Right now, the questions our owner managed company clients are asking the most are: “What COVID-19 support is available?”, “Can I furlough as a company director?” and “What about the self-employed payments up to £2,500 a month?”

As it stands, there is potentially a gap in support where remuneration is mainly by way of dividend. It looks like it may be possible to furlough directors and claim 80% of their salary up to £2,500 a month, but there’s still a question mark over company directors, who are still acting as directors, genuinely being able to tick the “not working for the company” box.

Putting that aside, many company directors take a modest salary in the region of £8,600 a year, so any claims are likely to be restricted to 80% of that salary. If you operate through a limited company, whilst you may not be employed elsewhere, you are not (in tax terms) self employed, so the self-employment income support scheme doesn’t apply either.

Other areas of support to look at will be the rates holidays, the deferral of VAT and self-assessment tax (due 31 July) and some of the grants that the government have announced, which we’ve covered on our COVID-19 hub. Some of these are automatic and some will come direct from HMRC or the local authority but the key issue at the moment is that most of this support is not yet live, so you can’t make a claim yet.

The message for our smaller company clients, where the sole employees are the owner directors, may well be to write to yourself agreeing to furlough (assuming you are not undertaking any outside work for the company at present) and that should start the clock “ticking” in terms of being able to claim furlough.

We’re monitoring all of the COVID-19 measures and will update our information and guidance regularly. Because our processes and systems are designed to support remote working, you can continue to contact our team members on their usual direct dials and email addresses.

Alternatively, please get in touch with Kate Naylor.

Kate Naylor
Kate Naylor
Business Tax Partner

Kate spends a lot of time working with businesses and their owners on tax strategies and mitigation, which includes looking at the business and its structure, through to the owners personal tax situation and their longer term goals and plans.

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