Small Business Minister considering support for “utterly despondent” limited company directors

Small business owner worried

UKs Small business owners welcomed the news that Small Business Minister Paul Scully is considering ways of supporting limited company directors that he can propose to the Chancellor.

The news comes after research showed that 45 per cent of freelancers fear they will not be able to afford basic costs like rent and bills despite the government support. It also showed that 69 per cent of limited company contractors believe the government is not doing enough to sustain them through the Coronavirus crisis.

A petition currently on calling for ‘small Ltd company directors to get government support like the employed and self employed. has been signed by 365,000 at the time of this post being written.

Alasdair Hutchison, Policy Development Manager at IPSE (the Association of Independent Professionals and the Self-Employed) said: “More support is urgently need for self-employed people working through limited companies. The limited company contractors we have spoken to are utterly despondent and feel completely left behind. Our research, too, shows that 69 per cent of limited company contractors do not feel government measures are enough to sustain them.

“The Chancellor’s Self-Employment Income Support Scheme was very generous to the people it covered, but there were several holes in the package – particularly limited companies and people who have only recently become self-employed.

“It is very welcome that Mr Scully is looking at ways to plug the gap for company directors. One way to do this would be to include dividend income in the government’s Job Retention Scheme, which company directors are eligible for but only for the small portion of their earnings that comes from PAYE. This would enable many limited company contractors who pay themselves through dividends to make full use of the scheme.

“Otherwise, we suggest the Small Business Minister considers schemes based on either a temporary tax break or targeted grants for limited company contractors in need. Either way, we urge him and the Chancellor to act quickly to extend their support package to this vital and varied section of the workforce.

Speaking to some small businesses affected, Claire Young, founder of School Speakers said: Initially I was delighted to see the positive headlines of business support  that Ministers were promising to protect all businesses. However, sadly, the reality is far from this. The business £10k grant for example is only applicable to those with a business rates bill; for those businesses working in a serviced office or from home you get nothing. They way funding has been allocated isn’t fair and inclusive. The bulk of SMEs have literally been forgotten about.

Brad Burton founder of the business networking company 4Networking added: “It’s a mess. Unprecedented mess. My 14 year old £1m+ real world national business networking organisation came to a grinding halt when Covid hit our shores. Thousands of members who once attended our 500+ groups each month was no more with the introduction of social distancing.

Our members and Directors alike breathed a sigh of relief when Rishi did that press conference. The banks just are not CBILLing sensibly, we got knocked back for a loan.
We’re on our own. The sooner those that accept that, accept that. (Like me) the sooner we’ll find a way through this most brutal of conditions from companies”
We somehow managed to avoid every grant, every loan, every bit of support.
So we had to change our offline offering to an online one. It worked, we gone from 0% of Revenue to about 34% in less than 4 weeks.
We’re one of the “lucky ones” the longer this ‘drought’ goes on, the more casualties we going to see. We are going to have to pay either way; Via the benefits office or cash support for Directors and companies.
I know where the smart money is. But do the Government?”

Speaking to Sara Robinson, a communications consultant based in Cardiff she said of the situation: “I am a sole trader who operates as a limited company. As a freelance consultant I am required to do so in order to win work. This means I’m not eligible for the government’s support scheme for the self-employed. People like me have fallen through the cracks.

I have lost work overnight, with clients cancelling contracts with immediate effect as they themselves battle to keep their organisations afloat.

“I’m the very opposite of a ‘fat cat’ – I am a single parent and my business is how I earn my income and keep a roof over our heads. Yet the UK government support package doesn’t cover people like me. I know many people in the same boat, and it just doesn’t seem fair that for some inexplicable reason, the chancellor thinks we are less deserving of help.

“My business uses photographers, creatives, and other freelancers so there is a trickle-down effect – I may not employ people directly but I am also a source of income for at least three other freelancers. So this isn’t just about my income, but about the people I would ordinarily be commissioning and paying to supply services to me and my clients.

“The message from UK government seems to be if you are a contractor, you’re on your own. In Wales, the Government has taken a different approach to its UK counterpart. For example they have announced an Economic Resilience Scheme which aims to plug the glaring gaps in the support schemes already announced by the UK Government. The new £500 million Welsh fund will support firms of all sizes, including social enterprises, and I have made an application to the fund.

“I won’t know the outcome until the end of the month – it’s not a huge amount to support all the people who will fall through the cracks, but it’s great that in Wales the government has at least recognised that there are people who have been left high and dry by the existing support schemes. I am crossing everything that I am judged eligible.”