Directors - Furloughed Workers?

Directors - Furloughed Workers?

This is a question we have been asked a number of times over the last week and it is still a very grey area, with no clarification from HMRC as yet.

Once you are on furlough you will not be able to do any work for your employer, furlough has a minimum period of 3 weeks.

So how does that work for a Director who is employed by the limited company?

Posting on Facebook, Twitter, Linkedin etc could be enough to jeopardise a director's Coronavirus Job Retention Scheme claim, as such activity could breach the scheme’s ‘no work’ rule.

You can carry out Statutory duties (likely to include dealing with Companies House filings or preparing statutory paperwork for the company),however they are really limited so if as a director you are still talking to customers; you are still talking to suppliers; you are still busting a gut to keep your business going; you’re still marketing your busines and you’re still posting on social media; unfortunately you won’t be able to claim.

One of the key conditions of the furlough scheme is that the employee is not allowed to work for the employer.

So if as a Director and employee your employer has no work for you to do e.g. general daily duties such as dealing with post, clients, customers, invoicing, payroll, banking etc. (this is not an exhaustive list) and then you may qualify as a furloughed worker. However please bear in mind what we have said above.

You can only claim 80% of PAYE which, for most Directors this will only amount to 80% of £950/£1,000 p/m or so in the current tax year. Please note dividend income cannot be included.

Would there be more value in working on your business?

Would there be more value in working on your business than you can claim via furlough. If you don't claim you can continue to work within your business getting the business in a good position and be ready to start trading again once this is behind us.

These are just our thoughts and the final decision rests with the director should they decide to become a furloughed worker.

For more information on the Coronavirus Job Retention Scheme please click in the following HMRC link

HMRC Coronavirus Job Retention Scheme

Team DTA