Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what estimate his Department has made of the number of employees of small limited companies whose jobs are at risk as a result of the ineligibility for covid-19 related financial support of directors who are paid through dividends.

The Government prioritised delivering support to as many people as possible as quickly as possible, while guarding against the risk of fraud or abuse. The Government takes an evidence-based approach when developing policy. This meant making difficult decisions, and the Chancellor has acknowledged that it has not been possible to support everyone as they would want.

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 & 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. Those who pay themselves a salary through their own company may be eligible for the CJRS. The CJRS is available to employers, including personal service companies, and individuals paying themselves a salary through a PAYE scheme are eligible.

HMRC designed the Self-Employment Income Support Scheme (SEISS) using information already in hand, in order to make it deliverable quickly and to minimise the risk of fraud. Expanding the scope would have required HMRC to collect new information that they would not be able to manageably or consistently verify in order to ensure that payments were made to eligible companies and for eligible activity.

It is important to secure the SEISS against fraud risk and misuse.

The CJRS and SEISS are only two elements of a substantial package of support for businesses and individuals. There is access to affordable, Government-backed finance through the Coronavirus Business Interruption Loan Scheme (CBILS) and the Coronavirus Large Business Interruption Loan Scheme (CLBLS) for large firms, along with the Bounce Back Loan Scheme (BBL) for small and micro enterprises. Over £65 billion (as of 15 November) has been dispensed through these schemes.