In Focus: Tax  

Directors risk falling into dividend 'tax trap'

"Directors must consider whether the company will still be solvent following a proposed distribution. Directors may be personally liable should the company become insolvent."

Lack of government support

The warning will come as an additional blow to company directors, many of whom have not been eligible for any Covid-support schemes.

As reported by FTAdviser, the Budget on March 3 discussed continued support for those eligible for the CJRS - furlough scheme - and the self-employment income support scheme.

However, Chancellor Rishi Sunak's statement continued to exclude support for over 700,000 limited company director/ shareholder businesses. 

Such directors typically receive most of their remuneration through dividends, an acceptable practice under existing tax rules, and as such continue to receive no support under either the CJRS or the SEISS rules.

simoney.kyriakou@ft.com