Search rightsnet
Search options

Where

Benefit

Jurisdiction

Jurisdiction

From

to

Forum Home  →  Discussion  →  Work capability issues and ESA  →  Thread

company director and (NS)ESA

S Taylor
forum member

Welfare benefits adviser - Macmillan Caring Locally, Christchurch

Send message

Total Posts: 31

Joined: 11 June 2013

I have a patient who is the sole company director of his own ltd company. There are no employees. He has been off sick since March 20 and is terminally ill so will not be returning to work. He tells me there is no money in the business to pay himself SSP and that he is starting to wind down the company but it is still running (I’m not sure quite what that means as he is too ill to work?) in case he does not die. Normally as an employee you would have needed to exhaust your SSP before being eligible for (NS)ESA. As it is now over 28 weeks since his period of sickness started is there any eligibility to (NS)ESA?

Ruth_T
forum member

Volunteer adviser - Corby Borough Welfare Rights & CAB

Send message

Total Posts: 286

Joined: 21 June 2010

NS ESA is a contribution based benefit, so he would have to satisfy the NI contribution conditions by virtue of having paid either Class 1 or Class 2 NI contributions in the relevant years.  (2017/18 and 2018/19 if he’s claiming now.)

If a company cannot pay SSP, for whatever reason, they should issue a form SSP1 explaining why.  That form is then submitted with the ESA claim.   

S Taylor
forum member

Welfare benefits adviser - Macmillan Caring Locally, Christchurch

Send message

Total Posts: 31

Joined: 11 June 2013

Thanks Ruth, looking at the reasons for issuing an SSP1 the only reason which might apply in this instance would be the one for his average earnings in the 8 weeks prior to sickness. If this doesn’t apply then there is no reason on the SSP1 for not paying SSP. Any thoughts?

Ianb
forum member

Macmillan benefits team, Citizens Advice Bristol

Send message

Total Posts: 668

Joined: 24 November 2017

If he is able to get a backdated Fit Note then his 28 week SSP entitlement has now expired and that could be the reason for issuing the SSP1. (In fact I am not sure he even needs a Fit Note).
Has he been paying himself anything through PAYE since March? If he has and it shows as normal wages that might complicate things.

Brian Fletcher
forum member

Welfare Rights, Wigan & Leigh Carers Centre, Wigan

Send message

Total Posts: 101

Joined: 1 April 2015

This may not be the case and i don’t know if you asked the question, but speaking from my own experience as a limited company director in a three way partnership. None of us actually pay ourselves a weekly wage.

We choose to renumerate ourselves by way of dividend which is less in taxation, and does not attract NI contributions at all

HB Anorak
forum member

Benefits consultant/trainer - hbanorak.co.uk, East London

Send message

Total Posts: 2465

Joined: 12 March 2013

Brian Fletcher - 22 October 2020 12:16 PM

This may not be the case and i don’t know if you asked the question, but speaking from my own experience as a limited company director in a three way partnership. None of us actually pay ourselves a weekly wage.

We choose to renumerate ourselves by way of dividend which is less in taxation, and does not attract NI contributions at all

That’s interesting.  Most owner/directors draw a salary (or nominally do so - if the company cannot pay them it just piles up in their loan account) which is above the lower NI threshold but below the threshold at which NI contributions are actually paid, in order to protect their NI record - especially state retirement pension, but equally ESA(c).  As long as the NI credits are recorded, HMRC doesn’t care whether the nominal salary is actually paid or not.  I was surprised the claimant in the original post had not done that with SSP - just say it’s being paid even if it’s not, but Brian’s comment suggests perhaps it’s more widespread.

Aren’t you worried about your pension or, how shall I put this, are you at a stage in your career where further contributions are of no advantage in terms of qualifying years?

Brian Fletcher
forum member

Welfare Rights, Wigan & Leigh Carers Centre, Wigan

Send message

Total Posts: 101

Joined: 1 April 2015

Nearly 60 HB, so I have enough NI, and I also have a miltary pension.

Taking dividends rather than a wage does require a bit of forethought. I’ve recently been dealing with someone whose only source of income was dividends from their own business. Recently severely injured in an accident - not enough NI for NS ESA, and too much in savings to qualify for UC. Spouse has had to give up work to provide care, and the only income is PIP.

You rapidly find out that your savings don’t really stretch as far as you think

Charles
forum member

Accountant, Haffner Hoff Ltd, Manchester

Send message

Total Posts: 964

Joined: 27 February 2019

Even without needing any NI contributions, It is almost certainly more beneficial from a tax point of view to take a salary.