Directors and shareholders of a Limited Company can seek support via the Coronavirus Job Retention Scheme (CJRS) where conditions are met, however, when the support was first provided the Government confirmed that this did not cover dividend income.
Many directors and shareholders will have planned their annual remuneration as a mixture of salary and dividends and therefore, in many cases, the CJRS support will only take into account part of their annual remuneration.
A petition was signed by directors and shareholders who felt this needed addressing, however the petition (as at 23 June) has not quite met the 100,000 signatures required for it to go to parliament for debate.
On 5th June the Government officially responded to the petition and a key quote from the response was as follows:
‘Dividends are not covered by the CJRS. Income from dividends is a return on investment in the company, rather than wages; under current reporting mechanisms it is not possible for HM Revenue and Customs (HMRC) to distinguish between dividends derived from an individual’s own company and dividends from other sources, and between dividends in lieu of employment income and as returns from other corporate activity.’
Based on this, until the petition reaches 100,000 signatures, directors and shareholders who fall into this category are left with the Government’s official response for the time being. Should the petition reach 100,000 signatures, it will be a case of watch this space for any further development.