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Original poster

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

330 replies

cucumber66 · 20/03/2020 21:13

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?

OP posts:
Original poster
cucumber66 · 27/03/2020 09:06

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

@HasaDigaEebowai So if I've understood this right, a self-employed person could effectively continue working as normal, earning a wage - while also claiming the government grant of up to £2500 a month. But a company director cannot so much as send an email without forfeiting the 80% pay. How is that fair?

Thanks for your insights on this by the way - very useful.

OP posts:
HasaDigaEebowai · 27/03/2020 09:11

Its the obvious inconsistency. It's possible of course that they will change this but at the moment that's how it stands.

ListeningQuietly · 27/03/2020 09:12

Cucumber
The self employed money is taxable .... so if they do not have a drop in earnings, they will owe at least 29% of it back at the end of the tax year ....

ddc70 · 27/03/2020 09:24

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 completely understand that legally this is the case. But the whole point of a government taking emergency action to help beat the virus by preventing people from working is to take a more grounded, realistic view of such things.

The fact of the matter, whatever the mechanism, is that this is the earned money that we live on. Whatever the route it takes, it starts with our work and ends in the bills we have to pay.

In hard times like this a responsible government shouldn't be hiding being monetary laws. Our families need to eat just like everyone else's and without subsistence many will fold and have to find other work which may be counter to containing this virus.

In this respect the Tories are shooting themselves in the foot (not to mention the post virus economic ramifications of all these companies ceasing to exist. Many will be replaced by companies that take their earning out of the UK.

So, perhaps this is all legally correct, but morally and pragmatically it be more incorrect.

Btw, thanks for all your input here, Hasa, it's much appreciated.

Original poster
cucumber66 · 27/03/2020 09:25

The self employed money is taxable .... so if they do not have a drop in earnings, they will owe at least 29% of it back at the end of the tax year

But the money we earn as company directors is also taxable through corporation tax and dividends. So why aren't we allowed to claim a government grant of up to £2500 a month while still trying to earn a wage which will then be subject to tax? Sorry if I'm not understanding - this really isn't my area of expertise but I don't see why we're treated different.

OP posts:
ddc70 · 27/03/2020 09:31

Sorry if I'm not understanding

It's because you're seeing from a human perspective. Try seeing it from the callus Tory policy maker's perspective and it makes perfect sense...

Cohle · 27/03/2020 09:38

If you've deliberately structured your financial arrangements to minimise the tax you pay, then I don't think you can be annoyed that the government now thinks you earn less than you do.

CandyLeBonBon · 27/03/2020 09:43

As a pp stated, you still pay tax on dividends. It's just not income tax. It's certainly not free money. What we don't pay in income tax, we pay in corporation tax

Cohle · 27/03/2020 09:46

I know. That's why I said minimise tax, not avoid it.

CandyLeBonBon · 27/03/2020 09:47

And the reason we do that? To compensate for the fact that we don't get paid holidays/sick/pension etc.

ddc70 · 27/03/2020 09:56

I don't think you can be annoyed that the government now thinks you earn less than you do.

They know exactly how much we earn via annual accounts, which include dividends. They're choosing to turn a blind eye utilising the detail of it to do so.

In a time of the greatest crises since the war (their words) blindly using this monetary detail to exclude us whilst simultaneously preventing us from working is hypercritical on a level far in excess of wanting equal help. As many here have said, most of us earn less than the Self Employed and PAYE - we aren't trying to cash in, we're trying to survive.

Cohle · 27/03/2020 10:38

And the reason we do that? To compensate for the fact that we don't get paid holidays/sick/pension etc.

Yes but you seem to want the same safety net afforded to employees now, despite not contributing to it.

furrytoebean · 27/03/2020 10:53

Yes but you seem to want the same safety net afforded to employees now, despite not contributing to it

Where do you think employees gets their money? They get it from business owners who take all the risks.
We pay into corporation tax, we pay national insurance, we pay income tax we pay tax on our dividends.

All the money we take as dividends has already been taxed before we draw it down and then it gets taxed again.

Why you think we should be left to rot and close our businesses down putting all those employees out of work I have no idea.

Cohle · 27/03/2020 11:05

Where do you think employees gets their money? They get it from business owners who take all the risks.

OP's only employee is herself. And you said earlier that you're in the same situation.

TabbyStar · 27/03/2020 11:08

I really think that people who have little idea about the tax situation of company directors should STFU about us paying no tax instead of insulting us and implying we are on the fiddle when we are facing a very uncertain future compared to others and pay a shit load of tax like everyone else. The advantages only kick in at higher levels anyway, not at the level that lots of us are earning at.

fivesecondrule · 27/03/2020 11:13

In terms of the dividend issue: I think a comparable issue can be applied to PAYE when an individual relies on bonus or commission. These individuals will only receive 80% of their basic pay. I know it's not exactly the same but are dividends a 'bonus' for the ltd business showing a healthy profit that year?

ddc70 · 27/03/2020 11:16

Yes but you seem to want the same safety net afforded to employees now, despite not contributing to it.

Er, we do pay NI, you know!

Cohle · 27/03/2020 11:17

No I won't shut the fuck up Tabby Hmm. And I understand the tax situation of company directors just fine.

People should be aware that choosing to structure their businesses in certain ways has consequences. Many people seemed delighted to accept the benefits, but are aghast at having to face up to the downsides.

ddc70 · 27/03/2020 11:20

In terms of the dividend issue: I think a comparable issue can be applied to PAYE when an individual relies on bonus or commission.

Good point! They should have those bonus/commissions included.

That's difficult if it's impossible to prove. However, dividends are all there on HRMC's records - as easy to check as Self Employment records.

Rosehip10 · 27/03/2020 11:21

All these "directors" who have been ripping the country off by paying sod all tax and then taking dividends for salary - suck it up, bet you don't feel it was such a good idea now! Also suck up paying proper NI in the future too Smile

Cohle · 27/03/2020 11:21

Er, we do pay NI, you know!

NI funds the state pension, JSA, maternity allowance and similar benefits.

No one is saying you shouldn't be entitled to those...

ddc70 · 27/03/2020 11:26

People should be aware that choosing to structure their businesses in certain ways has consequences.

I don't think you appreciate the consequences yourself, tbh.

There are two aims for the Tories are handing out cash...

  1. To stop people going out to work and spreading the virus.
  2. To enable the economy to get back to businesses asap after the virus.

Ignoring the plight of us 1 million'ish company owner/employees is counter to both of these aims.

Regardless of the petty detail the effect will be negative upon virus spread and economic recovery. Both of these surely trump your concerns.

ddc70 · 27/03/2020 11:28

Also suck up paying proper NI in the future too

Do you mind if we suck up sick pay and holiday pay while we're at it.
enjoy your pathetic gloat - what goes around comes around.

ListeningQuietly · 27/03/2020 11:35

SSP is paid for largely by Employers NI
Big companies force their staff to work through limited companies
so that the big company avoids paying sick pay, holiday pay, SMP, pensions and all the other perks they give their employees.

Maybe before gloating at those running small companies

you should ask why the NHS and the Civil Service and the BBC and ITV and Sky and Channel 4 and the Guardian and the Times and the Mail
force their workers to NOT be employees Hmm

cucumber66 · 27/03/2020 11:37

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