sole trader ltd company (not paye)

derek876544

I am a sole trader ltd company (not paye)  but receive a directors loan each month to cover my living expenses etc. I contacted my accountant and he says I am not entitled to any covid type payments and I am in a grey area as I am not paye.

I was not affected with the first lockdown and was able to continue working, as I am a mechanic, but as the year has gone on my workload has started to fall away with my regular customers not willing to spend as much and not using their machines. I am looking at it possibly being a bleak winter workwise and am wondering what steps I can take if any to receive any help or if I have to be off covid wise ???????

Jeremy535897

It is getting a bit late to do so, but you could ask the company's bank about bounce back loans. Mortgage "holidays" are also being extended.

calcotti

If you trade as a limited company you are not a sole trader, you are a one person limited company.

Nothing to do with your question but if you are not paying yourself through a PAYE you will not be accruing NI credits towards your future State Pension - or are you getting these another way?

diggingdude

Could you not pick up some work at an mot test garage. All the ones round me are currently understaffed with backlogs due to the mot extension earlier in the year 

Grumpy_chap

You cannot be a Sole Trader and a Ltd Co Director - it sounds like you are the latter.

Why on earth are you not paying yourself through payroll and then dividends for whatever else you draw from the business?
 
Paying Director's Loan to cover living expenses is very unusual and will need to be "regularised" at some point in time to correctly pay the tax - possibly annual RTI?  The other reason would be if you have made a Directors Loan to the business to fund equipment for start up and are now repaying that loan from the business to the Director in a monthly payment basis.

All mechanics are really busy around us, so there must be work available - why are your customers deserting you?

If you had payroll, then furlough may have been a possibility in the past and may be a possibility under the November Furolugh, but without payroll, both these options are unavailable.  You could consider BBLS.  Also mortgage, loan payment holidays and tax deferrals.  Other than that, UC is the only option.

Do you have an Accountant advising you?  If not, time to get one.

gizmo111

diggingdude said:

Could you not pick up some work at an mot test garage. All the ones round me are currently understaffed with backlogs due to the mot extension earlier in the year 

The OP says he is a mechanic - doesn't stipulate that he works in the motor trade.  There's lots of other machinery that would need repairs/maintenance.

calcotti

Grumpy_chap said: If you had payroll, then furlough may have been a possibility in the past and may be a possibility under the November Furolugh, 

Would need to have reported a PAYE payment to HMRC by 30th October.

Grumpy_chap

calcotti said:

Grumpy_chap said: If you had payroll, then furlough may have been a possibility in the past and may be a possibility under the November Furolugh, 

Would need to have reported a PAYE payment to HMRC by 30th October.

Yes, it was a hypothetical IF given the OP said that they do not operate payroll.

derek876544

Thanks for all your comments, I am indeed a one person Ltd company.
My job entails working on Horticultural machinery mainly golf courses and council work (as well as domestic in the winter) I recieve a payment from my company each month and not being paye seems the reason for no furlough payments.
I am going to contact my accountant again for further discussion as to why I am not paye as it was he who advised me to go Ltd originally.
It's just nice to get other people's opinions and you have given me some ammo to throw at him.
Regards Derek J.

Grumpy_chap

derek876544 said:

I am indeed a one person Ltd company.
My job entails working on Horticultural machinery mainly golf courses and council work (as well as domestic in the winter) I recieve a payment from my company each month and not being paye seems the reason for no furlough payments.
I am going to contact my accountant again for further discussion as to why I am not paye as it was he who advised me to go Ltd originally.

Some council maintenance work may still continue - even possibly some golf course work if they want to keep the greens in good order ready to re-open asap.

If not PAYE, what is the monthly payment you receive from the Ltd Co?  Dividend?  Repayment of Director's Loan?  
It is not being Ltd Co that is the issue, it is the unusual state of not having a payroll operating, which means no NI so your state pension is not secured.  Even without the need for hindsight about coronavirus impacts (which the Accountant is fair not to have taken into account tbh), maintaining enough salary for NI threshold is a common approach.

dunstonh

I am a sole trader ltd company (not paye)  

You cannot be both (unless it is two separate roles)

but receive a directors loan each month to cover my living expenses etc. I contacted my accountant and he says I am not entitled to any covid type payments and I am in a grey area as I am not paye.

Its not a grey area.   A directors loan is not salary.   its black and white.

As you are not paying yourself a salary, you are not qualifying towards the state pension. So, that's a big loss for you.   And it also means other benefits are not being qualified for either.  A limited company director should nearly always take a salary to at least the primary threshold (the bit that qualifies you for state pension and benefits).

Why are you using the DLA and not salary and dividends?  There is no logical reason for doing this.   Are you sure its DLA and not dividends that are being used?

If the accountant recommended this, then you should be having strong words with him as its hurting you not just now but also causing you to miss out on state pension qualification.