To ask the Chancellor of the Exchequer, what steps the Government is taking to support small business owners that receive their income primarily through dividend payments rather than salary.
5 May 2020
HMRC are not able to distinguish between dividends derived from an individual’s own company and dividends from other sources, so do not have a clear mechanism through which to support dividend income from an individual’s own company, without also supporting dividend income from other investments. Dividends are taxed at a low rate and are paid in respect of the individual’s role as a shareholder in their own business. It would not be right therefore for the Government to reimburse shareholders’ dividend income.
However, individuals paying themselves a salary through a PAYE scheme, including salaried company directors, are able to apply for the Coronavirus Job Retention Scheme (CJRS), subject to their abiding by the requirements of the scheme. Those who pay tax on their trading profits through Income Tax Self-Assessment may instead be eligible for the Self-Employed Income Support Scheme (SEISS). The SEISS will provide grants to those who are self-employed, or members of partnerships, worth 80% of their trading profits/partnership trading profits, up to a maximum of £2,500 per month. SEISS is available to those who generate majority of their income from self-employment and who earn less than £50k.
Small business owners may also benefit from a range of other support measures including:
- A 12-month business rates holiday for all eligible retail, leisure and hospitality businesses in England
- Small business grant funding of £10,000 for all business in receipt of small business rate relief or rural rate relief;
- The Coronavirus Business Interruption Loan Scheme (CBILS)
- The Bounce Back Loan Scheme (BBL) for SMEs
- VAT deferral for up to 12 months
- Through the Time To Pay scheme, businesses in financial distress, and with outstanding tax liabilities, can receive support with their tax affairs
- Protection for commercial leaseholders against automatic forfeiture for non-payment until June 30, 2020
The Business Support website provides further information about how businesses can access the support that has been made available, who is eligible, when the schemes open and how to apply - https://www.businesssupport.gov.uk/coronavirus-business-support.