Director of my own company - do I qualify for the 80 per cent salary?

[cucumber66]

I’m a director of my own limited company and ordinarily earn about 28k per annum. However, since the virus hit business has dried up and I’m facing serious financial difficulties.

From what I gather, I’m also classed as an employee of my company and am paid my monthly salary through the payroll. There are no other directors or employees - it’s just me.

I can’t get hold of my accountant tonight to check whether I’m eligible for the 80% government grant and am feeling anxious as to whether I can claim this. It could be the difference between my business surviving or going under. Does anyone know?

HMRC Advice for Business

Some initial advice here.

OP do you have offices? Do you pay business rates or qualify for rate relief?

Nothing in that HMRC link about Director employees.

Nothing in that HMRC link about the savings limit for UC

forcing people in their 50's and 60's to spend all of their savings will bite the government in the bum VERY BADLY later

Sorry if I gave the wrong info
I was recently told by my mortgage lender that they classed me as SE on that basis but I appreciate it may not be a universal thing

cucumber - I have read the current info and I would say as long as you are on PAYE and as an employee if your own company, you can put yourself on furlough and then state the amount you are paid via PAYE only per annum (dividends I wouldn't think count).

I am also in your position but pay myself mostly through dividends, making a PAYE payment once per year to myself, to ensure I am eligible for NI pension contributions.

For 2019-20 I have just paid myself £8600 in PAYE so my assumption is that I can put myself on furlough and claim £6880 for 2020-21. I also have absolutely no income as all my client work has dried up.

It's not a lot but it's better than having nothing coming in this year. And I guess it will be tax free as well.

This raises an interesting question about whether people who up to now have been taking £8600 in salary and the rest in dividends could just switch to taking their full earnings in salary from 1st March to qualify for the 80% on the whole amount? To me that seems in the spirit of what the government are trying to do, which is to protect people's monthly incomes. I think it's also necessary to protect the (non director) employees of any businesses whose directors pay themselves this way, because if the directors aren't able to protect their own monthly income, the business may go under, and any other employees may lose their jobs anyway.

Thoughts?

If you are it will be your wages not your dividends. As I understand it’s just what’s on PAYE - HMRC can check and pay that very easily because of the real time information employers submit to them monthly so they will know what 80% of your wages is.

It appears to only apply to people laid off (why do we need a new word?) Rather than being a top up too people staying in work. Thus directors with staff would need to keep working and cannot claim. If they tried to that would be fraud.

Paul Lewis has confirmed payments will be based on February Salary. Probably to ensure that March salaries aren’t adjusted after the announcement.

How can Paul Lewis confirm what Rishi Sunak has not published yet?

I assume that directors who have been taking salaries of £8,600 per annum will get 80% of 1/12th of this for each month it is in force = £573 a month.

The key problem is micro companies which ONLY have directors
of which there are tens of thousands
will they be allowed to claim if their work has dried up?
We will find out next week.

How can Paul Lewis confirm what Rishi Sunak has not published yet?

He had spoken directly to the Treasury apparently, he announced it on Money Box so doubt its just speculation, I don’t think he is that irresponsible.

The 29th Feb is stated in the HMRC link re SME SSP exemption.

Cannot see how it would apply to the wages on as then it would exclude LOTS of seasonal and casual staff.

I'll wait for Rishi.

It appears to only apply to people laid off (why do we need a new word?)

We need a new word because the whole point is they no longer need to be ‘laid off’

We are pretty much in the same position as you.

We spoke to the accountants yesterday who in a nut shell don’t know what we will qualify for yet in terms of wages. They are finding out all they can and are letting everyone know as soon as they are clear on it.

We would qualify for sick pay at £94(ish) pw for 2 weeks if we get ill, and we can defer vat bills until I think June.

I’m desperately hoping something is announced soon as we have gone from making a living ( in business for 15 years) to almost a big fat nothing in the space of 2 weeks.

Scary times

” We need a new word because the whole point is they no longer need to be ‘laid off’”

No, the whole point is they absolutely do need to be laid off. Rather than made redundant.

Furlough isn’t a ‘thing’ in UK employment law. They mean laid off, which is a ‘thing’, meaning placed on unpaid leave because there is no work, but remaining employed. That is exactly what needs to happen to qualify for this scheme.

We are in the same position - dh and I are directors and the only employees.

We DO have an office we get rate relief in so we are really hoping we may get the grant for that - if no I have no idea what will happen.

Well thats come back to bite you only taking a minimum wage through payroll to avoid paying income tax.

UncleBilly
Regardless of the wage taken, director only companies are likely to be excluded.

And it would not be prudent to draw a large salary from a small company in case profits did not materialise.

Well thats come back to bite you only taking a minimum wage through payroll to avoid paying income tax

Not quite how it works.

I'd like to know the answer to this as well. I'm a director of a tiny company and it's unclear what impact coronavirus will have on my business. At the moment it's early days but if this continues for months it's likely businesses will stop contracting companies like ours. How would you prove that you needed the grant? If anyone gets more info from their accountant please share as I can't find anything at the moment.

Uncle Billy - you do know that tax is payable on dividends as well as PAYE???? It's not free money...we're all paying in our share.

I also pay corporation tax annually and VAT every quarter.

There is pretty much no difference in the tax I pay for the income my company takes in overall. Except as the director of my Ltd company and a contractor, I don't get guaranteed pay, pension, holiday, sick or indeed probably this protection of 80% that's about to be put through. I also have to run my company on top of my client work.

Please don't comment if you don't understand...it's extremely insensitive when those of us who are self-employed have a client-base that has dried up overnight.

No, the whole point is they absolutely do need to be laid off. Rather than made redundant.

Laying off and being made redundant are the same in common conversation

Laying off terminates the contract, it doesn’t just put it on hold for a while

We need to cut hours e.g. staff working 2 days a week, but it doesn’t like this will cover this situation. So staff need to be totally stood down rather than reduced hours?