Directors of a Limited Company And coronavirus question

[Beebers111]

Dh and I run a small business. I don’t draw a salary, he draws just over £12k per year. That’s it. I work elsewhere so have a salary from that.

We don’t qualify for the government help of 80% as far as I know as he isn’t ‘leaving his job’ however we can’t afford to pay him as there isn’t the money in the company.

He isn’t classed as self employed. But we are a lower income family (household income for us is around £25k per year in its entirety).

We already claim a small amount of tax credits which we are entitled to as dd is receiving dla.

I don’t think we are entitled to any help yet? Unless I reduce DH’s salary and claim more tax credits? We have to do something or we are going to be wiped out in about 8 weeks time.

Does anyone have any advice ?

Sadly we're in exactly the same position.

We've discussed it with our accountants and so far there is virtually nothing that has been announced that will help us either, or in fact anyone either in this position or in self-employment.

Mortgage holiday - possibly, but can't get through to the bank to ask; deferred payment of second payment-on-account in July; wow - big deal!

Everything else that's been announced so far seems to be aimed at bailing out the government's business chums - and talking to business contacts a lot of them seem to be taking the cash that's there (business rate assistance / small business grants (if they're in a property or getting some sort of rates relief)) and THEN firing staff anyway. Businesses looking after Number One, and stuff the staff - Who'dathunkit?!

In short the government seems fine to print £330B to support businesses, and employees to an extent with the 80% reclaim on salary scheme (but I've yet to come across anyone who knows how to claim that - so people are just getting fired anyway.)

BUT it all feels like window-dressing - any help to the little people seems to involve endless jumping through hoops and hoping their employer will do the right things (and jump through some currently-non-existent hoops themselves.) But really there's very little there for individuals and families, when you look properly hard.

What needs to happen IMHO is that the government needs to divert some of that £330B directly to individuals, rather than have businesses act as the middlemen/women, grabbing their slice on the way through.

A friend of my partner is setting up what I think is a pretty well-worded petition on the government portal, requesting immediate support for families and individuals through the stopping of all Council Tax and utility bills, and rent / mortgage payments, for a minimum of three months until we start to see some improvement. I agree with him that the only way people will really buy into the behavioural change required is if the government steps up to the plate and supports them to do what the government WANTS them to do. Otherwise, self-preservation in so many cases is going to mean some people feel they have no choice but to take the risk.

OK so it's more money. But the Magic Money Tree seems in full flow for the Conservatives' mates in businesses of all sizes - why shouldn't it flow as well for the individuals and families who need help right now, when it's really needed?

I'll see if I can find the link - I think it's in the early stages of being verified but I may be wrong.

Stay safe and look after those close to you. We can never get our loved ones back, no matter how dire the financial situation might turn out to be in the short term. Y x

Here's the petition

www.change.org/p/uk-parliament-small-ltd-company-directors-to-get-government-support-like-the-employed-and-self-employed?source_location=search_index&algorithm=promoted&original_footer_petition_id=&grid_position=1&pt=AVBldGl0aW9uAGeoQQEAAAAAXoIqvoozNIhlODU2MWYzNA%3D%3D

Please sign and share as widely as possible.

Take care and hang in there.

Is it true that Ltd companies haven't been offered the same help because they earn more than £50k?? My friends husband has said he won't get any help and my auntie has just said it's because he earns £50k. Surely that's not true in every case. I'm sure he's not pulling in that amount

The issue with Ltd companies is in how directors are paid. When you run a limited company (as opposed to being self employed) you pay Corporation tax on your profits. If the director was to then pay himself a salary he’d also have to pay tax & employer NI on that so what many do (as advised by their accountants) is to pay themselves asmall salary just below income tax levels but so they still get NI credits. They then pay themselves dividends out of the already taxed profits. (There is still some personal tax to pay on dividends but not quite as much. )

The government has said that only paye salary and self employed profits count under their help schemes, not dividends.

OP - when you say your dh draws just over £12k per year is that salary through PAYE or dividends. If it’s salary then he can claim for the 80 per cent as long as he isn’t actively working to generate income for the company. He is still allowed to perform his statutory duties as a director.

Can a limited company earn less than £50k a year?

A limited company doesn’t earn anything. It either makes a profit or a loss. People earn money

www.gov.uk/guidance/check-if-you-could-be-covered-by-the-coronavirus-job-retention-scheme

There's a section for company directors here.