Bounce Back Loan

yvonneb123

Hi, 

As a Director of a Limited Company I have been very frustrated that no financial grants were available as they were to the self employed and the only option was (and still is) a bounce back loan.
Reluctantly I have now gone down this route but have a question that I cannot seem to find the answer to anywhere online.  I am the only employee of my company and in the past have made regular and significant SIPP contributions through the company.  Does anybody know if I’m able to use the bounce back loan (or at least some of it) for this purpose? I was planning to absolutely try and pay it back at the end of the last year to avoid any interest, however as the interest rate is so low it may make financial sense to use it in my SIPP if this is allowable?  Any advice/knowledge would be very welcome. 

Many thanks......

Jeremy535897

If the contributions are in line with past contributions, there should not be an issue.

MattMattMattUK

yvonneb123 said:

As a Director of a Limited Company I have been very frustrated that no financial grants were available as they were to the self employed and the only option was (and still is) a bounce back loan.

You are also able to claim for PAYE salary under CJRS.

yvonneb123 said:

Reluctantly I have now gone down this route but have a question that I cannot seem to find the answer to anywhere online.  I am the only employee of my company and in the past have made regular and significant SIPP contributions through the company.  Does anybody know if I’m able to use the bounce back loan (or at least some of it) for this purpose? I was planning to absolutely try and pay it back at the end of the last year to avoid any interest, however as the interest rate is so low it may make financial sense to use it in my SIPP if this is allowable?  Any advice/knowledge would be very welcome. 

It might be a grey area, but the key factor is are your SIPP payments contractual, or are they discretionary. Also, would making those payments mean that the company was insolvent on the basis of having greater liabilities than assets (eg. if you paid the value of the loan into your SIPP, but left the debt on the company's books unpaid and had no other assets, or assets less than the liabilities) regardless of any projected future revenue. If doing so would make the company insolvent then it would not be legal, in would breach your obligations of a director and could well be regarded as undue enrichment. 

Grumpy_chap

As a Director of a Ltd Co., you are eligible for CJRS.  
You are not eligible for self-employed grants as you are not self-employed.
Depending upon the nature and operation of the business, the Ltd Co. may have been eligible for the premises-related grants.

Jeremy535897

MattMattMattUK said:

yvonneb123 said:

As a Director of a Limited Company I have been very frustrated that no financial grants were available as they were to the self employed and the only option was (and still is) a bounce back loan.

You are also able to claim for PAYE salary under CJRS.

yvonneb123 said:

Reluctantly I have now gone down this route but have a question that I cannot seem to find the answer to anywhere online.  I am the only employee of my company and in the past have made regular and significant SIPP contributions through the company.  Does anybody know if I’m able to use the bounce back loan (or at least some of it) for this purpose? I was planning to absolutely try and pay it back at the end of the last year to avoid any interest, however as the interest rate is so low it may make financial sense to use it in my SIPP if this is allowable?  Any advice/knowledge would be very welcome. 

It might be a grey area, but the key factor is are your SIPP payments contractual, or are they discretionary. Also, would making those payments mean that the company was insolvent on the basis of having greater liabilities than assets (eg. if you paid the value of the loan into your SIPP, but left the debt on the company's books unpaid and had no other assets, or assets less than the liabilities) regardless of any projected future revenue. If doing so would make the company insolvent then it would not be legal, in would breach your obligations of a director and could well be regarded as undue enrichment. 

It is extremely unlikely that a one man company would have a contract with the sole director that stipulated specific payments of salary, never mind contributions into a SIPP. (Even if it did, as the sole director could unilaterally change it at any time, it would not be worth the paper it was written on.) A BBL can be used to pay salary and benefits, including to directors, but a cautionary note has to be sounded if salary or benefits are increased from pre COVID levels, as I said earlier.

MattMattMattUK

Jeremy535897 said:

It is extremely unlikely that a one man company would have a contract with the sole director that stipulated specific payments of salary, never mind contributions into a SIPP. (Even if it did, as the sole director could unilaterally change it at any time, it would not be worth the paper it was written on.) 

Mine does... well salary and contributions into the same pension scheme as the staff rather than a SIPP. I am not a one man company any more, but the contract has been in place since the start, although the PAYE salary was originally set at £100 pcm. I agree they could change it at any time, but they would still have to follow the proper rules and documentation, my salary has to be approved by the board (me) and the shareholders (me), but I would still have to follow that process and document it, including an AGM/EGM and the proper notifications, I accept that I might run a slightly tighter process than many smaller companies though.

Jeremy535897 said:
A BBL can be used to pay salary and benefits, including to directors, but a cautionary note has to be sounded if salary or benefits are increased from pre COVID levels, as I said earlier.

Yep, I agree, I also think that if the director made the company insolvent by paying themselves a large salary or pension in normal times that might be viewed quite dimly, although I understand the wrongful trading regulations are somewhat relaxed at the moment.

Jeremy535897

MattMattMattUK said:

Jeremy535897 said:

It is extremely unlikely that a one man company would have a contract with the sole director that stipulated specific payments of salary, never mind contributions into a SIPP. (Even if it did, as the sole director could unilaterally change it at any time, it would not be worth the paper it was written on.) 

Mine does... well salary and contributions into the same pension scheme as the staff rather than a SIPP. I am not a one man company any more, but the contract has been in place since the start, although the PAYE salary was originally set at £100 pcm. I agree they could change it at any time, but they would still have to follow the proper rules and documentation, my salary has to be approved by the board (me) and the shareholders (me), but I would still have to follow that process and document it, including an AGM/EGM and the proper notifications, I accept that I might run a slightly tighter process than many smaller companies though.

Jeremy535897 said:
A BBL can be used to pay salary and benefits, including to directors, but a cautionary note has to be sounded if salary or benefits are increased from pre COVID levels, as I said earlier.

Yep, I agree, I also think that if the director made the company insolvent by paying themselves a large salary or pension in normal times that might be viewed quite dimly, although I understand the wrongful trading regulations are somewhat relaxed at the moment.

I think that you fall into the "extremely unlikely" category (and that is meant as a compliment).

Grumpy_chap

Jeremy535897 said:

I think that you fall into the "extremely unlikely" category (and that is meant as a compliment).

I don't think Triple Mat is as "extremely unlikely" as you might imagine. 
I, too, have full contract of employment and write myself a letter with each salary review, etc.  I always have done and now find it is beneficial in demonstrating genuine employment by the Ltd Co, and an asset in terms of off-payroll considerations.  Everything is set out, annual leave, sick pay, etc.  Even my waiver to release myself from working hours directive.
Maybe MSE forum members are just all "extremely unlikely" as each other.

Jeremy535897

Grumpy_chap said:

Jeremy535897 said:

I think that you fall into the "extremely unlikely" category (and that is meant as a compliment).

I don't think Triple Mat is as "extremely unlikely" as you might imagine. 
I, too, have full contract of employment and write myself a letter with each salary review, etc.  I always have done and now find it is beneficial in demonstrating genuine employment by the Ltd Co, and an asset in terms of off-payroll considerations.  Everything is set out, annual leave, sick pay, etc.  Even my waiver to release myself from working hours directive.
Maybe MSE forum members are just all "extremely unlikely" as each other.

I have seen how hundreds of small businesses operate over the last 45 years, and I can assure you that you are in a very small minority.

unholyangel

Grumpy_chap said:

Jeremy535897 said:

I think that you fall into the "extremely unlikely" category (and that is meant as a compliment).

I don't think Triple Mat is as "extremely unlikely" as you might imagine. 
I, too, have full contract of employment and write myself a letter with each salary review, etc.  I always have done and now find it is beneficial in demonstrating genuine employment by the Ltd Co, and an asset in terms of off-payroll considerations.  Everything is set out, annual leave, sick pay, etc.  Even my waiver to release myself from working hours directive.
Maybe MSE forum members are just all "extremely unlikely" as each other.

As a director, you don't need a waiver, as per WTR 1998 section 21. 

That section makes an exception for directors to 4(1) and (2), which is the section that sets the maximum average at 48 hours. There's other exceptions for directors to WTR also, but since we're discussing 48 hours, I've only mentioned the parts relevant to that. 

Jleone63

I have applied for a bounce back loan with Santander as I am a director of a company so no other support. When the form came up on Santander website I had difficulty in putting in £30.000.00. It kept saying error. I finally managed and received £3.000.00 . After involving the banking ombudsman, they revealed I had only put into the system $12.000.00 takings per year. It was obvious that a 0 was missed out on both of the numbers. 
Santander wont relook at this or deal with it, even though they acknowledge they know the business earns more as the moneys goes through their account. Has anyone else had the sane issue as I have as I am going crazy trying to keep my business supported until we open again 

Any feedback I would be so greatful for