To ask why people think directors that take dividends are tax avoiders?

[Milo2]

Small Ltd companies are currently left out of the UK government funding. Why? The directors still have families to feed and bills to pay.

I’ve seen a few people on here rubbing their hands with glee. Saying things like ‘good it serves them right for taking dividends’.

Some have compared directors to those that avoid paying tax and it’s completely unjustified.

Am I being unreasonable to ask why there is so much hate for these directors?

Also would you be upset if you had no hot water or heating to find that your local heating engineer had gone bankrupt and couldn’t help you? If so, why would you hate them so much when all they do is work hard and pay their taxes just like everyone else?

Self employed people are allowed to earn and get the difference made up to 80% of their usual income. It makes sense for them to work for the governments sake as they will then have to pay out less money

And we can't do this for directors because?

As someone else said before - because they avoid/pay less tax than someone who is PAYE does....
"It’s all about tax. Dividends are taxed at 20%. If a director paid herself £200k dividend it’s subject to tax"

Perhaps people think that since they paid less into the 'system' they should get less back when times are hard... or perhaps they assume that they might 'save' some of the money they didn't pay in tax by using the above system?

It makes sense why people have no sympathy for them - no need to hate anyone though

Self employed people are allowed to earn and get the difference made up to 80% of their usual income. It makes sense for them to work for the governments sake as they will then have to pay out less money.

Please give us the link where it says the govt will only make up the difference to 80%. The guidance I've seen says they pay 80% without caveat. That means the sole trader could actually end up with more than they'd usually earn, i.e. the 80% plus their earnings. If you know different, please post the link to the HMRC guidance.

@furrytoebean I think at a certain level of earnings then yes you should not be entitled to any help apart from universal welfare benefits. If you say are earning £100k a year, then you really should not need government help to pay your bills for 3-6 months.

And we can't do this for directors because?

Which is the fundamental fatal flow in the support package.

If you say are earning £100k a year, then you really should not need government help to pay your bills for 3-6 months.

So where are employees allowed that help, but not the self employed?

It’s all about tax. Dividends are taxed at 20%. If a director paid herself £200k dividend it’s subject to tax

Except as stated by posters earlier, dividends aren't taxed at just 20%. The profits out of which they're paid were taxed at 19% and dividends are taxed at up to 38.1% over £150,000, so actually more tax than would be paid by an employee earning £200k.

Far too much nonsense on this thread. People should do a little research before spouting off.

Perhaps people think that since they paid less into the 'system' they should get less back when times are hard... or perhaps they assume that they might 'save' some of the money they didn't pay in tax by using the above system?

But those dividends have already been taxed 20% corporation tax.
So the tax on dividends is a tax on top of the corporation tax.

If people are earning sufficiently high incomes to have to pay an accountant to find tax avoidance measures for them, then they are clearly earning a lot more than most people. Hence the lack of sympathy now it has all gone pear-shaped.

I pay an accountant to ensure I am doing everything legally and above board. It would be far easier for HMRC to come after a small business like mine than a larger one for tax avoidance as I wouldn't have the legal fees to fight it

If my accountant allowed me to put something through that shouldn't be there, once HMRC have finished auditing my accounts and issuing me with a hefty bill they'd then be looking at other companies who had their accounts filled by the same accountant.

Put very simply it isn't worth it for me or my accountant to allow for any shady goings on.

Once again, there are directors who are as dodgy as hell, there are employers who treat their staff like crap but not everyone is bent, not everyone is trying to do the bare minimum.

Whilst I believe at this stage there are great measures in place for businesses who employ people it isn't great for Ltd companies where the director is the only employee.
I also believe this hatred towards any director who can claim dividends is utterly ridiculous and based on a distinct lack of knowledge

I also believe this hatred towards any director who can claim dividends is utterly ridiculous and based on a distinct lack of knowledge
This ^

Totally agree weed I've always had an accountant, it's a basic business expense not a luxury only for the Uber rich.

It means I can focus on what I do, not spend my time keeping up to date with tax law because that's her job. She files my returns (you know the ones I have to do more of because I'm a limited company) and she lets me know what I can use as an expense and not.
I go with my accountant because she's very straight and will always err on the side of caution.

This idea that only very privileged people can afford accountants is laughable.
I had one when I earned 11 grand a year, you can't afford not to have one.

The idea that people not agreeing you should receive 80% of 50k is hatred, is simply inaccurate.
No hatred here, I just don't agree the government should be paying you any more than you may be entitled to through furlough.

No one is getting 80% of 50k, It's capped.

All I want is the same treatment as self employed people: the ability to work and still get support, the acknowledgement that businesses can't just stop trading, the exact same treatment as the self employed.
Happy for it to on salary rather than dividends.

Why exactly do you think that's unreasonable?

I’ve just collapsed my Ltd. company I employed an accountant to complete my company accounts, file my annual corporation tax returns, submit quarterly vat returns, deal with paye/nics, I also bought liability insurance from them. Effective tax rate once corporation tax was included was higher than paye. Nothing dodgy, no tax avoidance, no expense claims for weekends away, expensive dinners. Penalties for missing filing accounts/vat returns on time are quite severe and is the reason why accountants are used but apparently doing something above board and legal means you’re a shifty tax dodger who are not entitled to anything from the state. The disinformation circulating re the amount of tax paid by small Ltd companies is quite staggering.

The idea that people not agreeing you should receive 80% of 50k is hatred, is simply inaccurate

You know what this has really really irritated me, because that's not what anyone is saying. You're putting words into our mouths.
Like I've said a hundred times I don't earn anywhere near 50k

No one is asking for 80% of 50k, we're asking not to be forgotten: the employment rules just don't work the same for us.

No this is not hatred, don't be disingenous. Just claim furlough on your salary paid through the company. As I said I have been furloughed, our company has closed down and no one at all is working. If you can't do that and have to carry on working, you can't claim furlough. You are actually being treated the same as employees.

So a painter and decorator or a gardener that could work outside and keep their clients can claim 80% of their income and keep working but a company director like my DH who is the only employee with no business premises, whose work has completely dried up due to Corona can claim nothing. I can't see how that's fair at all!

As I said I have been furloughed, our company has closed down and no one at all is working. If you can't do that and have to carry on working, you can't claim furlough. You are actually being treated the same as employees.

Yes and we shouldn't be.

I don't really know how many times I can explain to you that if I furlough myself I would lose my business.
When this was over I wouldn't have anything to return to and not only that but I wouldn't be able to pay my overheads so my suppliers would lose out on income too.

It's great the company you work for can just shut up shop for three months but I think it's probably a rarity for that to be able to happen.

Can anybody actually point to any hatred in this thread?

Certain people keep claiming it but I haven't actually seen any.

And disagreeing with the notion that directors should receive a government bailout is not hatred.

Im sure there has been the occasional post saying people are tax dodging and deserve it

But most people don’t think that at all

And disagreeing with the notion that directors should receive a government bailout is not hatred

It is when your only reasoning behind it is the fallacy we're all tax dodgers and thieves. That you rub your hands with glee at the thought of people losing their livelihoods and businesses that they have built up over years of hard work because apparently they deserve it. When you don't have any issue at all with a self employed person who isn't affected by coronavirus being able to get a lump sum at the end of this.

It's really nasty

@Kazzyhoward, the first one, self employed in partnership, not a limited company (I'm 99% sure).

You are actually being treated the same as employees.

But not the same as sole traders who are allowed their 80% AND still allowed to continue working in their business. See the difference????