Well the announcement on 26th March by the Chancellor on guidance for Directors wasn’t very good news was it!!
I’ve been looking at both schemes and how they both affect directors of small limited companies and give my summary to help you understand.
The Self Employed Support Scheme:
I had been in anticipation of the chancellor making this announcement all week and I thought that small limited companies would get the same support at sole traders, he has capped the limit as self-assessments up to £50,000 so I don’t know why they choose not to, but there is clear guidance to state directors are not covered, in the details that came out on 26th March there is a paragraph that says:
“Those who pay themselves a salary and dividends through their own company are not covered by the scheme but will be covered for their salary by the Coronavirus Job Retention Scheme if they are operating PAYE schemes.”
If you want to see the more of this guidance, I have written a summary here
So this paragraph leads directors to look at the Job retention scheme.
The Coronavirus Job Retention Scheme:
IF a company is closed and has furloughed all the entire team you would think that it would be okay to furlough the director, at least they would get 80% of their salary back too (up to £2500 per month) but then there is a point in the guidance on the HMRC website that says:
“A furloughed employee can take part in volunteer work or training, as long as it does not provide services to or generate revenue for, or on behalf of your organisation.”
I believe means that as soon as a director does anything that could generate revenue for their own company it makes them not eligible to be furloughed.
If you are a company director you will know yourself turning off is very difficult in the best of times, but in these difficult times even if there is no revenue, we will all be working in our business to protect it and improve it so that when Freedom Day comes we will be ready to hit the ground running and rebuild our business.
So where does this leave you?
Sadly, at the moment, it leaves us with nothing!
There is of course the business grant if you have premises to help you cover expenses in the meantime and Universal Credit if you need income right now.
I’m holding out that the government haven’t forgotten about the hardest working part of the population but only time will tell.
If you want to have your voice heard then I suggest maybe signing the petition that has started here.
Maybe get on twitter and send your concerns to @rishisunak
And most of all remember you are not in this alone, find communities of other small businesses online and feel empathy and find words.
We’ll survive, as risk takers we always do .. but it really is a kick in the teeth from the government for the people who keep the economy moving the most!
