With schemes for the self-employed and employees being unveiled by the Government, directors of limited companies have been asking what help is available to them.
As many of our clients feel HMRC has not announced much help to those drawing a low salary and dividends, here are some of the questions we’ve been asked most often:
Can I furlough myself and get 80% of my income back?
Not quite. You could furlough yourself under the Coronavirus Job Retention Scheme, but if you pay yourself a small amount in salary and draw the rest in dividends in order to be as tax efficient as possible you will only get 80% of your salary back and none of the part of your income that is drawn in dividends.
Can I work during furlough?
The time you are furloughed must be for a minimum block of three weeks. During this time, you cannot undertake any work for your business, outside fulfilling your regulatory duties such as filing returns. If you decide to furlough yourself you must have it in writing and as a recorded minute in your company records.
Can I pay my dividends to myself through PAYE and then claim 80% of them back?
No, this would be fraud. Not only that, but in order to qualify you must have been on your PAYE scheme on 19 March 2020, and payments are calculated on past salary.
I’m an owner-manager and the only person in my business. Do I qualify for the Self Employment Income Support Scheme?
Unfortunately, no. The SEISS is open to self-employed sole traders but doesn’t include directors as they are, technically, employees of their company.
I am a contractor under IR35. Can I furlough myself?
Yes. The group entitled to furlough includes contractors, consultants and other workers who provide services to an organisation via a limited company set up as a PSC (personal services company). If you provide services to the public sector the rules are slightly different, so do seek expert help.
What else should I be thinking about?
There’s no ‘one size fits all’ solution for limited company directors. The Government measures that have been released may be useful for you depending on the size and nature of your business.
Here’s a brief list of things you could explore, which we have covered separately:
- Cash flow and payments
- Mortgage holidays
- Deferring income tax and VAT payments
- The Coronavirus Business Interruption Loan Scheme
- HMRC Time to Pay Scheme
- Statutory Sick Pay Relief package for businesses
- Business rates holidays
- The Small Business Grant Scheme
As always, we’re here to help you in these uncertain times. If you need advice about any of the above, speak to us about the ways we can help.