Member Since: 16th Nov 2013
30th Nov 2020
A lot of heat and little light has been generated on the question of the application of CJRS to small company directors. Overall I agree with Ceri but with one important exception. The way that the CJRS scheme (aka furlough payments) has applied to annually paid employees (mainly small company directors) is shamefully unfair and arbitrary . Depending upon when in the year the annual payment and related RTI submission is made, some companies will get 7 or 8 months' worth of CJRS support (eg payment date in December), some only 5 months (eg payment date in late March) and others up to 12 or 13 months (eg payment date in October). The only mitigation for this glaring anomaly is that in most cases the salary payments were relatively small, ie below the NIC threshold.
As far as concerns DISS I think this comes far too late. If through lack of support small companies have gone to the wall that is regrettable, but the fact remains that there seems to be no political impetus for DISS or anything resembling it.
As far as concerns the argument surrounding dividends, they are investment income and no one got any support for dividend income lost due to COVID. Dividends are not treated as earnings for pension contribution purposes nor for most other purposes (although some mortgage companies did allow their inclusion). It is unrealistic to expect HMT to make an exception now.
So are small company directors now being "punished" for avoiding tax by receiving dividends rather than a larger salary? That depends on your point of view. I am a professional adviser with clients in both camps, ie self-employed and working through companies. The tax saved over the years by the latter group generally far exceeds the value of any support lost now. So as long as they can continue to trade they are better off.
15th Apr 2019
1. What does FHL stand for please?
2. Where a borrower has fluctuating PAYE earnings, is the SLC deduction cumulative? Eg if earnings are paid monthly and January earnings exceed 1/12 of the repayment threshold, so that an SLC deduction is made in that month for 9% of the excess, will there be an automatic adjustment in a subsequent month if earnings are less than 1/12 of the threshold? Or is a wrap-up adjustment made at the end of the tax year?
Many thanks, Andrew