No more coronavirus support to come for limited company directors, Chancellor Rishi Sunak tells Martin Lewis
The Chancellor Rishi Sunak has told MoneySavingExpert.com founder Martin Lewis that limited company directors won't be getting any additional financial support during the pandemic, admitting that when it comes to extra help, the door is "firmly shut".
How Martin challenged the Chancellor
Those who work via small limited companies that they're directors of (often because firms ask them to) have very limited state support available. And despite speculation in January that some kind of new income support scheme could be created to help them - speculation which Martin warned at the time was unlikely to come to fruition - there was no additional help announced in this week's Budget.
Quizzing the Chancellor on Thursday's show, Martin read out a question from a member of the public called Gemma, who asked: “Why on earth have you excluded limited company directors once again? We were teetering on the edge and you just threw us overboard.”
Martin added: “They say you don’t understand what the word business means. What is it you’ve got against limited company directors that they’re completely without support?"
The Chancellor replied: “I wouldn’t think it’s fair to say they’re completely without support - there’s so many things we’ve done.”
Martin replied: “There’s Universal Credit and there’s other small things, but they haven’t had the support that other businesses and self-employed people have."
To which the Chancellor replied: “Well hang on, they can be furloughed for their PAYE, their business may be able to benefit from a Bounce Back Loan, and in their personal situation they may be able to benefit from a six-month mortgage holiday and also there’s all the other welfare changes we’ve made.
"There’s a lot going on there, but the simple thing with directors is it’s been a real challenge. I and my team have met with groups and looked at options and there just isn’t a workable option.
"I’ll give you one stat Martin that hopefully will help for the people that are watching to understand this. For company owner managers, there’s no official definition of what that is. We think there’s maybe around 600,000 of those people, but we don’t actually know because there’s no official way that we know. We get 3.3 million dividend tax returns - and we have no way of differentiating between the 3.3 million and the 600,000 - if that is indeed the right number.
"So if we did provide support it would mean that three out of every four pounds from the taxpayer going out would not be going to the right people - and that is the challenge that we’ve been grappling with.”
Martin then interjected again to challenge the Chancellor directly, saying: “I know that some like the Federation of Small Businesses say they think they can solve that. Forgive me, can we manage expectations. They won’t like the answer - is that door firmly shut? Limited company directors are not getting any more support?"
The Chancellor replied: "Yes. We have not found a way and we’ve looked at all the proposals that have been put forwards."
There is SOME help for limited company directors - here's what's available
Unfortunately there's little state support available for those who are limited company directors. Yet there is a small amount of wriggle room, which Martin has worked through.
You can watch a full video of Martin's tips in our Self-Employment and Small Limited Company Help guide, but here are the key points in brief:
- No official scheme exists for limited company directors. There's no cover for lost dividends, although many have lobbied for it.
- Limited company directors, even if they're the only employee, can furlough the PAYE element of their income. This could mean they get 80% of their salary up to £2,500/month. This isn't likely to be a huge help for many, as more income is dividends (and there's no help there), but it's something. For more info see Furlough help.
- If you do furlough yourself you can't then work for the firm. But you can continue to perform your statutory obligations as directors, eg, official legal filings (in the video Martin discusses how far this reaches).
- When furloughed, you can work for other people. So you could freelance yourself and work outside of your limited company.
- Universal credit may help. Those struggling for income are likely eligible for, and so should also claim, universal credit.