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Wed 25th March – Total UK Cases 9,529 – Total UK Deaths 422

Should Directors dividends be included within their income?

2 min read

A large sector of individuals who have been largely ignored by Government support are small business owners, these are the entrepreneurial lifeblood of our economy.

Many business owners are company directors and to ease the burden on their business they are often paid a low salary of £12,500 per year or less. This is just £1,041.66 per month, the rest of their income is usually taken as a dividend which is dependent upon the profits of the company – no profits no dividend.

Under the Coronavirus Job Retention Scheme, a director in this position will be paid 80% of £1,041, that is only £833 per month, less tax and NI.

This is a far cry from the £2,500 per month which one of their furloughed employees could obtain under the Government scheme.

Dividends ARE TAXED so why are they not included as income under the scheme? The self employed are compensated on the basis of their past profits, so why aren’t business owner directors also compensated on the basis of their past dividends which are related to profits? The cap of £2,500 per month to cover directors salaries plus dividends should of course be applied, that is fair.

It will affect many Company Directors across the country and these directors need to start screaming from the roof-tops to make the government aware that this is not fair.

Many employees which have been furloughed are now being given more than the directors who are running the company and taking all of the responsibility and risk.

Small businesses have been largely ignored and it is those businesses which we will need to rebuild our economy and to provide jobs when this is all over. They have been offered loans and allowed to defer tax payments, but those all will need to be repaid eventually, but lost revenue is usually lost forever, so where will the money come to repay the loans and tax? The fear is that many small businesses will go to the wall.

As one small business owner commented; “when this is over we might look back and say; never before have so many sacrificed so much to save so few.”

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