A new Directors Income Support Scheme (DISS) has been devised by Rebecca Seeley Harris, a former policy adviser for the Office of Tax Simplification (OTS), which mirrors the Self-Employed Income Support Scheme (SEISS).
It has since been fully endorsed by the ForgottenLtd campaign group, along with the Federation of Small Businesses (FSB) and the Association of Chartered Certified Accountants (ACCA).
The new DISS would be capped at £2,500 per month – like the SEISS – with taxable grants paid directly into company accounts, as opposed to personal accounts. The FSB believes this framework would mitigate the risks of fraud.
The costs of this proposed scheme to the taxpayer are estimated at £2 billion to £6 billion, which would come in cheaper than the £7 billion it cost for the first three months of the SEISS.
HM Treasury has steered clear of supporting directors of small limited companies until now, citing the difficulties in separating company income and passive income on the balance sheet.
However, the directors of the UK’s two million-plus small, limited companies pay themselves using the perfectly legitimate accounting structure of company dividends.
Cynics have suggested that the lack of support for directors of small companies is due to them paying reduced National Insurance contributions (NICs) and Corporation Tax because of taking an income through dividends.
At least 780,000 directors of limited companies haven’t received a penny from the Government throughout the coronavirus crisis. The FSB’s national chairman, Mike Cherry, believes it is “high time” that the Government steps up to prove its “pro-enterprise” credentials.
“Our fresh proposal demonstrates that, in fact, putting together a support scheme for directors in line with what’s available to the self-employed is pretty straightforward,” said Mr Cherry.
“So much of the information needed is there in existing tax returns. These individuals are not statistics on a spreadsheet – they are real people with bills to pay and families to feed.”
Daren Moore, Group Commercial Director at TaxAssist Accountants, said: “Local authorities are starting to take matters into their own hands too. Targeted financial support is being ring-fenced for local firms ‘excluded and forgotten’ by the national support schemes.”
Liverpool’s £9.5 million grant fund will help directors of small limited companies across Liverpool, Knowsley, Halton, Sefton, St Helens and the Wirral.
Additional grants have also been unveiled in Wales, as well as the other devolved administrations in Scotland and Northern Ireland, targeting those excluded from national schemes.
Last updated: 2nd December 2020