Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what assessment he has made of the potential merits of not requiring dividends to be taken into account when calculating levels of covid-19 income support for directors of small limited companies; and if he will make a statement.

Dividends are not covered by the Coronavirus Job Retention Scheme or the Self-Employment Income Support Scheme. 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.

The purpose of the CJRS and SEISS schemes is to support the incomes of people who have lost earnings due to the pandemic. These schemes have relied on verified HMRC data to identify and target support to those in need. Information that would enable HMRC to do the same for company directors is not collected by HMRC, because it is not needed for administering the tax system. Information held by other bodies such as Companies House cannot be used for this purpose as it is self-declared, unverified and does not provide data on income. Relying on self-certification to identify directors or determine income sources could open any scheme up to unacceptable levels of fraud and error.

Those who pay themselves a salary through their own company’s PAYE scheme may be eligible for the CJRS. Directors may have access to the wide range of support provided by the Government since the start of the pandemic including loans, direct cash grants, and Universal Credit. More information about the full range of support measures is available on GOV.UK.