The vast majority of our clients are director/shareholder owner-managed limited companies.
Typically the directors take some remuneration through PAYE by way of salary, usually at a level just above the NIC threshold, with the remainder taken as dividends. Can these directors make use of the Coronavirus Job Retention Scheme? The simple answer is yes, but only based on their PAYE salary.
Dividends are not included as part of the amount that can be claimed.
The other key issue is that the director must stop working in the business to be eligible, with the exception of tasks that relate to their statutory duties. They cannot undertake any services or revenue-generating work.
Where a company (acting through its board of directors) considers that it is in compliance with the statutory duties of one or more of its individual salaried directors, the board can decide that such directors should be furloughed. Where one or more individual directors furlough is so decided by the board, this should be formally adopted as a decision of the company, noted in the company records and communicated in writing to the director(s) concerned.
Please call us should you need help to determine how this may apply to you.
