m unlikely to remain one for much longer. The way this government has treated small businesses like ours is a slap in the face.”
Michael Mocatta and his wife Fiona are both self-employed directors of limited companies. She has a copywriting business, he runs a marketing consultancy. The couple, who live in Finchley and are members of New North London Synagogue, have three children aged between 11 and 16. Since the pandemic struck, her income has halved and he is now earning nothing. They are working through their hard-earned savings and, like Britain’s other 700,000 limited company directors, have received nothing in support from the government.
Yet if they were sole traders they’d be receiving 80 per cent of their average trading profits for the three months from November to January. Last week, the chancellor Rishi Sunak announced a revised self-employment income support scheme (SEISS) worth £3.7 billion, with the first payments landing in people’s bank accounts in December. It’s the third grant for the self-employed under the scheme since April. So far the scheme has provided £13.7 billion in grants to people through the crisis. But if you are one of Britain’s 700,000 limited company directors, you are not entitled to a penny.
“We set up our businesses as limited companies because we were advised that dividends were the most efficient way of paying taxes. And back in 2003 the government of the day actually advised small businesses to incorporate. Now we are being told the HMRC doesn’t trust this dividend scheme and there is an inference that we are somehow behaving unfairly. The reality? We might actually become homeless.
“If you’re in business you generally want to be seen as cool, calm and collected,” says Mocatta. “It’s difficult to admit that things are tough financially. But I am putting my hand up and saying this is a crisis, and I’d love to hear from other Jews in our situation. We need to speak to our MPs as a group. This government is not a friend of entrepreneurs.”
Emily Watson and Jonathan Stones are in the same situation. They are in debt for the first time in their lives. In April, at the height of the pandemic, they took out a bounce-back loan, the government’s emergency funding scheme for small businesses.
They desperately needed the £25,000 they borrowed. When the country went into lockdown, so did the successful video booth company the couple set up in 2002. And although they are selfemployed, they were not eligible for the government’s self-employment income support scheme.
“We feel completely let down,” says Watson, 43, who lives in South East London close to Bromley Reform Synagogue, of which her grandparents were founding members. “Our company has paid over £500,000 in corporation tax over the past 18 years and seven months after we went into the first lockdown we’ve had nothing back from the government. We have been able to furlough our three members of our staff, for which we are grateful, and I’ve furloughed myself. But furlough wasn’t an option for Jonathan. It would’ve meant not doing anything that could be classified as work — and that includes applying for the bounce-back loan which has saved our business.”
The £500 furlough money Watson gets from the government every month covers the couple’s food and electricity bill, she says. “The rest of our living expenses, including our rent, come out of the money we had saved for a deposit on our first property and our retirement. When the chancellor announced support for businesses at the start of lockdown, he said no one would be left out. But small businesses like ours have been left out.
And we feel very let down for it.”
Let down describes how Paul Burns, 58, feels too. The Kol Chai Reform member is the director of The Burns Unit, a specialist training business for the communication industry, and when the nation went into lockdown his company went on Zoom. “It worked reasonably well for a couple months, but then work dried up completely, and it feels terrible. Fortunately, my kids have now left home and my wife and I are used to living pretty frugally, so we’re coping.”
He thinks the government is behaving unreasonably. “There’s this perception that limited companies like mine use tax loopholes to save money. But the truth is that if it wants to, the government can easily see every single penny I’ve earned, the corporation tax I’ve paid and the dividends I’ve paid myself.”
Simon, not his real name, feels similarly aggrieved. He runs a one-man coaching and leadership assessment business which works principally in the financial sector and from April to June he didn’t have a single day’s work. Things started dribbling in towards the end of July, but at much lower rates than he was earning before the pandemic struck. “I’ve had to stop all my pension contributions and although my wife is thankfully still in work, we are eating away at our savings.
“I’m well aware many are far worse off. But this is not just about what people need, but also about what is equitable. The government has taken a very broad brush. Significant numbers of sole traders whose businesses weren’t actually that affected by the pandemic have benefited from the support the government has offered, and large numbers of self-employed limited company directors who earn similar incomes have been left out simply because of the way we set up our business.”
Matt Frankel is a sole trader whose events business has been severely affected by the pandemic. The barmitzvah DJ regularly works
After a couple of months my work dried up and it feels terrible. Luckily my kids have left home We might actually become homeless. This is a crisis and I’d love to hear from others in our situation