Anyone else screwed as a limited company couple ?

[totallysurreal]

We are a limited company - myself and DH. I'm really concerned, because it doesn't look like there will be any work for DH after this week. I'm off already as looking after the kids.

Our accountant said there is nothing we can claim apart from try for universal credit. I saw Martin Lewis said we can claim 80% if any salary paid via PAYE as if employed. Sadly we only paid ourselves the under the tax threshold amount each ( around 12k a year.) I only get that as we have small children so my work is minimal, but my DH draws dividends of varying amounts depending on what he's been charged out at and that's come in.

We do not have savings and won't be able to pay our mortgage with no work. I do not know what to think. This has always been an issue any sick or holiday periods for DH and we are screwed, no reserve. We live a very frugal life already - one car between us- no sky - no holidays ever- no weekends away- occasional bag of chips but no meals out etc.

Any one else in a bad small limited company situation due to Coronavirus?

@gamerchick sorry if I sounded annoyed! I'm just a bit hurt by some of the comments on this thread. People running small businesses take a huge amount of personal risk and are often creating lots of high quality jobs. Saying "just furlough yourself" or "get a job in a supermarket" or "it's your fault for dodging tax" have no idea what it's like trying to keep a business afloat right now, especially when you've spent years building it from scratch.

As for 'why do it then' - in my case I have to be a limited company to do the work I do. It's not my choice - I can't work in my area without being a limited company.

@gamerchick sorry if I sounded annoyed! I'm just a bit hurt by some of the comments on this thread

It's cool, we all have our irritations and bang head off desk moments. There's more stress being shared around than in the average year atm.

The dividend doesn't magically appear, like salary it only exists if we are working.

Ha ha, I like this idea, I work really hard on top of being a lone parent and caring for my parent(s). If I didn't have these responsibilities I'd probably be in a job earning double. I do feel I deserve a magically appearing dividend some years

Has anyone had any contact with their MP? I Tweeted mine on Thursday and wrote on Friday, waiting for a response, he's Conservative.

I can’t stand these threads! Sanctimonious pricks, who are probably paid their salaries by a limited company from an employer who has furloughed their employees, rather than lay them off, despite the fact they themselves are in big trouble.

The ignorance in business operations makes you look pathetic and talking out your backsides, nearly ALL small businesses pay dividends, it means that you can keep money in the company, rather than take a large salary and only take a dividend when the money is there.

Also the directors do pay tax on their self assessment, they also pay PAYE on each and every employee. Even furloughing over 100 staff, the PAYE is going to be £6,000 for us to find.

So you lot sit back enjoy you benefits, or your nice furloughed wage and don’t give a shit about those that run businesses so you can continue your selfish lifestyles.

Oh our business which has been in existence for 80 years is probably going bust, let’s hope you’re not one of our employees eh?

Others in the same boat, contact your MP and sign this ...

www.change.org/p/uk-parliament-limited-companies-to-receive-the-same-as-self-employed-and-employees-during-coronavirus

My husband takes £12k and we can't furlough him as business is too specialised for me to deal with clients (would have no idea what I am talking about). I will be furloughed but it's not really worth it (I do the admin so he can take that over relatively easily). We don't earn enough to take much in dividends. Fortunately the business has had a good run so we will be ok for 3-4months but if we can't get moving again after that then we are screwed. He's looking for other work now to keep us going but he's not proud and would happily work in a supermarket to keep money coming in and he can do that if he's not furloughed.

All of these nasty posters about small Ltd companies - I really wish that we could put you on a blacklist.

So the next time your boiler breaks down, your roof tiles blow off, or your car needs a repair, you're left standing in your own sh##te because no limited company will pop round and fix it. Then try getting a large company with PAYE employees out and enjoy the extra cost.

Glad to see some great posts explaining why the low PAYE plus dividends setup exists. As explained, the tax benefits are marginal. My DH has this arrangement as his income is unstable and it's just not possible to put a higher rate PAYE salary in place. He takes dividends 3-monthly based on the health of the business.

Indeed we paid our accountant £1350 last year .. limited companies paying for services.
I don't expect sympathy or handouts, but it IS unfair we are excluded from help. It was unfair when the self employed were excluded and that has been resolved. I just need to find a solution for us as a limited company.

I have signed the petition and I will contact my MP.

I’m actually really heartened to see all the other business owners here, defending each other.

It’s so easy to criticise business owners - and yet the realities are harsh. Yes there’s potential big profits but also incredibly hard work and huge risks.

Please directors do pay tax - twice - once on income via corporation tax and then again on dividends. I’d love to see PAYE people be happy to pay twice

Let’s hope the government does enable something to assist directors very soon.

Sunak did say that self employed could in this instance access Universal Credit. I know this is not much but better than nothing at all. Councils are also going to have a hardship fund. Apply quickly for help with Council Tax before it all goes.

Accessing benefits, sick pay etc is nothing to do with tax it is down to paying lower NI contributions. Sunak said after this is over he was going to look at making everyone pay the same Class 1. That will be really galling to those that did not get any help in this worrying time.

But everyone needs to be saving as well. It's common money aware advice that you need savings

@Didkdt oh do take your sanctimonious “advice” and shove it where the sun don’t shine. Do you think most people can actually afford to save?! I would love to but don’t earn anywhere near enough! And I haven’t been on holiday in years before you ask. Some people really don’t have a clue do they?

But everyone needs to be saving as well. It's common money aware advice that you need savings

On this basis no one should be getting any help at all, we can all live off our savings!

People love being sanctimonious don’t they?

Serves them right, should have thought about it, have they not got insurance? Where’s your savings.

Bet they have loads of friends.

On this basis no one should be getting any help at all, we can all live off our savings!

Well quite. Also people on salaried jobs don't have other expenses to worry about such as business rent, accountants bills, unpaid invoices, corporation tax etc. which will all hit small business owners during this lockdown. You'd have to save a bloody lot of money to be able to pay all that off for months and months.

I really can't waste another day getting worked up and trying to justify ltd companies and explaining why we aren't all tax dodging scum

It's crap, sorry you are in this situation OP
I know you've said about the mortgage break
I'd really encourage you to find a second job, pharmacies and supermarkets are recruiting here.
The one thing us business owners are good at is seeing opportunities and grabbing them with both hands.
Review your outgoings and see what you need per month - I don't know about you but I've saved a bit these last 2 weeks not going out. It seems obvious but until the figures were written down my DH who has stopped trading was worried.
I pay almost £1k on credit card debts. I've moved all to minimum repayments saving short term £700. On average we spend £100 eating out each week, so that's another £400 saved.
He's now realised that he doesn't need to bring home X but X-£1,100 and he now knows what he needs to find a way to generate. It feels more manageable than trying to match your current earnings

Yes let's get back to serious suggestions. Here's what I've done:

• reduced mine and my partner's salaries to a bare minimum to keep money in the business
• I'm considering asking the accountants if we can pay in a few months rather than now so we can keep some cash flow
• we're now trying to figure out how we can provide services that make sense given the current situation, I've been working pretty much 13 hour days non-stop for the last 2 weeks trying to sort this out. I'm desperate for a weekend! Time will tell if it works so fingers crossed

I'm not sure if any of these suggestions would work for anyone else here so sorry if not. Thanks to all of those putting pressure on MPs etc. It does seem surprising that the government would let so many small business owners go under given how vital we are to the economy but there we are. Maybe we need to shout a bit louder as I'll be absolutely livid if they start bailing out companies like Virgin and easyJet while we get nothing.

Some people set up ltd companies as that is the best way for their business to operate. Some people (both the IT freelance contractors I know, for example) set them up to avoid tax. Those sorts of people unfortunately give private ltd companies a bad name.

Dippy - most of us who work as contractors for big companies (and no I don't work in IT) have to set up limited companies. That's one of the stipulations for big companies giving us work.

Oh FFS
Yes everyone should try and save I've seen people save on very low incomes mostly because they NEED to a couple of generations ago that's what people did. Because they knew the consequences of losing their jobs. It's what people in countries with no welfare state do and they are generally very poor.
I've never said Ltd companies are all rolling in clover but you do have access to things employees don't. Especially employees in retail and the service industry many of whom are on those low wages without the perks and with zero hours contracts.
You can take a dividend a company loan ask the council for relief. There are bank loans available.
A lot of retail businesses have gone. They wont be Furloughed. Airlines are giving staff 50% pay cuts or laying them off. No furlough there.
It sucks for a lot of people out there and they have nothing to fall back on. They aren't all having their pitty party because they are being Furloughed on £24k
My experience of Ltd companies are the I T contractors but at the end of the day the government must have felt you had access to different funds.
Yes some companies have and will go to the wall and for some that would have happened with or without Covid 19. It is sad it's been sad for a long time. When the old family businesses were dying on the High St to make way for the national retail chains no one was on here saying fuck off.
Yes we should be paying PAYE level sums to our contractors to tradesmen but we're not.
Everyone has been looking for the cheapest way to make money for years, but no one is saving it, and it's coming back to haunt us.

both the IT freelance contractors

None of the major employers, such as banks, internet firms, insurance companies etc will engage freelancers on any basis other than through a limited company or similar intermediary. They certainly won't engage a sole trader, and havn't been doing for the last 20/25 years. Those contractors you know wouldn't have a choice!

Accessing benefits, sick pay etc is nothing to do with tax it is down to paying lower NI contributions.

People on low wages HAVE paid the required NIC to get the "credits" for state benefits such as state pension. Earning more and paying more NIC doesn't give you more rights to, say, higher state pension, or higher SSP. Huge numbers of people don't pay any NIC at all (carers, home responsibility parents), benefit claimants, etc., yet have the same rights to state benefits such as state pensions.

There is NO link between the amount paid in NIC and the benefits you receive. Having enough "credits", i.e. wages above the NIC threshold or credits by exemption, is the gateway to benefits.

All that has now been ripped up and suddenly, we've got an income related benefit. No one could have planned for that.