Accessing your company profits
The Covid-19 crisis has altered the landscape significantly for individuals and business owners alike. The government announced a number of schemes which you may be taking advantage of to get through the crisis, including the Coronavirus Job Retention Scheme. This is available to one person companies whose director/owner furloughs themselves. However, only salary is covered, not dividends, and like all other furloughed workers, the director “cannot undertake work for or on behalf of the organisation”. According to press reports the Treasury nevertheless accepts that the director may continue with their statutory obligations in that role.
For those whose businesses have not stalled this year, the tax rules are still changing. Just because you have drawn profits in one way in the past does not mean that this continues to be the best approach. Company tax rates have fallen considerably in recent years, but the taxation of dividends has become more punitive, with significant increases to the rates of tax on dividends and the abolition of the dividend tax credit.
There may be a number of major environmental-related tax changes in the near future and the government’s fiscal policy may have to be changed in the light of the cost of Covid-19 support. These should be monitored regularly and assessed carefully for impacts on your business.