Your IndustryMar 30 2020

What Rishi Sunak's measures mean for those in work

  • Explain the government's new scheme for helping the employed and self-employed
  • Describe some of the consequences of furloughing staff
  • Describe the challenges relating to company directors
  • Explain the government's new scheme for helping the employed and self-employed
  • Describe some of the consequences of furloughing staff
  • Describe the challenges relating to company directors
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Approx.30min
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What Rishi Sunak's measures mean for those in work

Mr Chan says: “For firms who are concerned about costs and looking to reduce costs in the first place, the measure is not going to have a big impact as the firm would have got rid of the employee anyway.”

Trust

Furloughing any adviser would break the individual’s trust with the firm, experts warn. 

“If I was the staff and I was chosen to be furloughed I wouldn’t wait around for three months and I would be looking for a new job,” says Mr Chan. 

This concern is also raised by Ms Cardew. 

She explains that if a firm has already made a redundancy payment to that individual, they will need to work out how to deal with this and “the relationship between the employee and the firm may also be fractured”. 

“A lot of people have mortgages, and rents to pay, that certainty is more important than the three months worth of money,” Mr Chan adds. 

But Mr Gallacher stresses that dropping to £2,500 is still better than only relying on universal credit benefits, which are significantly lower than the furlough measures being proposed. 

Universal credit at present gives single claimants aged under 25 £251.77 per month and single claimants aged 25, £317.82 per month. 

But Mr Chan acknowledges that the job retention scheme could be helpful for trainee advisers or paraplanners early into their careers, or paraplanners transitioning to become financial advisers. 

This is because they are likely to earn less than a typical adviser, which is usually between £40,000-£100,000, he says. 

Self-employed

The chancellor announced that the support for self-employed people is capped at £2,500 a month, or 80 per cent of profits. This assistance will also continue for three months. 

Only those who are already self-employed and have a self-assessment tax return for 2019 are eligible.

The self assessment tax return deadline is in April, and those who file by that deadline will be eligible. 

Another element of this rule that advisers should bear in mind is that a self-employed person only qualifies if the majority of their income comes from that source.

So for example, a self-employed person who generates more income from buy-to-let property that is greater than the income they generate from being self -employed is not eligible for this cash.

Dan Clayden, who runs Clayden  Associates, an advice firm in Devon says: “It is not really clear how these measures apply to advisers who are company directors.

"If the director is listed as a person with significant control of the company at Companies House, how can they go on furlough but the company continue?

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