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?

The furlough scheme is for 3 months. Of course it might be extended but I suspect it could become less generous. If you're taking a minimum tax efficient PAYE salary then the furlough reimbursement of circa £1500 less tax and NI is unlikely in most cases to be worth the business damage of not being able to keep your company going. Obviously there will be exceptions where people's businesses are extremely small but I'd think very carefully about it.

You have to appreciate that they can't allow people to recoup dividends. That would be impossible to police and would mean that for example people who get a dividend payment from BT shares they hold would be eligible. It would be impracticable and would lead to masses of fraud.

If they cut the tax free dividends to claw some of this money back I'm going to be furious.

They wont do this since they've left divs alone. They will change the NI provisions. We are likely to all be paying much more NI in the future to recoup these billions of pounds they're handing out.

Seems like I can’t claim after all so will apply to the bank for a business interruption loan instead

Be aware that most of the lenders under the CBILS scheme are looking for personal guarantees from directors and the amount of information and due diligence required mean it will be a long process. Lending will be based on ability to repay. It's probably not an option for smaller businesses who are cash strapped now.

@HasaDigaEebowai I don't suppose you know what it said in the furlough rules about maternity/SSP do you please?

If people are on mat leave they should stay on mat leave since if they come off mat leave to be furloughed thinking its better for them financially then they could be called back to work and lose out on part of their mat leave period. It will be 80% of contracted wage unless they previously worked variable hours. If they worked variable hours you either take the payment they had in this month last year eg March 2019 or you average their pay in the 2019/20 tax year.

If people are on sick pay or self isolating they cannot be furloughed. They can be furloughed once they return to work from SSP. They can be furloughed if they are shielding because they are on the vulnerable list.

If you're taking a minimum tax efficient PAYE salary then the furlough reimbursement of circa £1500 less tax and NI...

Is that a monthly amount you're stating? Isn't the minimum far lower than this?

According to my annual accounts my accountant has me paying myself £11500 per annum, which amounts around half the sum you give.

John McDonnell (labour), just said on radio 4 that many have been left out. He gave a list of about half a dozen groups ending with people paying themselves dividends through a company

There's so many people left out that I don't think their claim that it will cover 95% of self employed people is anywhere near accurate. I don't know if this is deliberate or just an unintended consequence of the situation being more complicated than they envisaged.

DP will probably miss out because he's done both employed and self employed work in the relevant tax years for the same clients in the festivals and concerts industry and a quick look at his tax returns suggests that overall it's ever so slightly weighted towards employed so will lose out despite him submitting tax returns with SE income on for nearly a decade and being fully SE for the last year.

The excluding of higher earners is also misguided and demonstrates that whoever is speaking about it has little understanding of what averages mean in real life.

Rishi Sunak and the other man on the BBC TV this morning (I thought it was John McDonnell but maybe not) just kept going on about how the average earnings of someone entitled to nothing because they made over £50k was £200k so everyone in this group had plenty of savings so didn't need help.

To her credit, Naga Munchetty tried to champion the cause of an example of a London based tradesperson who made slightly more than £50k but was supporting a SAHM and 2 DC so were far from rolling in money, but the man just kept banging on with 'they make an average of £200k they have loads of money, they don't need help' soundbite.

I just hope there's a common sense approach and appeals process where you can state your case, rather than black and white 'computer says no'.

No I meant over 3 months it would be that. Not per month

No I meant over 3 months it would be that. Not per month

Sorry that was to DDC70

I don't mind not getting it on my dividends, anything is better than nothing and I totally understand that the government can't just pay out everything for everyone, but if they relaxed the rules around furlough for directors that would help massively!

just kept going on about how the average earnings of someone entitled to nothing because they made over £50k was £200k so everyone in this group had plenty of savings so didn't need help.

Yes I have to admit I didn't understand this maths. Clearly skewed massively but the multi millionaires

I don't mind not getting it on my dividends, anything is better than nothing and I totally understand that the government can't just pay out everything for everyone, but if they relaxed the rules around furlough for directors that would help massively!

Yes this is the massive inconsistency when you look at the self employed scheme

Only 2000 of dividends are tax free now

HMRC have the accounting records that show how many shareholders etc a company has.

If a company has just 1 Director, 1 shareholder and 1 PAYE employe and they are all the same person then its obvious, surely that they are generating all the revenue.

Doesn't that make it reasonable straight forward to looking at the dividends and PAYE they've taken over the last 3 years as the wage they've earned. That is indeed the truth of the matter - we've earned this!

If there's an issue with the dividends being tax free, then a little math will allow them to compensate for the difference between corporation tax and self employed tax to adjust the 80% down a little.

However, no such adjustment has been made for the difference between PAYE tax and Self Employed tax.

None of this is Just or fair. Maybe the rest of the nation is in this together but we've been left out in the cold.

Most people think that anyone doing this (limited company, low income, extra in dividends) is a rich tax dodging piece of shit. They don’t realise that many of us don’t earn much at all. DH and I have a joint income of just over £30k most years including dividends. We set up when I became too ill to work and started doing small bits of self employed work here and there, he was already self employed so it was a logical step and made everything much more straightforward.

I suspect anyone who’s a sole Director will be able to furlough - just like you can’t claim SMP if you’re a sole director because then the company would cease to run. Perhaps this will be different though, to prevent limited companies folding completely.

Unfortunately there won’t be an outcry because the public think we are tax dodging arseholes.

Sorry about typos - multi tasking looking for work out there in virusville!

Unfortunately there won’t be an outcry because the public think we are tax dodging arseholes.

Whilst many of those deciding that that we're entitled to nothing have secret accounts in the Caymans.

Morning all. The new rules have just been published. You cannot do even an hour of work whilst on furlough and so as per my posts last night the vast majority of people will not bother.

@HasaDigaEebowai Please could you post a link?

Perhaps this will be different though, to prevent limited companies folding completely.

Which is pretty much inevitable in great numbers. The very least the Tories could do for companies folding due to the virus and lack of support is relax the tax on dividend limits. Then we can take that money without it being eviscerated 33% to live on.

If they won't give us the financial help they're giving everyone else they could at leat allow us to live on our own hard earned money without charging us for the privilege.

Doesn't that make it reasonable straight forward to looking at the dividends and PAYE they've taken over the last 3 years as the wage they've earned. That is indeed the truth of the matter - we've earned this!

Well yes you have earned it but its not a wage. Its profit from your company which the company (a legal person in itself) has then chosen to distribute to its shareholders. It isn't your wage at all.

I really do sympathise and am in exactly the same situation. But accountants really should explain this to people when they advise incorporation. The benefit of incorporation is that if your business goes under then you don't lose your personal property, only your investment in the business. But this means that the legal set up is different.

You can furlough yourself (as long as you don't do even an hour of work) and claim up to 80% of your PAYE salary. Its the same rules as for any employee. If your salary has been kept low for tax efficient reasons then unfortunately that is all you can claim.

Also, could someone please explain the difference between the self-employed scheme and company directors? Am I right in thinking that self-employed people can continue to work as much as they like while also claiming up to £2500 in grants, but company directors are not allowed to so much as send an email?

@HasaDigaEebowai Please could you post a link?

www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme

A director who is also an employee will be able to furlough themselves as an employee (but unless you think your business won't suffer at all if you ignore it completely for three months then I would strongly advise you to think twice)

I've just seen that a petition has been set up here if anyone wanted to sign it:

www.change.org/p/uk-parliament-small-ltd-company-directors-to-get-government-support-like-the-employed-and-self-employed

Am I right in thinking that self-employed people can continue to work as much as they like while also claiming up to £2500 in grants, but company directors are not allowed to so much as send an email?

A self employed person does not operate through a limited company, they will be a sole treader or in a partnership.

A company director might also be an employee if they take a PAYE salary through payroll. If they don't take a salary through PAYE then they cannot be furloughed anyway.

Any person who is furloughed cannot do even an hours worth of work UNLESS they are self employed. This is the only exception.

Furloughed people can do training whilst furloughed (could be useful to some companies) but it cannot be income generating

Have to do some work now but I'll dip in and out throughout the day.

First on my work list this morning is to draft two furlough letters for clients !