Sick Pay - Director of a Limited Company

Nikster73

Im hoping for some advice please or guidance.

My husband is a Director and employee of his Limited Company.  At the end of November he had to had surgery on his foot, which has resulted in him being unable to work or drive.  This was only supposed to be until approximately 6th Jan 2022.  Unfortunately, after recent x-rays working is not going to be possible, and more surgery is required!

My husband has never had a day absent from work.  We are starting to panic, as we depend on him working to cover our outgoings for the business and personally.  I did notify our accountant prior to his surgery, as we had no knowledge if he was entitled to claim any sick pay......to which we were advised there was nothing that could be claimed.  Is this correct?

Also, in this situation, should my husband still be drawing down his monthly wage ( even when not working?).   Is there anything else we should be doing?  Its worrying, as the bills, mortgage, merchants, outstanding invoices still have to be paid.   The accountants have been closed over the holidays.  

Thanks 

lisyloo

I’m assuming he has no insurance for this eventuality? and no one else can step in temporarily even to keep things ticking over?

I’m not sure why you are having issues paying the mortgage if he’s taking his normal salary? Aren’t the household finances ok if he’s taking his normal income?

he can drawdown an income if there is enough money to continue to pay the bills i.e. the company is solvent.
if the company is not solvent then he has a legal duty to ALL the creditors and should stop taking money out.
however difficult this is personally he MUST fulfil his legal duties as a director.

so what id be doing is

1) looking at alternative staffing to keep things ticking over
2) be looking at the budgeting to see how long the company stays solvent (the accountants should be back on 4/1)
3) reducing any unnecessary bills e.g. pension payments

do you have no personal savings for the household?

Grumpy_chap

Nikster73 said:

Im hoping for some advice please or guidance.

My husband is a Director and employee of his Limited Company.  At the end of November he had to had surgery on his foot, which has resulted in him being unable to work or drive.  This was only supposed to be until approximately 6th Jan 2022.  Unfortunately, after recent x-rays working is not going to be possible, and more surgery is required!

My husband has never had a day absent from work.  We are starting to panic, as we depend on him working to cover our outgoings for the business and personally.  I did notify our accountant prior to his surgery, as we had no knowledge if he was entitled to claim any sick pay......to which we were advised there was nothing that could be claimed.  Is this correct?

Also, in this situation, should my husband still be drawing down his monthly wage ( even when not working?).   Is there anything else we should be doing?  Its worrying, as the bills, mortgage, merchants, outstanding invoices still have to be paid.   The accountants have been closed over the holidays.  

Thanks 

Normally, SSP cannot be reclaimed by the employer.  There is an exemption in the case of COVID, but that does not appear to apply here.  So, your Accountant is correct that there is nothing that can be claimed in that regard.

If there are sufficient funds within the business then your husband can continue to draw his regular salary each month and could still do so retrospectively for the period he has been off work.  If there are no funds, then obviously there is nothing to be paid out.

What is the nature of the work?
Can the work be done from home?
If it is simply driving that prevents him from working, can someone else drive and he travel as a passenger?  Can he use any alternative form of transport?

I assume that your husband never took out any insurance to cover this type of eventuality?  Maybe called "key person insurance" or may be a more straightforward income protection product.

Do you have any savings as a couple?  If so, this is the rainy day when those savings need to be used.

What is your income status?  If your income is low and your husband has no income because of the foot operation, then you may be able to claim UC.  In the case of a sole Director and employee of own Ltd Co., the assessment for UC looks through the company structure to see the income receipts to the business and then assesses this as personal income.  It is not as straight forward as that as I understand there is some consideration of company expenses.  There is also a way that the money in the company bank account is disregarded as "working capital".  Again, this is not straightforward and I don't pretend to understand it so please do not get your hopes us based on my comments.  There are others in the forum that will be able to advise on this aspect of things - they may visit this board and see your post but if not, please consider posting in the benefits board of the forum.  If you do so, it may be helpful to include a link to this thread so that others have full context of the query.

In my view, which may not be correct, if there are sufficient retained funds within the business, then the business should continue to make the regular monthly payroll to your husband in the way it normally would.  This is as per an employee in a larger company who continues to receive sick pay even when not working (up to however many weeks).  This would, though. mean that your husband has an income and would likely prevent any UC claim.

Hope you can find a solution financially and that your husband makes a swift recovery from hereonin.

Sandtree

You need to speak to your accountant, SSP can be claimed by a director as anyone else however you are just robbing Peter to pay Paul as its the company that has to pay the SSP. In certain circumstances it can be partially offset in PAYE  but that depends on factors you've not disclosed and some accountants will advise against ever waking the beast that is HMRC, especially if you are a contractor.

Assuming the company is solvent then it can continue paying salary for as long as it can afford to 

binao

Grumpy_chap said:

Nikster73 said:

Im hoping for some advice please or guidance.

My husband is a Director and employee of his Limited Company.  At the end of November he had to had surgery on his foot, which has resulted in him being unable to work or drive.  This was only supposed to be until approximately 6th Jan 2022.  Unfortunately, after recent x-rays working is not going to be possible, and more surgery is required!

My husband has never had a day absent from work.  We are starting to panic, as we depend on him working to cover our outgoings for the business and personally.  I did notify our accountant prior to his surgery, as we had no knowledge if he was entitled to claim any sick pay......to which we were advised there was nothing that could be claimed.  Is this correct?

Also, in this situation, should my husband still be drawing down his monthly wage ( even when not working?).   Is there anything else we should be doing?  Its worrying, as the bills, mortgage, merchants, outstanding invoices still have to be paid.   The accountants have been closed over the holidays.  

Thanks 

Normally, SSP cannot be reclaimed by the employer.  There is an exemption in the case of COVID, but that does not appear to apply here.  So, your Accountant is correct that there is nothing that can be claimed in that regard.

If there are sufficient funds within the business then your husband can continue to draw his regular salary each month and could still do so retrospectively for the period he has been off work.  If there are no funds, then obviously there is nothing to be paid out.

What is the nature of the work?
Can the work be done from home?
If it is simply driving that prevents him from working, can someone else drive and he travel as a passenger?  Can he use any alternative form of transport?

I assume that your husband never took out any insurance to cover this type of eventuality?  Maybe called "key person insurance" or may be a more straightforward income protection product.

Do you have any savings as a couple?  If so, this is the rainy day when those savings need to be used.

What is your income status?  If your income is low and your husband has no income because of the foot operation, then you may be able to claim UC.  In the case of a sole Director and employee of own Ltd Co., the assessment for UC looks through the company structure to see the income receipts to the business and then assesses this as personal income.  It is not as straight forward as that as I understand there is some consideration of company expenses.  There is also a way that the money in the company bank account is disregarded as "working capital".  Again, this is not straightforward and I don't pretend to understand it so please do not get your hopes us based on my comments.  There are others in the forum that will be able to advise on this aspect of things - they may visit this board and see your post but if not, please consider posting in the benefits board of the forum.  If you do so, it may be helpful to include a link to this thread so that others have full context of the query.

In my view, which may not be correct, if there are sufficient retained funds within the business, then the business should continue to make the regular monthly payroll to your husband in the way it normally would.  This is as per an employee in a larger company who continues to receive sick pay even when not working (up to however many weeks).  This would, though. mean that your husband has an income and would likely prevent any UC claim.

Hope you can find a solution financially and that your husband makes a swift recovery from hereonin.

Second @Grumpy_chap 100%

This is a covid board/section. The benefits board has several very knowledgeable posters. (Could be, Ex / Retired DWP).

Good luck 

Nikster73

Thanks kindly for your replies.

Unfortunately, there is no health insurance plan in place.  this is something that will need to be effective going forward.  To be honest, the surgeon who carried out the operation advised my husband that he would be fine to start work after a six week period!  We might need to look at Income protection insurance for the future.  I work part-time within the company and only draw down a small salary.

My husband is a Carpenter within the construction Industry and does manual work.  The other workmen are not as highly skilled as he is, therefore cant earn as much money.

At the beginning of Dec he did test positive for the Omicron Variant, one week after his surgery.

We dont have issues paying the mortgage, I didn't say we had.....this will be covered and is first and foremost.  However there are a lot of monthly outgoings, such a vehicles and vans, insurances, salaries, workshop premises etc, but nowhere near the usual level of income coming in.

I did read that it would be possible for him to claim ESA?  he has never had to visit a job centre ever, but if needs must, then every little helps.  

I will check the benefits board forum, as advised.

Regards