Directors: Coronavirus

(asked on 22nd February 2021) - View Source

Question to the HM Treasury:

To ask the Chancellor of the Exchequer, if he will review self-certification tax declaration rules which currently prevent small company directors being able to access covid-19 support packages.


Answered by
Jesse Norman Portrait
Jesse Norman
This question was answered on 2nd March 2021

Company directors who are also owner managers can earn a salary and receive shareholder dividends from their company as part of their total remuneration package. Company directors who pay themselves a salary through PAYE are eligible for the Coronavirus Job Retention Scheme (CJRS), but neither the CJRS nor the Self-Employment Income Support Scheme (SEISS) cover dividends or other investment income.

The SEISS relies on the information provided through tax returns to determine eligibility for the scheme and to calculate the grant amount. These returns are also used to protect the scheme from abuse by organised crime groups and fraudulent operators; when an individual applies to the SEISS, HMRC can cross-check the person’s SEISS application against their tax returns.

It is not possible under current reporting mechanisms for HMRC to distinguish between dividends paid in lieu of employment income and those paid as returns on investment in the company. The Government has considered proposals under which company directors would be allowed to self-certify how much of their dividends are in lieu of salary, and then claim SEISS based on that self-certification. However, it is clear that this would open up the scheme to an unacceptable risk of opportunistic fraud and criminal activity.

Those not eligible for the CJRS and SEISS may still be eligible for other elements of the support available. The Universal Credit standard allowance has been temporarily increased for 2020-21 and the Minimum Income Floor relaxed for the duration of the crisis, so that where self-employed claimants' earnings have fallen significantly, their Universal Credit award will have increased to reflect their lower earnings. In addition to this, they may also have access to other elements of the package, including Bounce Back loans, tax deferrals, rental support, mortgage holidays, self-isolation support payments and other business support grants.

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