Jump to content
Sign in to follow this  
Genie

The economic impact of Covid-19

Recommended Posts

4 minutes ago, KenjiOgiwara said:

If they've tanked 50% and not recovered your unlucky with your sectors. I assume you're into heavy leveraged companies. Spesifically oil service and airlines? 

You're not alone though. I lost a **** ton on oil service. 

I think however there's more to come the next few years. I'm hugely sceptical to the projected growth at this point. 

UK Banks. 

As expected they took a pounding early doors with Covid-19, plus ongoing Brexit uncertainly and USA/China tensions all add up to a poor H1. 

I'm not overly concerned long term though.

 

2 minutes ago, Genie said:

I’m not even gonna look at my pension pot, it’s probably a horror show.

I've looked at mine a few times and the end of March was the worst for me. Looked last week and it had recovered a fair bit, which was nice! 

Share this post


Link to post
Share on other sites

I'm more concerned long term tbh, my ISA is my "just in case climate change doesn't destroy western civilisation" insurance :( 

Share this post


Link to post
Share on other sites
2 hours ago, Sam-AVFC said:

Am I right in thinking you're South West or have I imagined that? I'm just about to move back and this is not news I need to hear!

Yes. 

Share this post


Link to post
Share on other sites

There has been a huge rise in people seeking help from food banks, homelessness charities and other shelters the past 2 months.

  • Sad 1

Share this post


Link to post
Share on other sites
10 minutes ago, avfcDJ said:

There has been a huge rise in people seeking help from food banks, homelessness charities and other shelters the past 2 months.

This is worrying when so many are still on furlough. If these people are struggling to make ends meet on 70-80% pay then it’s going to get an awful lot worse when the job retention scheme ends.

Share this post


Link to post
Share on other sites
3 hours ago, Genie said:

This is worrying when so many are still on furlough. If these people are struggling to make ends meet on 70-80% pay then it’s going to get an awful lot worse when the job retention scheme ends.

Seeing a lot of bad stuff going on through my work. 😓

Share this post


Link to post
Share on other sites

The government's support is based on declared, legitimate income, and doesn't include dividends.

So there are several classes of people who are getting much less than 70-80% support:

  • People who work through their own Ltd company (e.g. me) and take a mix of salary and dividends. It's a normal, legitimate arrangement, but the govt have refused to take dividends into account, so I've been getting £800 per month in govt support. Not a crisis yet, as I have low overheads, had cash in the bank, and took a Bounceback Loan... but I can imagine some people in this situation are very close to running out of cash.
  • People who do a mix of taxed and cash-in-hand work (e.g. a lot of tradesmen, cleaners). Yes they were breaking the law, but they're still an important part of the UK economy and have kids to feed, bills to pay, etc.
  • People who work extra jobs "off the books" which have disappeared overnight (e.g. someone moonlighting in a bar or as a cleaner). Again, breaking the law, but experiencing a big drop in take home pay.
  • The entire black economy - drugs, prostitution, etc. In many cases, not deserving of sympathy, but it's still a big shock to the economy, and they still have families to support.
  • Anyone who was out of work in 2019 and only recently returned to work or recently set up a business. This is the most devastating one I think, since they really haven't done anything wrong.

You might think in each case, "serves them right", but ultimately it means a lot of people who've experienced a sudden fall in earnings. In many cases these will be people who are least able to handle a sudden financial shock.

  • Like 1

Share this post


Link to post
Share on other sites

People that have been breaking the law and/or avoided paying their share of tax shouldn’t be complaining about not getting tax payer support.

  • Like 1

Share this post


Link to post
Share on other sites
47 minutes ago, Genie said:

People that have been breaking the law and/or avoided paying their share of tax shouldn’t be complaining about not getting tax payer support.

My point was it's going to have a devastating impact on the economy - whether through people running out of cash to support themselves, or through ignoring lockdown restrictions. You can say it's their own fault, and you're right, but that doesn't change the outcome.

Re: the first case (my situation), it's the normal arrangement for anyone who is a Director of a Ltd company - you pay yourself in a mix of salary and dividends. These often aren't wealthy people. My earnings last year were £30k, of which £12.5k was salary and £17.5k was dividends. I paid tax on the dividends and corporation tax on the company profits. I get govt support for the £12.5k salary - i.e. £800 per month.

You can say I was tax avoiding, but the tax savings are pretty trivial nowadays since they closed the biggest loopholes. I'm lucky I had a much better year the previous year so had cash in the bank, and I have few overheads and personal responsibilities.

There will be other people set up like this who are supporting a family and a mortgage. It's just one of the many oddities of the govt support plan.

Share this post


Link to post
Share on other sites
1 hour ago, KentVillan said:

So there are several classes of people who are getting much less than 70-80% support:

  • People who work through their own Ltd company (e.g. me) and take a mix of salary and dividends. It's a normal, legitimate arrangement, but the govt have refused to take dividends into account, so I've been getting £800 per month in govt support. Not a crisis yet, as I have low overheads, had cash in the bank, and took a Bounceback Loan... but I can imagine some people in this situation are very close to running out of cash.
  • Anyone who was out of work in 2019 and only recently returned to work or recently set up a business. This is the most devastating one I think, since they really haven't done anything wrong.

You might think in each case, "serves them right", but ultimately it means a lot of people who've experienced a sudden fall in earnings. In many cases these will be people who are least able to handle a sudden financial shock.

These 2 I agree with and there should be more support for the scenario. In your case, it is a perfectly legitimate way to earn and the government actually gets taxes in some form (via income, corporation and/or dividend) so to me that isn't so much an "ethical" issue. 

As @Genie says though, those that aren't paying taxes that are meant to, I struggle to emphasise for. 

Those caught up in the black economy that are vulnerable etc. and would want to get out of it otherwise, absolutely they should be supported, but that is for other reasons. 

  • Like 1

Share this post


Link to post
Share on other sites
13 minutes ago, KentVillan said:

My point was it's going to have a devastating impact on the economy - whether through people running out of cash to support themselves, or through ignoring lockdown restrictions. You can say it's their own fault, and you're right, but that doesn't change the outcome.

Re: the first case (my situation), it's the normal arrangement for anyone who is a Director of a Ltd company - you pay yourself in a mix of salary and dividends. These often aren't wealthy people. My earnings last year were £30k, of which £12.5k was salary and £17.5k was dividends. I paid tax on the dividends and corporation tax on the company profits. I get govt support for the £12.5k salary - i.e. £800 per month.

You can say I was tax avoiding, but the tax savings are pretty trivial nowadays since they closed the biggest loopholes. I'm lucky I had a much better year the previous year so had cash in the bank, and I have few overheads and personal responsibilities.

There will be other people set up like this who are supporting a family and a mortgage. It's just one of the many oddities of the govt support plan.

With your situation, you have an arrangement where you’re paying less tax than you would be if you were PAYE. So you’ve effectively had your support package upfront. Same as people doing cash in hand work or Trades not declaring earnings.

Share this post


Link to post
Share on other sites
9 minutes ago, Genie said:

With your situation, you have an arrangement where you’re paying less tax than you would be if you were PAYE. So you’ve effectively had your support package upfront. Same as people doing cash in hand work or Trades not declaring earnings.

lol, how much tax do you think I’ve saved vs someone on £30k salary? It’s a few hundred quid, and that’s in return for foregoing any employment rights, and having to find new business for myself several times a year. It really isn’t a tax dodge.

To say it’s the same as working cash in hand is a massive insult and ignorant beyond belief.

  • Like 2

Share this post


Link to post
Share on other sites

Why take the risk for 'a few hundred quid'? There'll be other reasons to do the self employed limited company thing, otherwise nobody would bother.

The reason for, for example, people that do it as IT contractors is because they earn significantly more than an equivalent true employee, making up for the risk of having less safety net. I wouldn't have that much sympathy for those in that situation in times, like now, when the safety net is more appealing. That is the risk taken to earn more and be taxed less.

Share this post


Link to post
Share on other sites
34 minutes ago, KentVillan said:

lol, how much tax do you think I’ve saved vs someone on £30k salary? It’s a few hundred quid, and that’s in return for foregoing any employment rights, and having to find new business for myself several times a year. It really isn’t a tax dodge.

To say it’s the same as working cash in hand is a massive insult and ignorant beyond belief.

I didn’t say it was a tax dodge or that it was the same as cash in hand work.

Being self employed is more difficult in certain aspects and for that reason you’re able to pay less tax and book more expenses to offset other taxes.  You chose to pay yourself a salary of £800 rather than £2500 because it meant you paid less money to HMRC which is perfectly legal and your choice to make.

Edited by Genie

Share this post


Link to post
Share on other sites
1 hour ago, Chindie said:

Why take the risk for 'a few hundred quid'? There'll be other reasons to do the self employed limited company thing, otherwise nobody would bother.

The reason for, for example, people that do it as IT contractors is because they earn significantly more than an equivalent true employee, making up for the risk of having less safety net. I wouldn't have that much sympathy for those in that situation in times, like now, when the safety net is more appealing. That is the risk taken to earn more and be taxed less.

Because being your own boss is a way of life. I’m not a “disguised employment” contractor, I run a genuine business. I had a quiet year last year for personal reasons, and was planning on kicking on this year and growing the business.

I’m not looking for sympathy, just pointing out that there are tons of people across the economy who aren’t protected by Sunak’s various schemes, and will be reaching breaking point.

I’m very lucky that I can weather the storm, mostly because I have no children and no mortgage. I dread to think what it’s like for someone in my boat who has dependents.

 

Share this post


Link to post
Share on other sites
19 minutes ago, KentVillan said:

I’m very lucky that I can weather the storm, mostly because I have no children and no mortgage. I dread to think what it’s like for someone in my boat who has dependents.

I was out of work for 6 months in 2009 and it was pretty tough, but like you I weathered it as I didn’t have kids then, the wife was working full time and I only had a small mortgage.

Whilst I have savings now I also have 2 kids, wife works part time and a big mortgage. I’m hoping I can weather this storm.

  • Like 1

Share this post


Link to post
Share on other sites
On 29/06/2020 at 19:42, Davkaus said:

I'm with Vanguard, the fees are dirt cheap going direct.

I'm back in profit after the March dip, so not feeling too pessimistic, there's a greedy part of me reckoning I could take it all out, drop it back in within a few weeks and make a killing. Then there's the part of my brain that's not a greedy idiot. 

Good advice your last line there davkaus. Ive seen people lose so much money when they get abit greedy as tempting as it is

Share this post


Link to post
Share on other sites

1,700 UK jobs with Airbus

600 jobs at TM Lewin

It’s going to be a horrible isn’t it?

  • Like 1
  • Sad 1

Share this post


Link to post
Share on other sites

1 hour ago, chrisp65 said:

1,700 UK jobs with Airbus

600 jobs at TM Lewin

It’s going to be a horrible isn’t it?

Its going to get a lot worse chris.

We have seen nothing yet. I think the retail sector is going to collapse

Share this post


Link to post
Share on other sites
1 hour ago, chrisp65 said:

1,700 UK jobs with Airbus

600 jobs at TM Lewin

It’s going to be a horrible isn’t it?

1,100 agency staff going from JLR end of July

Share this post


Link to post
Share on other sites
Sign in to follow this  

×
×
  • Create New...
Â