Employed by my own company advice

[Spirconi]

2k per month for workers is what they are doing now taxes and NI. So I miss your point?

UC and pensions is a different ball game that need improving anyway.

My point was, like the US are doing. Send a cheque direct to each person. Although that seems stupid to use cheque they have to go out to cash. That means less admin, less people getting missed. And they have a chance of recovering the money to avoid substantial tax increases longer term. Those over 30k may simply decide they dont need it and send straight back.

There is no right answer. Just my pennies worth.

 

[manwithnonames]

OMB Company directors need to band together to make their voices heard.

It's pretty evident most people think OMB Directors dont deserve any assistance but I think there is a strong ethical case to include them in income protection schemes using the same rationale applied to the self employed.

Obviously you cant do a general shareholder dividend income protection scheme but where OMB directors can demonstrate loss on previous, regular taxed income as declared via Self Assessment- they should be entitled to similar provisions as the Self Employed.


No one is going to do it for them and the window of opportunity is likely to close soon.

It needs a twitter tag and several like minded folks to get it started.
This website has a good concentration of OMB's
I'd sign up/follow/retweet but havent got time to set it up.......

 

[Mr D]

2k per month for workers is what they are doing now taxes and NI. So I miss your point?

UC and pensions is a different ball game that need improving anyway.

My point was, like the US are doing. Send a cheque direct to each person. Although that seems stupid to use cheque they have to go out to cash. That means less admin, less people getting missed. And they have a chance of recovering the money to avoid substantial tax increases longer term. Those over 30k may simply decide they dont need it and send straight back.

There is no right answer. Just my pennies worth.

US sending a cheque to each person is their choice. Often doesn't work quite as they want - they've done it before by tax refunds. People buy stuff from the wrong places or pay down card debt etc.
Stimulating the economy - just not necessarily the US one.

 

[Mr D]

OMB Company directors need to band together to make their voices heard.

It's pretty evident most people think OMB Directors dont deserve any assistance but I think there is a strong ethical case to include them in income protection schemes using the same rationale applied to the self employed.

Obviously you cant do a general shareholder dividend income protection scheme but where OMB directors can demonstrate loss on previous, regular taxed income as declared via Self Assessment- they should be entitled to similar provisions as the Self Employed.


No one is going to do it for them and the window of opportunity is likely to close soon.

It needs a twitter tag and several like minded folks to get it started.
This website has a good concentration of OMB's
I'd sign up/follow/retweet but havent got time to set it up.......

They are in a similar scheme. But like their workers they have to stop working.
Whether they can do so is down to them.

There are existing places dealing with OMBs - IoD, FSB etc.

 

[manwithnonames]

They are in a similar scheme. But like their workers they have to stop working.
Whether they can do so is down to them.

There are existing places dealing with OMBs - IoD, FSB etc.

The point is the protection offered to the OMB Director seems broadly less fair than the protection offered to the Self Employed.

80% of PAYE for furloughed Directors who are still having to maintain a statutory presence in their company overlooks the fact they can demonstrate previous, entirely legally taxed income- exactly the same as everyone else.

If the issue is OMB Directors running companies in this way- the Gov should have legislated before eagerly accepting CT, SA and PAYE via HMRC.

Surely if you pay taxes to the prescribed amounts of income protection described in the general scheme- and HMRC can see that - it would be fair to include that person?

I know "fairness" never normally comes into these things - but there is clear evidence of applied fairness in the Self Employed package.

 

[UKD]

None of this money is coming from tax revenue, so it’s a bit of a misstep that everyone is suggesting they should get support because of all the tax they’ve paid over the years.

Really, so where else does the government get their money from to spunk all this money out for people? Money tree? Loans, it is ALL repaid with taxes.

 

[UKD]

The point here is, is that if I have two employees on say £40K a year in salary, they will get 80% of their pay paid for by the state up to £2.5k a month.

Me, if I pay myself £719 a month in PAYE, and the rest in dividends, which endless company directors do, and is perfectly legal, then by keeping the company going, employees have more chance of financial survival than the actual company owners.

Pay dividends in advance? Well, we are in the early stages of the year, and I suspect many companies do not have the cash-flow to do that, nor the cash in the bank.

Co owners have been royally shafted here.

 

[manwithnonames]

^Agreed.
But no one is going to shed a tear for company owners ....

People might be receptive to the logical argument of parity with the self employed where taxable income can be demonstrated.

HMRC could check their own records to calculate an average payment and no one loses out.

 

[Mr D]

The point is the protection offered to the OMB Director seems broadly less fair than the protection offered to the Self Employed.

80% of PAYE for furloughed Directors who are still having to maintain a statutory presence in their company overlooks the fact they can demonstrate previous, entirely legally taxed income- exactly the same as everyone else.

If the issue is OMB Directors running companies in this way- the Gov should have legislated before eagerly accepting CT, SA and PAYE via HMRC.

Surely if you pay taxes to the prescribed amounts of income protection described in the general scheme- and HMRC can see that - it would be fair to include that person?

I know "fairness" never normally comes into these things - but there is clear evidence of applied fairness in the Self Employed package.

As directors we have the ability to set up our income to take advantage of taxes.
We don't have much moral high ground to claim to government that something is unfair when our decisions come back to bite us.

No one forces directors to have income one way over another.

 

[Mr D]

Really, so where else does the government get their money from to spunk all this money out for people? Money tree? Loans, it is ALL repaid with taxes.

And could be repaid next century.
In the meantime slowly being paid off. Until the next financial crisis or the next government decides to borrow a load of money to bring broadband under state control.

The choice for government is do nothing. Or do something and hope they can unwind the financial problem they have taken on over time.
One is easy, one is harder. No good choices that suit everyone.

 

[UKSBD]

OMB Company directors need to band together to make their voices heard.

I wonder how many members of the general public actually know about Directors NI schemes?

I don't think there would be much sympathy for them if people did know.

Make your voice heard too loudly and the NI perk will be the 1st thing to go.
(edit to add: it probably will now already)

 

[manwithnonames]

I wonder how many members of the general public actually know about Directors NI schemes?

Make your voice heard too loudly and the NI perk will be the 1st thing to go.
(edit to add: it probably will now already)

So accordingly.......Nothing to lose?
MP's use this model.
It'll always have a 'lil something.

These are the people out clapping the NHS whilst voting to up their own pay and freezing nursing.
If anything- it will probably get better....

 

[Gordon - Commercial Finance]

Really, so where else does the government get their money from to spunk all this money out for people? Money tree? Loans, it is ALL repaid with taxes.

Printing money, issuing debt.

 

[UKD]

I wonder how many members of the general public actually know about Directors NI schemes?

I don't think there would be much sympathy for them if people did know.

Make your voice heard too loudly and the NI perk will be the 1st thing to go.
(edit to add: it probably will now already)

The public also don't know about the tax on dividends; and they wouldn't also have a clue about approximately 50% of our turnover goes to taxes (of some sort) either.

Plus the fact that these same public will still expect to have jobs after all this is finished, all put in place by the same company directors who got shafted during this pandemic to keep them in jobs.

 

[Mr D]

So accordingly.......Nothing to lose?
MP's use this model.
It'll always have a 'lil something.

These are the people out clapping the NHS whilst voting to up their own pay and freezing nursing.
If anything- it will probably get better....

And yet so many of them get elected to parliament afterwards.
Perhaps the voters treat MPs pay and nurses pay as of less importance than some other matters.

Or could do what Nadine Dorries did and be a nurse then be an MP. Not all nurses leave the NHS for the higher pay of the private sector.

 

[Mr D]

The public also don't know about the tax on dividends; and they wouldn't also have a clue about approximately 50% of our turnover goes to taxes (of some sort) either.

Plus the fact that these same public will still expect to have jobs after all this is finished, all put in place by the same company directors who got shafted during this pandemic to keep them in jobs.

Hopefully most directors also don't have a clue about approx. 50% of turnover going on taxes either.
What with much less for their business.

 

[Ian J]

The public also don't know about the tax on dividends; and they wouldn't also have a clue about approximately 50% of our turnover goes to taxes (of some sort) either.

The public may not know the ins and outs of taxation for a company director but what they do know is that for a given salary on Paye an owner director will pay less tax on the same income otherwise why would we do it.

If you are paying 50% of your turnover in tax then there is something seriously wrong with your company

 

[adam thompson1981]

I'm not even bothered about dividends, just give us something even if its just 80% of PAYE salary.

There's a petition here.

https://www.change.org/p/uk-parliament-small-ltd-company-directors-to-get-government-support-like-the-employed-and-self-employed?recruiter=false&utm_source=share_petition&utm_medium=facebook&utm_campaign=psf_combo_share_initial&utm_term=psf_combo_share_initial&recruited_by_id=0af1c270-7042-11ea-8a25-9b60166f6047&utm_content=fht-21080167-en-gb:v2

 

[Newchodge]

I'm not even bothered about dividends, just give us something even if its just 80% of PAYE salary.

There's a petition here.

https://www.change.org/p/uk-parliament-small-ltd-company-directors-to-get-government-support-like-the-employed-and-self-employed?recruiter=false&utm_source=share_petition&utm_medium=facebook&utm_campaign=psf_combo_share_initial&utm_term=psf_combo_share_initial&recruited_by_id=0af1c270-7042-11ea-8a25-9b60166f6047&utm_content=fht-21080167-en-gb:v2

Why do you think you can't get 80% of PAYE salary?

 

[adam thompson1981]

Why do you think you can't get 80% of PAYE salary?

My accountant told me on friday a definite no a sole director can't be furloughed, apparently she had checked this with HMRC and from searching the Internet it seemed to be the case.

However reading your posts the last couple of days has given me hope.

Obviously I'm still pessimistic and worried, i would be glad to take 80% of PAYE. Obviously dividends taken into account would be great but I would be greatfull for any help.

 

[Aniela]

^Agreed.
But no one is going to shed a tear for company owners ....

People might be receptive to the logical argument of parity with the self employed where taxable income can be demonstrated.

HMRC could check their own records to calculate an average payment and no one loses out.

The thing with this sort of situation is that no-matter what, someone else always loses out compared to others and it will never really be 'fair' - Unfortunate as that may be.

Even down to the people that haven't lost their jobs and are unaffected income-wise, they're not getting a penny of help directly to help pay bills etc, but will need to be higher taxes etc to pay for other peoples problems.

Just the way it goes.

 

[Chris Ashdown]

Sorry but some directors stopped paying their full national insurance, yet still want full cover, sometimes life is a bitch

 

[adam thompson1981]

Sorry but some directors stopped paying their full national insurance, yet still want full cover, sometimes life is a *****

No idea about N.I tbh all I know is a sole director Im no better off take home pay than if I were a sole trader. There's probably £300 a year in it. I only went limited for the liability aspect when employing as I was advised to.

 

[Aniela]

Sorry but some directors stopped paying their full national insurance, yet still want full cover, sometimes life is a *****

No idea about N.I tbh all I know is a sole director Im no better off take home pay than if I were a sole trader. There's probably £300 a year in it. I only went limited for the liability aspect when employing as I was advised to.

To be fair, anyone that sets up a LTD company it's normally for either or both of the following reasons:

1) Lowering tax/NI, even if a little
2) Not being liable for most of the debts of the company. Protection basically. Trying to ensure that if a business goes into debt, their home and savings aren't going to be taken and other people will be left sucking it up instead

Yes there are other reasons but then you will still end up getting the above two as a side-effect.

I'm assuming if you're a business owner Chris, you will either already be benefitting is such way or will want to do when your business gets to that stage.

 

[Mr D]

No idea about N.I tbh all I know is a sole director Im no better off take home pay than if I were a sole trader. There's probably £300 a year in it. I only went limited for the liability aspect when employing as I was advised to.

There are directors saving considerably more in tax and NI by paying low PAYE wage and high dividends.
Considerable tax avoidance. Then we want to say to everyone that we want more money?
'How to get crucified in the press'.

 

[UKSBD]

There are directors saving considerably more in tax and NI by paying low PAYE wage and high dividends.
Considerable tax avoidance. Then we want to say to everyone that we want more money?
'How to get crucified in the press'.

You can just imagine the radio interview

Director: The Government aren't doing anything to help us directors.

Interviewer: How much do you earn at the moment

Director: At the moment I pay myself £719 a month in wages and I pay my wife/husband £719 a month in wages and we then take £40,000 a year each in dividends

Interviewer: Why do you pay your wife/husband and yourself only £719 a month?

Director: By paying us both only £719 a month it means the Company avoids having to pay any National Insurance on the £80,000 dividends we receive, plus I can avoid paying National Insurance on my £40,000 dividend and my wife/husband can avoid paying National Insurance on their £40,000 dividend.

Interviewer: So, if you were to pay both of yourselves £48,500 wages you would personally be paying £9,500 in National Insurance and the Company £11,000 in National Insurance, but by paying yourselves £8,500 in wages and £40,000 in dividends your Company pays £0 National Insurance and yourself and your wife/husband pays £0 National Insurance?

Listener at home: Spitting out tea WTF! Greedy fat cat b******

 

[Mr D]

You can just imagine the radio interview

Director: The Government aren't doing anything to help us directors.

Interviewer: How much do you earn at the moment

Director: At the moment I pay myself £719 a month in wages and I pay my wife/husband £719 a month in wages and we then take £40,000 a year each in dividends

Interviewer: Why do you pay your wife/husband and yourself only £719 a month?

Director: By paying us both only £719 a month it means the Company avoids having to pay any National Insurance on the £80,000 dividends we receive, plus I can avoid paying National Insurance on my £40,000 dividend and my wife/husband can avoid paying National Insurance on their £40,000 dividend.

Interviewer: So, if you were to pay both of yourselves £48,500 wages you would personally be paying £9,500 in National Insurance and the Company £11,000 in National Insurance, but by paying yourselves £8,500 in wages and £40,000 in dividends your Company pays £0 National Insurance and yourself and your wife/husband pays £0 National Insurance?

Listener at home: Spitting out tea WTF! Greedy fat cat b******

Yes. Coming across like Richard Branson or Jeff Bezos won't be endearing us to the man in the street on £94 a week SSP / universal credit / no income at all.

 

[manwithnonames]

-

You can just imagine the radio interview

Director: The Government aren't doing anything to help us directors.

Interviewer: How much do you earn at the moment

Director: At the moment I pay myself £719 a month in wages and I pay my wife/husband £719 a month in wages and we then take £40,000 a year each in dividends

Interviewer: Why do you pay your wife/husband and yourself only £719 a month?

Director: By paying us both only £719 a month it means the Company avoids having to pay any National Insurance on the £80,000 dividends we receive, plus I can avoid paying National Insurance on my £40,000 dividend and my wife/husband can avoid paying National Insurance on their £40,000 dividend.

Interviewer: So, if you were to pay both of yourselves £48,500 wages you would personally be paying £9,500 in National Insurance and the Company £11,000 in National Insurance, but by paying yourselves £8,500 in wages and £40,000 in dividends your Company pays £0 National Insurance and yourself and your wife/husband pays £0 National Insurance?

Listener at home: Spitting out tea WTF! Greedy fat cat b******

-

Or ...instead of getting what sounds like Frank Spencer doing the interview- they could use someone who started a limited business with a view to sell/attract outside investment as a long term strategy.?

They pay themselves a pittance whilst re-investing in the business but can demonstrate equal taxation to the employed/self employed.

Not all Ltd. companies are formed to benefit from (entirely legal) tax loopholes.

 

[Stas Lawicki]

It sounds highly unlikely that dirs not paying paye will get anything at all. The noise seems to have lessened to nothing and the press will be reporting significant infections and high profile casualties. It's seems to me that Rishi feels he's done what he needed to do. As I said a couple of weeks ago, I didn't expect a bailout, I have a contingency in my finances as being in this company set up you have to be prudent and plan for the worst. You can't depend on anybody else.

It's going to be horrible for people when this period of inactivity goes on for another 6 months. We can't all become online retailers but if you haven't do so already, we can cut costs to eek out whatever we have in the bank. Banks BTW are offering all sorts of things to accout holders. Maybe if you can't get cash you can get a reprieve from your monthly bills.

Hang in there folks.

 

[Ian J]

Interviewer: So, if you were to pay both of yourselves £48,500 wages you would personally be paying £9,500 in National Insurance and the Company £11,000 in National Insurance, but by paying yourselves £8,500 in wages and £40,000 in dividends your Company pays £0 National Insurance and yourself and your wife/husband pays £0 National Insurance?

I must admit that I don't really understand the intricacies of taxation and just sign the form that my accountant gives me.

Are you saying that the only difference between taking a large salary and taking a small one but with the rest in dividends is a saving in NIC?

I sincerely hope not as I'm over 65 so don't pay NIC anyway

 

[Newchodge]

I must admit that I don't really understand the intricacies of taxation and just sign the form that my accountant gives me.

Are you saying that the only difference between taking a large salary and taking a small one but with the rest in dividends is a saving in NIC?

I sincerely hope not as I'm over 65 so don't pay NIC anyway

Unless someone else is paying NIC in your company, your company would still have to pay employer NI @ 13.8%.

 

[Mr D]

-
-

Or ...instead of getting what sounds like Frank Spencer doing the interview- they could use someone who started a limited business with a view to sell/attract outside investment as a long term strategy.?

They pay themselves a pittance whilst re-investing in the business but can demonstrate equal taxation to the employed/self employed.

Not all Ltd. companies are formed to benefit from (entirely legal) tax loopholes.

If acting in the same way then expect the public and media to view in the same way. Nuances you can see mean little to people who get told you are depriving them of a nurse's salary.

You choose what to pay. As do other directors for their businesses.

And by the way investors can see that something has been happening and factor in wages when working out viability of a business.
Not as good an advantage when figures reworked. Can turn what you see as a great investment into a business that doesn't make much actual profit.

 

[manwithnonames]

If acting in the same way then expect the public and media to view in the same way. Nuances you can see mean little to people who get told you are depriving them of a nurse's salary.

You choose what to pay. As do other directors for their businesses.

And by the way investors can see that something has been happening and factor in wages when working out viability of a business.
Not as good an advantage when figures reworked. Can turn what you see as a great investment into a business that doesn't make much actual profit.

Fair comment... am personally prepared but can imagine a lot aren't

 

[UKSBD]

I must admit that I don't really understand the intricacies of taxation and just sign the form that my accountant gives me.

Are you saying that the only difference between taking a large salary and taking a small one but with the rest in dividends is a saving in NIC?

I sincerely hope not as I'm over 65 so don't pay NIC anyway

There's a bit more to it than that, I was just simplifying it to demonstrate how it could come across to the general public if Directors starting shouting too much and trying to get a bit of sympathy.

 

[DontAsk]

Are you saying that the only difference between taking a large salary and taking a small one but with the rest in dividends is a saving in NIC?

The Government will also possibly save on not having to pay you a full pension at retirement.

 

[adam thompson1981]

You can just imagine the radio interview

Director: The Government aren't doing anything to help us directors.

Interviewer: How much do you earn at the moment

Director: At the moment I pay myself £719 a month in wages and I pay my wife/husband £719 a month in wages and we then take £40,000 a year each in dividends

Interviewer: Why do you pay your wife/husband and yourself only £719 a month?

Director: By paying us both only £719 a month it means the Company avoids having to pay any National Insurance on the £80,000 dividends we receive, plus I can avoid paying National Insurance on my £40,000 dividend and my wife/husband can avoid paying National Insurance on their £40,000 dividend.

Interviewer: So, if you were to pay both of yourselves £48,500 wages you would personally be paying £9,500 in National Insurance and the Company £11,000 in National Insurance, but by paying yourselves £8,500 in wages and £40,000 in dividends your Company pays £0 National Insurance and yourself and your wife/husband pays £0 National Insurance?

Listener at home: Spitting out tea WTF! Greedy fat cat b******

So anyone who operates as a ltd company vs being a sole trader is a fat cat?

And why did you leave out the fact companies pay corporation tax?

For a ltd company operating under the Vat threshold there's hardly anything in the take home pay of a sole director of he were Ltd or sole trader.

I pay Corp tax, small amount of n. I, dividend tax and employers n. I. I also pay higher accountant fees which pretty much offsets any tax advantage at this level.

I don't think sole directors should get their dividends paid but they should get their paye covered at least up to the 2500 per month threshold the same as self employed or employed workers.

 

[Mr D]

So anyone who operates as a ltd company vs being a sole trader is a fat cat?

And why did you leave out the fact companies pay corporation tax?

For a ltd company operating under the Vat threshold there's hardly anything in the take home pay of a sole director of he were Ltd or sole trader.

I pay Corp tax, small amount of n. I, dividend tax and employers n. I. I also pay higher accountant fees which pretty much offsets any tax advantage at this level.

I don't think sole directors should get their dividends paid but they should get their paye covered at least up to the 2500 per month threshold the same as self employed or employed workers.

No, we aren't fat cats.

However the measures we choose to use to reduce our payment to government can be considerable. Legal, and our choice.
We don't then have the moral high ground to say something was imposed on us and we aren't to blame. We know exactly who is to blame.

Directors are getting our PAYE covered up to threshold. Just have to meet criteria, same as other employees.

 

[riskywhat]

I'm in a similar situation to others in this thread. Ltd company owner, of which I am the only employee.

My business rates are included with my rent so I'm not eligible for the 10k grant. My salary is low (£715 per month) so 80% of that is not going to be much help, and without money coming in, how would I pay the business bills anyway?

In my case even the inclusion of dividends to the calculation would be useless. I only set up the business a year ago. The company still owes me money, so each month I have been taking from the directors loan account. No dividends at all so far...

 

[Mr D]

I'm in a similar situation to others in this thread. Ltd company owner, of which I am the only employee.

My business rates are included with my rent so I'm not eligible for the 10k grant. My salary is low (£715 per month) so 80% of that is not going to be much help, and without money coming in, how would I pay the business bills anyway?

In my case even the inclusion of dividends to the calculation would be useless. I only set up the business a year ago. The company still owes me money, so each month I have been taking from the directors loan account. No dividends at all so far...

Your choices are limited then.

Loan? By what has been posted the banks are trying to avoid too many risks. And taking on a mass of debt isn't always a viable solution.

Will paying yourself 80% of salary and getting that aspect covered by government help at all?

Things are shut down currently for a few weeks. May well extend that before its finished, we aren't at peak infection yet.
Can your business survive afterwards? Can bills be delayed / negotiated / reduced by the business not running?

 

[riskywhat]

Your choices are limited then.

Loan? By what has been posted the banks are trying to avoid too many risks. And taking on a mass of debt isn't always a viable solution.

Will paying yourself 80% of salary and getting that aspect covered by government help at all?

Things are shut down currently for a few weeks. May well extend that before its finished, we aren't at peak infection yet.
Can your business survive afterwards? Can bills be delayed / negotiated / reduced by the business not running?

£570 per month will help, but it won't help much. It wouldn't even come close to covering my personal bills, and that's without taking into account the business bills. Google ads is my biggest expense and that has been paused, but rent and other bills are contracts. Personally I think this will go on MUCH longer than another 2 weeks. I will have to look into getting a business loan, I just wish the government took into account all situations.