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furlough, small dividend in 2020?

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    furlough, small dividend in 2020?

    Hi,
    I run an ltd company. The company made just around 7000 in total the whole year.

    I've paid myself 2000 in dividends and 4000 in salary in 2019/2020.
    I kept 1000 on the side to pay as dividend on April 6 2020 (to be part of the dividend allowance of 2020).
    I have one single client left and the client wanted to half the work on April 1 and reduce the contract to just £250 a month. I asked for a day to think about whether to agree to the new terms or cancel the contract.

    My questions are:
    - Can I put that contract on pause for a few months (if the client accepts, and cancel if not), and put myself on furlough starting April 3?
    - In April and May of this past year I had paid myself 500 each. So on furlough that'd be 400 instead of the 250 above. That is better than accepting the new terms. And since pay was not the same every month this past year, I assume then one can claim the pay of April and May 2019 instead of average?
    - Most importantly, I had been awaiting that 1000 dividend, and wanted to declare and pay it on April 6 2020.
    Can this still be done if I furlough myself? With no income coming in anymore and then claiming the 80%, is it still ok to pay myself that 1000 dividend?

    Thank you for your advice.

    #2
    Where are your taxes?
    'CUK forum personality of 2011 - Winner - Yes really!!!!

    Comment


      #3
      Originally posted by northernladuk View Post
      Where are your taxes?
      Ha ha ha. I was thinking about you as I was reading the post. Lol.

      Comment


        #4
        How long are you planning to furlough yourself for? What do you expect to achieve from it?

        Comment


          #5
          Originally posted by northernladuk View Post
          Where are your taxes?
          Hi,
          since PAYE is an expense, so tax (19%) is due on the dividend only. I already accounted for that. I rounded the figure a bit for ease of description. The dividend already taken falls on the company's previous tax year, and the one to be paid falls in the new one (the company tax year does not coincide with the fiscal one for employees).

          Is it ok to go on furlough and still take a dividend on april 6?

          Comment


            #6
            Originally posted by ladymuck View Post
            How long are you planning to furlough yourself for? What do you expect to achieve from it?
            A couple months. This is because the only client I still have left decided to cut down the number of contracted hours by half. So perhaps best is to furlough

            Comment


              #7
              Originally posted by rsw View Post
              Hi,
              since PAYE is an expense, so tax (19%) is due on the dividend only. I already accounted for that. I rounded the figure a bit for ease of description. The dividend already taken falls on the company's previous tax year, and the one to be paid falls in the new one (the company tax year does not coincide with the fiscal one for employees).

              Is it ok to go on furlough and still take a dividend on april 6?
              Corporation Tax? VAT? WTF?
              ---

              Former member of IPSE.


              ---
              Many a mickle makes a muckle.

              ---

              Comment


                #8
                Originally posted by wattaj View Post
                Corporation Tax? VAT? WTF?
                Corporation tax (19%) is due on profits, which is mainly equal to the dividend payout.
                Not VAT registered as turnover is like 10% of the VAT threshold as you can tell from my post.

                Mind language please?

                Comment


                  #9
                  Originally posted by rsw View Post
                  A couple months. This is because the only client I still have left decided to cut down the number of contracted hours by half. So perhaps best is to furlough
                  To be clear, have your hours been cut in half, or has your contract been terminated? If you're still doing *any* (non-director duties) work through your Ltd company, you cannot furlough yourself and claim back 80% of salary.

                  Is it is just your hours that have been cut, you have to decide whether to terminate the contract with your client before you can furlough yourself. Is the amount you'd now invoice (which you can take as salary and dividends) greater or less than 80% of the salary you'd be able to claim if you furloughed?
                  Last edited by Paralytic; 3 April 2020, 12:13.

                  Comment


                    #10
                    Personally I'd do the work if for no other reason than to keep my sanity and avoid the paperwork. I also have a slight issue looking for free hand outs if I can work instead, particularly with the amounts we are talking here. Must be so little. I wouldn't risk the contract being completely canned if they find out they managed without you.

                    OK bad timing but could be a chance to look for more work to supplement your income as well.
                    'CUK forum personality of 2011 - Winner - Yes really!!!!

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