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

sanch3z_77

zagfles said:

mobilejo said:

Jeremy535897 said:

LilElvis said:

fenwick458 said:

well for a one person LTD company the Employer NIC doesn't matter because you get £3000 allowance per year,
and OK employees NIC is 12%, bringing the total paid with the salary method to £4000, so the difference could be £687.50

Of course Employers NIC matters - you have £X in the bank to pay out and this would be part of the cost if the money was distributed via PAYE rather than as a dividend.

Not if your total employer's NIC is below £3,000 for 2019/20. See
https://www.crunch.co.uk/knowledge/employment/employment-allowance-explained/

Except he wouldn't be eligible to claim the allowance being a one man company.

zagfles said:
Well it makes much more sense than saying to the government "please now treat that the income I pretended was unearned in order to avoid paying National Insurance as earned income so I can have my cake and eat it".

Dividends are unearned income, and are not, and should not be covered by this scheme. Even if the dividends are from a company you work for. If someone has saved several thousand in NI over the years through this type of creative accounting then they should use the money they saved to bail themselves out. Instead of effectively trying to claiming on an insurance they didn't pay the premiums for.

Unearned income? Interesting interpretation. So the company has £x in the company bank account - If I tick box A on my tax return (salary), then I earned it with blood, sweat and tears. But if I tick box B (dividends) then all of a sudden that same money just fell on me from the sky and I didn't earn it? 

To call it creative accounting is giving it too much credit - its the least creative and basic accounting advice there is. No one is pretending its a secret or dodgy way of doing things, certainly not HMRC who are well aware of how directors remunerate themselves.

Exactly. If you want earnings, then pay national insurance on your earnings like everyone else. If you want dividends from a company you own, then if that company is unable to pay those dividends for whatever reason, you're no different to someone who owns shares in a publicly listed company which is unable to pay dividends. I don't see the govt bailing out shareholders.

The hypocrisy of those who've benefitted for years by pretending earned income is unearned and now suddenly want to claim their dividends are in fact wages even though they paid no NI on them is unbelievable.

I really see your side of the argument and appreciate it but we don't pay ourselves £3000 a month each salary as there are years and months where the company can't cover this, other months and years when events happen things are more lucrative... sure it sounds like a terrible business but the flexibility to take dividends when possible means we can earn as the health of the company improves. We started this business to spend more time together as a family and we don't regret a minute of it. The downside is I never get to switch off and the first thing in my suitcase for a holiday is my laptop.

So this isn't some huge tax fiddle but about flexibility, now however it's a real problem. Family of four with likely little to no income for 4-6 months

rmsc3r

Have a look at the MSE guide to Corona Virus Self-employed and employment help... it says this...

Are you a self-employed limited company director?

There have been a lot of conflicting reports on this. Over to Martin who has the lowdown: "I have now had it absolutely confirmed by both the Treasury and HMRC that self-employed limited company directors CAN be furloughed as employees on their PAYE element, even if they’re the sole employee.

"Technically they can't then work for the firm, but can continue to perform their statutory obligations as directors, eg, official legal filings."

zagfles

sanch3z_77 said:

zagfles said:

mobilejo said:

Jeremy535897 said:

LilElvis said:

fenwick458 said:

well for a one person LTD company the Employer NIC doesn't matter because you get £3000 allowance per year,
and OK employees NIC is 12%, bringing the total paid with the salary method to £4000, so the difference could be £687.50

Of course Employers NIC matters - you have £X in the bank to pay out and this would be part of the cost if the money was distributed via PAYE rather than as a dividend.

Not if your total employer's NIC is below £3,000 for 2019/20. See
https://www.crunch.co.uk/knowledge/employment/employment-allowance-explained/

Except he wouldn't be eligible to claim the allowance being a one man company.

zagfles said:
Well it makes much more sense than saying to the government "please now treat that the income I pretended was unearned in order to avoid paying National Insurance as earned income so I can have my cake and eat it".

Dividends are unearned income, and are not, and should not be covered by this scheme. Even if the dividends are from a company you work for. If someone has saved several thousand in NI over the years through this type of creative accounting then they should use the money they saved to bail themselves out. Instead of effectively trying to claiming on an insurance they didn't pay the premiums for.

Unearned income? Interesting interpretation. So the company has £x in the company bank account - If I tick box A on my tax return (salary), then I earned it with blood, sweat and tears. But if I tick box B (dividends) then all of a sudden that same money just fell on me from the sky and I didn't earn it? 

To call it creative accounting is giving it too much credit - its the least creative and basic accounting advice there is. No one is pretending its a secret or dodgy way of doing things, certainly not HMRC who are well aware of how directors remunerate themselves.

Exactly. If you want earnings, then pay national insurance on your earnings like everyone else. If you want dividends from a company you own, then if that company is unable to pay those dividends for whatever reason, you're no different to someone who owns shares in a publicly listed company which is unable to pay dividends. I don't see the govt bailing out shareholders.

The hypocrisy of those who've benefitted for years by pretending earned income is unearned and now suddenly want to claim their dividends are in fact wages even though they paid no NI on them is unbelievable.

I really see your side of the argument and appreciate it but we don't pay ourselves £3000 a month each salary as there are years and months where the company can't cover this, other months and years when events happen things are more lucrative... sure it sounds like a terrible business but the flexibility to take dividends when possible means we can earn as the health of the company improves. We started this business to spend more time together as a family and we don't regret a minute of it. The downside is I never get to switch off and the first thing in my suitcase for a holiday is my laptop.

So this isn't some huge tax fiddle but about flexibility, now however it's a real problem. Family of four with likely little to no income for 4-6 months

You can pay variable wages, for instance my employer has a profit share and that's paid dependant on company profits and is paid as a bonus, subject to NI in the same way as normal earnings. Although I think even here, bonuses and suchlike are excluded from the govt scheme for employees, it's meant to cover basic wage only. I think employees who've done stuff like salary sacrifices will be in the same boat.

Look at Universal Credit, you'd get quite a lot with a family of 4 if you have no income and no savings. Alternatively, there are loads of jobs going in supermarkets and food production apparently.

sanch3z_77

zagfles said:

sanch3z_77 said:

zagfles said:

mobilejo said:

Jeremy535897 said:

LilElvis said:

fenwick458 said:

well for a one person LTD company the Employer NIC doesn't matter because you get £3000 allowance per year,
and OK employees NIC is 12%, bringing the total paid with the salary method to £4000, so the difference could be £687.50

Of course Employers NIC matters - you have £X in the bank to pay out and this would be part of the cost if the money was distributed via PAYE rather than as a dividend.

Not if your total employer's NIC is below £3,000 for 2019/20. See
https://www.crunch.co.uk/knowledge/employment/employment-allowance-explained/

Except he wouldn't be eligible to claim the allowance being a one man company.

zagfles said:
Well it makes much more sense than saying to the government "please now treat that the income I pretended was unearned in order to avoid paying National Insurance as earned income so I can have my cake and eat it".

Dividends are unearned income, and are not, and should not be covered by this scheme. Even if the dividends are from a company you work for. If someone has saved several thousand in NI over the years through this type of creative accounting then they should use the money they saved to bail themselves out. Instead of effectively trying to claiming on an insurance they didn't pay the premiums for.

Unearned income? Interesting interpretation. So the company has £x in the company bank account - If I tick box A on my tax return (salary), then I earned it with blood, sweat and tears. But if I tick box B (dividends) then all of a sudden that same money just fell on me from the sky and I didn't earn it? 

To call it creative accounting is giving it too much credit - its the least creative and basic accounting advice there is. No one is pretending its a secret or dodgy way of doing things, certainly not HMRC who are well aware of how directors remunerate themselves.

Exactly. If you want earnings, then pay national insurance on your earnings like everyone else. If you want dividends from a company you own, then if that company is unable to pay those dividends for whatever reason, you're no different to someone who owns shares in a publicly listed company which is unable to pay dividends. I don't see the govt bailing out shareholders.

The hypocrisy of those who've benefitted for years by pretending earned income is unearned and now suddenly want to claim their dividends are in fact wages even though they paid no NI on them is unbelievable.

I really see your side of the argument and appreciate it but we don't pay ourselves £3000 a month each salary as there are years and months where the company can't cover this, other months and years when events happen things are more lucrative... sure it sounds like a terrible business but the flexibility to take dividends when possible means we can earn as the health of the company improves. We started this business to spend more time together as a family and we don't regret a minute of it. The downside is I never get to switch off and the first thing in my suitcase for a holiday is my laptop.

So this isn't some huge tax fiddle but about flexibility, now however it's a real problem. Family of four with likely little to no income for 4-6 months

You can pay variable wages, for instance my employer has a profit share and that's paid dependant on company profits and is paid as a bonus, subject to NI in the same way as normal earnings. Although I think even here, bonuses and suchlike are excluded from the govt scheme for employees, it's meant to cover basic wage only. I think employees who've done stuff like salary sacrifices will be in the same boat.

Look at Universal Credit, you'd get quite a lot with a family of 4 if you have no income and no savings. Alternatively, there are loads of jobs going in supermarkets and food production apparently.

we don't qualify for universal credit and that should be ring-fenced for the really needy. Saying that most people getting the furlough will also no qualify for universal credit but they are still getting assistance

zagfles

sanch3z_77 said:

zagfles said:

sanch3z_77 said:

zagfles said:

mobilejo said:

Jeremy535897 said:

LilElvis said:

fenwick458 said:

well for a one person LTD company the Employer NIC doesn't matter because you get £3000 allowance per year,
and OK employees NIC is 12%, bringing the total paid with the salary method to £4000, so the difference could be £687.50

Of course Employers NIC matters - you have £X in the bank to pay out and this would be part of the cost if the money was distributed via PAYE rather than as a dividend.

Not if your total employer's NIC is below £3,000 for 2019/20. See
https://www.crunch.co.uk/knowledge/employment/employment-allowance-explained/

Except he wouldn't be eligible to claim the allowance being a one man company.

zagfles said:
Well it makes much more sense than saying to the government "please now treat that the income I pretended was unearned in order to avoid paying National Insurance as earned income so I can have my cake and eat it".

Dividends are unearned income, and are not, and should not be covered by this scheme. Even if the dividends are from a company you work for. If someone has saved several thousand in NI over the years through this type of creative accounting then they should use the money they saved to bail themselves out. Instead of effectively trying to claiming on an insurance they didn't pay the premiums for.

Unearned income? Interesting interpretation. So the company has £x in the company bank account - If I tick box A on my tax return (salary), then I earned it with blood, sweat and tears. But if I tick box B (dividends) then all of a sudden that same money just fell on me from the sky and I didn't earn it? 

To call it creative accounting is giving it too much credit - its the least creative and basic accounting advice there is. No one is pretending its a secret or dodgy way of doing things, certainly not HMRC who are well aware of how directors remunerate themselves.

Exactly. If you want earnings, then pay national insurance on your earnings like everyone else. If you want dividends from a company you own, then if that company is unable to pay those dividends for whatever reason, you're no different to someone who owns shares in a publicly listed company which is unable to pay dividends. I don't see the govt bailing out shareholders.

The hypocrisy of those who've benefitted for years by pretending earned income is unearned and now suddenly want to claim their dividends are in fact wages even though they paid no NI on them is unbelievable.

I really see your side of the argument and appreciate it but we don't pay ourselves £3000 a month each salary as there are years and months where the company can't cover this, other months and years when events happen things are more lucrative... sure it sounds like a terrible business but the flexibility to take dividends when possible means we can earn as the health of the company improves. We started this business to spend more time together as a family and we don't regret a minute of it. The downside is I never get to switch off and the first thing in my suitcase for a holiday is my laptop.

So this isn't some huge tax fiddle but about flexibility, now however it's a real problem. Family of four with likely little to no income for 4-6 months

You can pay variable wages, for instance my employer has a profit share and that's paid dependant on company profits and is paid as a bonus, subject to NI in the same way as normal earnings. Although I think even here, bonuses and suchlike are excluded from the govt scheme for employees, it's meant to cover basic wage only. I think employees who've done stuff like salary sacrifices will be in the same boat.

Look at Universal Credit, you'd get quite a lot with a family of 4 if you have no income and no savings. Alternatively, there are loads of jobs going in supermarkets and food production apparently.

we don't qualify for universal credit and that should be ring-fenced for the really needy. Saying that most people getting the furlough will also no qualify for universal credit but they are still getting assistance

Indeed, on their basic wage, same for everyone, as per post above at 11:34

onwards&upwards

Why don’t you and your wife get jobs?  Lots of supermarkets and hospitals are hiring coronavirus temps.  You’d be part of the solution then, something to be proud of. 

whizzywoo

According to the Martin Lewis briefing lone company directors are allowed to furlough themselves under the Job Retention Scheme.
They are allowed to carry out minimal admin duties such as statutory filings etc during the furlough period.  I would think that running payroll and completing VAT returns would count as statutory filing.  However they are NOT allowed to carry out any income generating duties. 
The Job Retention Scheme does NOT cover company dividends paid only salary paid through a proper PAYE scheme.
See Martin's comments here:
https://www.moneysavingexpert.com/news/2020/03/coronavirus-self-employed-and-employment-help/?utm_source=MSE_Newsletter&utm_medium=email&utm_term=31-Mar-20-50599902-1684&utm_campaign=nt-hiya&utm_content=15#limited

sanch3z_77

onwards&upwards said:

Why don’t you and your wife get jobs?  Lots of supermarkets and hospitals are hiring coronavirus temps.  You’d be part of the solution then, something to be proud of. 

easier said than done. Two under tens now at home. Wife has a prolapsed disc (since November) that can't be operated on due to current capacity issues and I have asthma. It's a crap situation all round. I could furlough us both but that will likely lead to lost clients that in the long-term might do us more harm. The government should really be looking at turnover, see if it's genuinely impacted and compensate as they have other groups.

onwards&upwards

sanch3z_77 said:

onwards&upwards said:

Why don’t you and your wife get jobs?  Lots of supermarkets and hospitals are hiring coronavirus temps.  You’d be part of the solution then, something to be proud of. 

easier said than done. Two under tens now at home. Wife has a prolapsed disc (since November) that can't be operated on due to current capacity issues and I have asthma. It's a crap situation all round. I could furlough us both but that will likely lead to lost clients that in the long-term might do us more harm. The government should really be looking at turnover, see if it's genuinely impacted and compensate as they have other groups.

Sorry to hear about your wife’s delayed op, but lots of people with asthma are still working.  I am.

Good luck anyway.

sanch3z_77

onwards&upwards said:

sanch3z_77 said:

onwards&upwards said:

Why don’t you and your wife get jobs?  Lots of supermarkets and hospitals are hiring coronavirus temps.  You’d be part of the solution then, something to be proud of. 

easier said than done. Two under tens now at home. Wife has a prolapsed disc (since November) that can't be operated on due to current capacity issues and I have asthma. It's a crap situation all round. I could furlough us both but that will likely lead to lost clients that in the long-term might do us more harm. The government should really be looking at turnover, see if it's genuinely impacted and compensate as they have other groups.

Sorry to hear about your wife’s delayed op, but lots of people with asthma are still working.  I am.

Good luck anyway.

indeed. I'm looking to work but there are a couple more health things that make it more difficult... Luckily we have a few savings but this is likely going to cost us 8-12k to get through this and i'm a little disappointed with the lack of support compared to other groups.