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?

Sounds like we've been shafted!

Expert on radio 4 just said that those who've been incorporate and operate through a business are excluded from this

Yeah bbc article says those who are paid through dividends are exempt and the chancellor is going to increase how much tax we pay next budget. So doubly shafted.

I'm okay as I've savings and enough in my company to keep paying myself, but I know many others are not in this position.

I thought I was okay, but more and more people I work with are being furloughed so my work is gradually disappearing.

But we are not self employed if we run limited companies. Government website claims that if you own a limited company you are not classed as self employed by HMRC. Instead you're both an owner and an employee of your company. Therefore, this goes back to the detail within the furloughed employee scheme surely?

I imagine there will be very few PSCs still operating when this is over. Our kind will be folding our companies across the nation.

And how about the Chancellor's hypocrisy? He inferred that he tax the self employed the same as PAYE after this. Does that mean Self Employed will get full holiday pay, sick pay and pension contribution?

Also capping those receiving help to 50K. The help for PAYE isn't capped and many of them earning well, well in excess of 50K.

Mr Sunak has proven he's not up to the job.

www.businesssupport.gov.uk/self-employment-income-support-scheme/

Confirmed on the government website. Not included, but can claim as an employee through the furlough scheme.

I don't think this has been thought through properly. It's clear that the furlough scheme prohibits people from working at all. Self employed people will still have to do bits of admin, probably some business development, may spend time on refreshing website, advertising etc. This "work" would disqualify them from the furlough scheme?

I really don't see why we've been excluded! The 50K cap prohibits any big earners from taking advantage. Whether the earnings derive from PAYE or dividends if it amounts to less than 50K then what's the difference?

It's simply the money we live and pay our bills with. Why are we not entitled to live and pay bills, but the remainder of the nation is.

It's sickening.

You have to not work though to be furloughed, which is pretty much impossible for a company director, whereas they accept it's not reasonable to say self-employed people can't work. We have the worst of both worlds.

On another MN thread : Self Employed Help it gives a link to a BBC piece that says that if you are paid through a limited company your 80% salary will come from the paye element of salary but not dividends. If this is the case surely that is OK?

paid through a limited company your 80% salary will come from the paye element of salary but not dividends. If this is the case surely that is OK?

No, because you are likely to take pay in the form of dividends as well as PAYE salary. It makes sense to keep salary low so you can flex payments down when revenues aren't so good.

Also, for most people in this situation, to not work (as per the rules) would be business suicide. I fully expect my work to resume once this severe lockdown is over. It will take a long time to build back up again.

80% salary will come from the paye element of salary but not dividends. If this is the case surely that is OK?

It's no secret that we all pay ourselves the minimum (i'm on £11500 per annum). Our accountants tell us that's the right thing to do and who are we to argue.

80% of that alone will fall well short of paying the bills. What do we do?

If a director is going to claim in the Furlough scheme they have to step aside from their company completely
leaving nobody running it
which is then a breach of the PSC rules
so catch 22 strikes
NOWT for the single person companies

If a director is going to claim in the Furlough scheme they have to step aside from their company completely
leaving nobody running it

This makes sense for us. There is no need for anyone to be running DH's company, surely, as there is nothing to do. Every theatre in the country is closed and it is literally impossible for his company to be doing anything at all.

Or as I'm the Company Sec (but not salaried as I have my own job), perhaps I could run it temporarily in name only. I wouldn't have to do anything apart from make sure the accountant has the stuff for account preparation. There's nothing to do.

On another MN thread : Self Employed Help it gives a link to a BBC piece that says that if you are paid through a limited company your 80% salary will come from the paye element of salary but not dividends. If this is the case surely that is OK?

Do you have a link to this article @friendlycat?

I was never expecting to have the dividend included in the 80%, but even 80% of the rest of my pay would be a huge help.

Do we still not have a definitive answer on this?

There is the 80% of salary
BUT
the director has to NOT WORK for the company during the furlough ....
which precludes looking for work when things improve .....

which precludes looking for work when things improve .....

But when things improve we won't need to be on furlough will we?

Nope no clarification yet. Us accountants know no more than you - we haven't been sent any information from HMRC at all yet.

If you are furloughed then you can claim through the scheme but for the paye part of your income only. Not for the dividends. You have to be furloughed for a minimum of three weeks and you cannot do anything income generating at all whilst furloughed. So most Director employees claiming a minimum salary through paye will not be able to claim much. I’m an employment lawyer and I’ve already seen the detail which they are about to publish on the furlough scheme.

Hasa
Which site will it come up on first ?

am busily reading the self employment rules in another tab

I suspect just the usual gov.uk one. But it won’t specifically address the director point.

What you have to understand if you are in this position is that if you operate through a limited company like this (I do too) you have three distinct legal roles.

1. You are a shareholder. This means that you own shares in the limited company and are entitled to dividends if the company makes a profit. These are not covered by any government bail out and are unlikely to be
2. You are a statutory director which means you have certain obligations to comply with corporate rules etc. You don’t get anything financially for this so nothing for the the government to bail out.
3. In most cases it will have been tax efficient for you to also be an employee and to take a small salary below the national insurance threshold. This is covered by the furlough scheme but ONLY if you don’t work at all. You can do training during this period since it’s not income generating.

You are NOT self employed. That’s something different entirely.

If you are furloughed then you can claim through the scheme but for the paye part of your income only. Not for the dividends. You have to be furloughed for a minimum of three weeks and you cannot do anything income generating at all whilst furloughed. So most Director employees claiming a minimum salary through paye will not be able to claim much. I’m an employment lawyer and I’ve already seen the detail which they are about to publish on the furlough scheme.

Well this is hopeful - thank you @HasaDigaEebowai

hasa
I've got legislation.gov.uk and parliament.uk and treasury.gov.uk all bookmarked
but as its too late to go through by SI as parliament is now in recess
I assume treasury :-)

How does that fit though with director's responsibilities to run our companies?

I don’t think they will do it that way. The legislation already exists in the uk to lay people off. Lay off is completely different in law to redundancy. Redundancy means you are dismissed but lay off means you are stood down for a period of time but are still an employee. This is really just an overlay of a government refund scheme onto the lay off legislation. Generally if you are laid off you get statutory guarantee pay of £29 a day. This new ‘furlough’ concept is just the government saying to employers “we will refund you if you follow our rules and to a limit of the cap we have specified”. As s result I suspect we will just get another poorly drafted government advice paper published on gov.uk rather than any legislation in the form of a statutory instrument.