Give us your details and we’ll be in touch asap

Insights

All Articles

Business Services

Business Tax

Personal tax

Probate and Inheritance Tax

VAT

Business Tax  •  Coronavirus Advice  •  HMRC  •  Personal tax  •  Small Business  •  Taxation

Company Directors and COVID-19

By RJP LLP on 31 March, 2020

HMRC has clarified its guidance on who is eligible to defer tax payments due on 31 July.

All taxpayers who are due to make self-assessment tax payments on 31 July can now delay their payment due to the disruption caused by Coronavirus. This includes self-employed taxpayers and also company directors who pay self-assessment tax on dividend income.

It is these directors of limited companies, who typically pay themselves a small salary and regular dividends, that are currently the ‘losers’ when it comes to accessing the different relief packages offered by the Government as a result of COVID-19.

As employees, they are technically eligible for the Coronavirus Job Retention Scheme which will enable them to claim a grant up to 31 May 2020. However, the scheme rules do not cover dividend income and they also prohibit an employee from working in their company at all when claiming the grant, therefore they have the choice of either stopping their business activities completely and receiving a potentially small grant payment, or continuing to work as normal. Given that many will have suffered a significant loss of demand for their services but will wish to keep their business active wherever possible, the potential to defer tax payments may be the most welcome incentive available to them.

Any directors intending that the company should furlough them under the current scheme should note:

  • Whilst you can receive the lower of up to 80% of your previous gross monthly salary or £2,500, this will not include amounts paid to you as dividends. Read our other article explaining how this is calculated: COVID-19: The Furlough Scheme Summarised
  • You will be able to continue to carry out your directors’ duties such as filing statutory forms, and ensuring you meet those duties, you will not be able to carry out any of your employee duties such as communicating with customers or suppliers or dealing with staff issues;
  • It is difficult to furlough every single employee in a company unless that company is effectively ‘mothballed’.

If you have concerns about your position as a company director/ shareholder, please contact us via partners@rjp.co.uk.

Read more articles like this

How to apply the temporary 5% VAT rate – Update for the hospitality sector

Summer Budget 2020 Update

VAT payment holiday window ends on 30 June 2020

Domestic reverse charge VAT rules are delayed until 2021

The Updated Furlough Scheme – claims for June and July 2020

Share this:

All Articles

Business Services

Business Tax

Personal tax

Probate and Inheritance Tax

VAT

Image

31 December 2020 - Review disposals of chargeable assets to avoid a possible CGT increase

Capital gains tax is due to be reviewed by the government and if a CGT rise is announced, the new rates may become effective from the next tax year on 6 April 2021. Take advice now if you are thinking of selling property or have other assets giving rise to a capital gains tax liability.