Brighton is renowned for being a popular tourist destination on the South coast and is known by many as London-By-The Sea. Whilst tourism is a major part of the local economy, Brighton is now one of the UK’s leading hubs for digital and technology-based start-ups. Not only this but a significant proportion of individuals in the Brighton economy run their own businesses in a number of different sectors, IT, property and building services, healthcare and hospitality. These professionals tend to run their businesses through a limited company structure for a variety of reasons, one of which being that commercial liability lies with the company and not the individual. However, during the current coronavirus situation it quickly became apparent that those who fall into this category do not qualify for a number of the support schemes announced by the government to date and many believe that protecting these owner-director businesses is essential if we want to ensure our economic recovery once this crisis is over.

With two universities, the University of Brighton and the University of Sussex – there are over 35k students in the city which not only provides a diverse talent pool for employers but also a number of entrepreneurs in the making and in order to support our economy  during these uncertain times, we need to ensure that this group of talented young students and their innovative ideas aren’t lost.

There has been a growing number of questions from local business hubs, such as Platf9rm, Wired Sussex and Brighton & Hove Chamber, all asking ‘why a vast and notably vital part of the working economy are being ignored’.

Beth, Operations Manager at The Projects ran an online event on 31 March entitled ‘Self Employed Summit’ and this featured leading figures from Brighton’s business community and you can see a recording of this insightful and powerful discussion here > https://youtu.be/zEWz2GT-77w. The reason for this Summit was to raise the profile of the impact of this crisis on not only our business economy but the whole of the UK and Caroline Lucas (Green Party MP) started the conversation highlighting the fact that there is a large section of the economy who are falling through the cracks.

Recently a Change.org petition was launched and in just over a week it has received 230k signatures and counting > Small Ltd Company Directors to get Government support like the Employed and Self Employed

 Quote from Limited company

“As a husband and wife team we’ve run our successful web development and marketing agency for 21 years. We tend to work on mid-size projects scheduled over several months, so a low salary high dividend pay model reflects the peaks and troughs in our cash flow. We support the local economy by hiring freelancers and printers as well as paying our corporation tax, dividend tax, PAYE and VAT. We feel let down and overlooked by the Chancellor Rishi Sunak – how is it fair that hard working families like ours aren’t entitled to access any financial support schemes or grants should our work dry up?”

With the petition gaining traction, we can only hope that Rishi Sunak is prepared to take note of the growing number of concerns from this segment of the economy.

Quote from Charlotte Delmonte (Sole Director of Charlotte Delmonte Design Limited)

“There is currently no government help for sole directors of limited companies. As we can only go under the job retention scheme, which won’t be much anyway as most directors of their own companies pay themselves a low salary and top up with dividends, it means we have to furlough ourselves therefore turning away work that might come in. This doesn’t seem very good business sense and means my company is likely to fold leaving me facing an uncertain future. The self-employed are still able to claim and trade so this doesn’t seem fair. The government are excluding a large portion of self-employed people because directors of limited companies aren’t seen as self-employed. 

Small business owners must also be protected! They should also be entitled to 80% of their filed average earnings, including dividends (which are already taxed!) up to £2500 like the employed and self-employed. 

I feel let down by the government. I feel like they don’t care if the business I’ve spent so long building up since the 2008 financial crisis. They should be supporting small businesses in this difficult time just as much as the employed and self-employed.” 

There was recently a positive development for these businesses as it has been reported that the Job Retention Scheme has been extended to allow director/shareholders to be furloughed so long as the only ‘work’ they complete is that required to carry out their statutory duties as directors (this furlough grant only applies the PAYE element of salary received). Obviously, there is more to be done but hopefully these are positive steps forward and as a local firm of accountants we will be supporting our clients through these uncertain times.

Author Victoria King, Marketing Manager