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Company Directors furloughing

HMRC confirms salaried company directors can furlough

However, this does not currently apply to earnings paid through dividends.

HM Revenue & Customs (HMRC) has confirmed that salaried directors of their own personal service companies (PSCs) will be able to furlough themselves under the coronavirus Job Retention Scheme.

In doing so, company directors will be able to claim back 80% of their salaried income up to £2,500 per month. However, this does not currently apply to earnings paid through dividends, which is how many limited company directors pay themselves.

In an update to the Coronavirus Job Retention Scheme guidance on the government website, HMRC confirmed that salaried company directors, including salaried individuals who are directors of their own PSCs, will be able to furlough themselves or be furloughed by their board of directors.

The guidance also states that furloughed company directors will still be able to carry out ‘particular duties to fulfil the statutory obligations they owe to their company’ while they are furloughed, provided they do ‘no more’ than is necessary.

‘As office holders, salaried company directors are eligible to be furloughed and receive support through this scheme,’ it says.

‘Company directors owe duties to their company which are set out in the Companies Act 2006. 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.

‘Where furloughed directors need to carry out particular duties to fulfil the statutory obligations they owe to their company, they may do so provided they do no more than would reasonably be judged necessary for that purpose. For instance, they should not do work of a kind they would carry out in normal circumstances to generate commercial revenue or provides services to or on behalf of their company.

‘This also applies to salaried individuals who are directors of their own personal service company (PSC).’

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