Why are self employed directors not eligible for financial support? Please explain

CoopersHumum

I am a one-man band...a self-employed consultant in my limited company. I have had my diary (and ability to earn) completely wiped out by C-19 due to distancing requirements. I am the only breadwinner in the household and do not have enough savings on which to rely for months without income. I simply don’t understand why being paid a small salary and the rest of my earnings in dividends (equalling around £25k a year) should prevent me from accessing the self-employed assistance offered to others. I am on the verge of a nervous breakdown with worry.
UC wouldn’t even cover my council tax and water bill per month, let alone any other expense.

why are people like me penalised...I simply don’t understand.

Hermann

You can furlough, but looks like due to your tax arrangements that won't amount to much.

Hermann

Dividends are just that, dividends. if they paid you 80% of your dividends then they have to pay 80% of easy jets & many others dividends.

comeandgo

You adjust your wages and dividends with the intent of reducing the amount of tax you pay.  Sometimes this can bite you in the bum.  This is one of this times.  

CoopersHumum

comeandgo said:

You adjust your wages and dividends with the intent of reducing the amount of tax you pay.  Sometimes this can bite you in the bum.  This is one of this times.  

I pay tax on the dividends as well as the wages...I pay corporation tax on the profits that are left. My dividend earnings are still taxable... I feel like I’m being thick here as I don’t actually benefit from lower tax payments as a consequence of being paid by mix of dividends and wages...

thanks for your time and reply...very much appreciated

CoopersHumum

Hermann said:

Dividends are just that, dividends. if they paid you 80% of your dividends then they have to pay 80% of easy jets & many others dividends.

Well I’m sure easyJet’s are more than 50k profit which appears to be the cap... I’m well below that amount.
i seem to being penalised for taking earnings through a mix of dividends and wages...both still only coming up to around 25k...
I pay the same tax on the dividends as I do on the wages component, and corporation tax on the rest. I’m overwhelmed by it.

i appreciate the time you have taken to reply, thank you

neilmcl

CoopersHumum said:

comeandgo said:

You adjust your wages and dividends with the intent of reducing the amount of tax you pay.  Sometimes this can bite you in the bum.  This is one of this times.  

I pay tax on the dividends as well as the wages...I pay corporation tax on the profits that are left. My dividend earnings are still taxable... I feel like I’m being thick here as I don’t actually benefit from lower tax payments as a consequence of being paid by mix of dividends and wages...

thanks for your time and reply...very much appreciated

Have you forgotten about NIC?

Hermann

It does nothing to help your situation but why take your pay as dividends if you saw no advantage?

neilmcl

Hermann said:

It does nothing to help your situation but why take your pay as dividends if you saw no advantage?

Probably because, like many others, he was advised to do this by his accountant to be "tax efficient".

diggingdude

Those lower National Insurance contributions are coming back to bite people now, why else would people pay themselves this way?

CoopersHumum

neilmcl said:

Hermann said:

It does nothing to help your situation but why take your pay as dividends if you saw no advantage?

Probably because, like many others, he was advised to do this by his accountant to be "tax efficient".

Correct. Advised by accountant. Thanks for taking the time to respond