Question to the HM Treasury:

To ask Her Majesty's Government what plans they have to introduce (1) a taxable grant for directors of limited companies, and (2) a scheme to reimburse small businesses for lost revenue, as part of a COVID-19 support package.

The Government acknowledges that it has not been possible to support everyone as they might want. Targeting additional support for those who receive dividends in lieu of remuneration is complex. Income from dividends is a return on investment in the company, rather than wages. Under current reporting mechanisms it is not possible for 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.

Limited company directors may still be eligible for other elements of the generous support available, including the Coronavirus Job Retention Scheme (in respect of their salary but not their dividends), Bounce Back loans, tax deferrals, rental support, increased levels of Universal Credit, mortgage holidays, and other business support grants.

To help businesses dealing with lost revenue, the Government has introduced the Local Restrictions Support Grant (LRSG) (Closed), giving businesses forced to close due to national or local restrictions up to £3,000 per month. This was worth over £1bn for the four weeks of national lockdown in November. In addition, these businesses will benefit from one-off grants of up to £9,000 as announced on 5 January. Similarly, where local areas were subject to enhanced restrictions on socialising, in particular a ban on indoor household mixing, LAs will receive funding that will enable them to make grants to hospitality, leisure, and accommodation businesses worth up to £2,100 per month.

Businesses which are not eligible for the grants for closed businesses may be able to benefit from funding from the Additional Restrictions Grant. The Government recently increased the funding available under this scheme to £1.6 billion across England. It is up to each local authority to determine eligibility for this scheme based on their assessment of local economic need; the Government encourages local authorities to support businesses which have been affected by COVID-19 restrictions, but which are ineligible for the other grant schemes.