[27.03.20]

The Government has provided generous packages to support the self-employed with profits upto £50K per year, and to support employees on PAYE who will be furloughed (laid-off) with 80% of their salaries paid by the Government.

However, to be clear, the measures for the self-employed do not currently cover company Directors who are paid part in salary and part in dividends. At this time there is no Government guidance on how a company Director will be supported during this time. As we learn anything further, we will keep this blog up to date.

A number of clients have contacted us asking if they, as a company Director, can be furloughed and claim 80% of their PAYE salary (not dividends).  At this time we are unsure if the Government’s scheme allows this.  As soon as we know, we will let clients know.  However, our view is that we can’t see how a company Director can be furloughed, as the definition of furloughed is that the employee must not undertake any work during the furloughed period. A company Director will be undertaking administrative tasks, if nothing else, during this time; and has responsibilities both to the company, Companies House and HMRC.  As a consequence we are unsure whether company Directors can legally be furloughed.

At this time, company owners who take their earnings as employed income up to the tax-free personal allowance and the rest as dividends may be caught between the Self-employed Income Support Scheme and the Job Retention Scheme. 

We hope that the Government will provide more guidance on this and further support for company Directors; and as they do, we will keep you informed.

Castletons Accountants