[30.03.20]

The Government has provided generous packages to support the self-employed with profits up to £50K per year, and to support employees on PAYE during the COVID-19 pandemic. However, there are currently no measures for Directors of Limited Companies.

Company Directors are key to the UK economy.  They start and build the companies that provide the employment opportunities and wealth for others. 

Although the Government has not set out any measures for Company Directors, some organisations are suggesting that Company Directors could furlough themselves, and could receive 80% of their PAYE salary, excluding their dividends.  To enable an employee to be furloughed, the employee must not undertake any activities for the company.  However, Company Directors have statutory and administrative responsibilities and duties.  Some organisations are suggesting that furloughed Company Directors would still be able to fulfil their statutory responsibilities.  However, what about the administrative duties such as paying staff and creditors and collecting debts from debtors.  Therefore, we are concerned about the definition of a furloughed Company Director, and what they can and cannot do.  This is particularly the case where a company has a sole Director.  We ask the Government to clarify this situation.

Company Directors very often take a small salary of around £9,000 per year and receive the remainder of their income via dividends from the company.  This is a recognised approach for company Directors.  Therefore, even if a Company Director is able to furlough themselves, they will receive 80% of a small proportion of their income.  We ask the Government to look at this situation as a matter of urgency, and ensure that company Directors are also supported during the COVID-19 pandemic, enabling them to continue to trade and employ people after the pandemic.

Castletons Accountants