Government 'looking at proposals' for coronavirus support scheme covering director dividends

The Treasury is considering proposals to support limited company directors who pay themselves with dividends, a senior official has said.

Giving evidence to the Treasury Select Committee, Beth Russell, the Treasury's head of tax and welfare, said: "we've seen proposals and we're looking at proposals".

Support for limited company directors impacted by the coronavirus pandemic but who use dividends has been a controversial issue.

The Coronavirus Job Retention Scheme allows them to access grants based on PAYE salaries but because many directors pay themselves a low salary, the amounts provided are much smaller than what can be accessed through other schemes such as Self-employed Income Support which provides up to £2,500.

The government says it's difficult to separate income dividends from other dividends, but Russell said the Treasury is considering proposals "where the money is paid out on a claim not verified up front and clawed back later".

"We don't have information on these people, we don't have an assessment of the scale of the risk there but clearly there's both a fraud risk, an error risk because for some people it's difficult for them to work out themselves what dividends relate to their business versus other dividend income they might have.

"There's also the work for HMRC having to go back and retrospectively check every single claim which they don't need to do in the same way for the schemes we've set up so far."

Russell added: "If we did do this, it would have to be a separate scheme and it would be very, very different from ones we've already put in place and would take far longer to set up."

Committee chair Mel Tride asked Russell to write to the committee outlining the proposals that are being looked at and how many individuals are covered by the dividend issue.

Enterprise Nation joined a call with the small business minister and put forward an idea for how the government could provide support covering dividends.

Image credit: HM Treasury

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