{"id":1723,"date":"2020-06-23T14:59:00","date_gmt":"2020-06-23T14:59:00","guid":{"rendered":"https:\/\/srcadvisory.com\/?p=1723"},"modified":"2020-06-26T15:20:06","modified_gmt":"2020-06-26T15:20:06","slug":"covid-19-planning-the-second-wave","status":"publish","type":"post","link":"https:\/\/srcadvisory.com\/covid-19-planning-the-second-wave\/","title":{"rendered":"COVID-19 PLANNING \u2013 THE SECOND WAVE"},"content":{"rendered":"\n

Many medical experts are predicting a second wave of the COVID-19 Pandemic, which may arrive in the autumn as temperatures fall.

Although we do not want to try to predict the future, we examine a few possibilities and suggest some planning ideas.

Government Support resumes<\/strong>

Since the software and legislation is in place for both CJRS and SEISS, it would be relatively straightforward for the government to reactivate the schemes, perhaps with a smaller percentage of state support or in the case of CJRS, with an enhanced contribution from employers.

It may be argued that this would prove ruinously expensive for the country, but government borrowing can be scheduled over decades, as were war debts from WW1 and WW2. Of course, the government may raise National Insurance (NI) and tax rates to recoup some of this expenditure. There have even been rumours of a Net Wealth Tax being introduced.

The continuation of bank loans guaranteed by the government such as Business Bounce Back Loans and Coronavirus Business Interruption Loan Scheme could be another tool in the hands of the Treasury.

Government Support is not resumed<\/strong>

In this case there will be considerable issues for those businesses which are dependent on government support which may need to carefully consider their future.

Safeguarding your position as a company director<\/strong>

Whilst remuneration planning has focused on the minimialisation of NI and tax liability, in these new uncertain times, remuneration should be structured to provide the maximum level of security, even if there is a consequent uplift in NI and tax payments.

Remuneration Structuring<\/strong>

Many directors of small and medium size companies in which they are shareholders prefer to take a small salary of around \u00a312,000 per annum and the rest of their remuneration in the form of dividends which do not attract NI and which are subject to lower tax rates than other forms of income.

However, this results in a low level of CJRS support and potential redundancy payments.  Company directors, as well as staff, are eligible for redundancy pay, also known as directors\u2019 redundancy, in the event of company liquidation or closure.

If you are a salaried director of a limited company \u2013 which has been trading for over two years \u2013 and you are considering closing the company due to financial struggles (i.e. HMRC debts, creditor pressure, cash flow worries, potential insolvency), it is likely that you can claim for director redundancy for which the average UK claim is \u00a39,000. In addition, it’s likely you can claim for other statutory entitlements such as notice pay, holiday pay and unpaid wages – yet many company directors are not aware that these entitlements are available to them.

If you do meet the criteria, claims can be made from the National Insurance Fund via the Redundancy Payments Service (RPS), and are tax-free. 

You must be regarded as an employee of the company as well as a director in order to be eligible. The criteria for claiming statutory redundancy pay as a director include:<\/p>\n\n\n\n