Furloughed Company Directors By the Job Retention Scheme

Furlough - a new word in UK, but one that may be on the top of most used words in 2020! You will have seen from one of our recent articles the details about the Job Retention Scheme, which was launched in response to the Covid-19 outbreak to support companies. The government has also responded to many directors of companies asking how they could be supported during these times, with the option to be furloughed if you are a director of a company, but what does it actually mean for you?

Can Directors be furloughed and added to the Job Retention Scheme?

In short - yes, but there are some caveats. You must follow the guidelines, which admittedly at this point are a little wishy washy in terms of what directors can and cannot do, of being furloughed as a director. Here are some of the requirements to be furloughed as a company director:

• The director must be a full-time employee of the company.
• The director must have been on PAYE on or before 19th March 2020.
• A director can furlough themselves, and continue their statutory duties, but cannot perform any work for the employing business aka they cannot carry out work that would bring income to the business, as per the requirements of employees being furloughed.
• Directors who are paid a nominal salary, but receiving most of their income through dividends would only receive 80% of the nominal salary if they quality.
• Payment-by-dividends is not supported by the Job Retention Scheme.

So, yes, you can claim the Job Retention Scheme as a director but I suggest you strongly think about whether it is the right option to take. If you can take this time to truly work on your business, perhaps develop better strategies, and build stronger client relationships, this could be an opportunity to grow and develop your company for even greater success.