Small company director - part time furlough and Dividends advice?

MoneyNow1

Like others I am a director of tiny company. I've been on Furlough since March (minimum PAYE salary) due to business demand evaporating but managing to do some hours now but that's all, so Furlough payment adjusted accordingly which doesn't amount to a lot. Company can survive we hope, as during pandemic we've reigned in on all non fixed overheads but the company will still make a loss this year.  There are some small reserves in the bank account from previous years profitability, is it still possible to take a modest director dividend in this case whilst still leaving enough to cover further months just on PAYE, as survival on PAYE won't pay my ongoing monthly personal bills. Sorry if this is a straightforward question, just a bit overwhelmed with all the rule changes and eligibility criteria  at present and want to make sure I comply with any new regulations. 

Jeremy535897

It is probably best to pay yourself £9,504 salary in 2020/21 but if company law permits it, you can then take a dividend. Reserves are what you need, though, not just cash in the bank.

Grumpy_chap

Have you considered BBLS?
Does the business operate from premises?

If you take a dividend but then default on anything, expect the creditors to pursue you personally (irrespective of the Ltd Co differentiation).

MoneyNow1

Grumpy_chap said:

Have you considered BBLS?
Does the business operate from premises?

If you take a dividend but then default on anything, expect the creditors to pursue you personally (irrespective of the Ltd Co differentiation).

Thanks,  always worked from home office so no business premises. Not planning on defaulting on anything and only debt is deferred VAT from earlier in the year, which I've put aside for March when due, but I wanted to check there are no rules preventing taking a dividend from company reserves whilst claiming partial ( reduced hours) furlough payments. 

Jeremy535897

Maybe you were thinking of this (not relevant to CJRS):

"3.2 Shareholder distributions

The government expects that large employers (250 or more employees) and their corporate groups using the scheme will not make capital distributions whilst claiming the Job Support Scheme grant. This includes:

• dividend
• charge
• free or other distribution
• any equivalent payment that a partnership may make to its partners

The government does not plan to make this expectation a contractual or legal condition of the scheme but encourages business to reflect on their responsibilities and that taxpayers should be able to rely on public money only being claimed where it is clearly needed."

From https://www.gov.uk/government/publications/the-job-support-scheme/the-job-support-scheme

Pennywise

May be better to take a slightly higher wage rather than the minimal 80% on furlough rather than dividend, depending on amount needed, current wage level, etc.  Get your accountant to crunch the numbers both ways.

MoneyNow1

Pennywise said:

May be better to take a slightly higher wage rather than the minimal 80% on furlough rather than dividend, depending on amount needed, current wage level, etc.  Get your accountant to crunch the numbers both ways.

Thank you again for feedback, we had explored increasing Directors PAYE pay but Accountant advised us there was a deadline published after it had passed so there was no option to do this. If anyone has different information and is is an option now, this is for sure our preferred route. Just considering if we see a considerable drop in income this year how that will affect assessment for personal borrowing in the future in case we need to remortgage or get a personal loan etc. 

Grumpy_chap

You can increase the Directors PAYE at any time.  It simply passed the deadline to be assessed at the higher level for CJRS claim, if any.  
It seems as though your Accountant is rather wanting.  The fact you have an Accountant but still ask in a public forum seems to suggest you may be in agreement about the Accountant's capability.

dunstonh

Do you have any retained profits within the business?  Those can be distributed as dividends as the retained profits come from previous years and are profit and allowable for dividends.