A Good-To-Know List for Directors:
- As far as PAYE is concerned, a director is an employee of their company.
- A director is neither a self employed nor a freelance worker performing tasks for their company. Therefore a director is not eligible for the Coronavirus Grant for the self-employed.
- A director on payroll on 28 February 2020 and engaged under a written or verbal contract may be furloughed.
- In accordance with HMRC guidance, furloughing a director requires that the decision be formally adopted and noted in the company records. It should also be communicated in writing to the director being furloughed.
- A sole director may be furloughed in respect of their employment duties.
- A furloughed sole director may still carry out tasks that are necessary to keep the company functioning, for example administrative tasks such as payroll, bookkeeping, mail handling. These tasks are deemed to be performed within the director’s statutory capacity.
- Where pay is for employment and service roles, partial furloughing is possible. This means duties as an employee are furloughed but statutory duties are not. Directors normally separate these tasks so that they are evidenced by two contracts: a service contract and an employment contract.
- Where there are two directors, one may be furloughed whilst the other carried out all necessary duties to keep the company active.
- Any director whose working hours and/or salaries are reduced due to Coronavirus restrictions is not entitled to the grant.
- Any director providing services or doing any task that generates income is not entitled to the grant.
- Payments made to employees and directors will be calculated based on average monthly earnings.
- A furloughed director or other employee(s) may undertake training but cannot work for the employer in question. They may undertake other work as long as their employment contracts allows it.
- A furloughed director cannot claim a grant for dividends but may receive dividends if they are a shareholder and there is sufficient retained profits in the company.
- A company may be eligible for business rate relief and grant if using business premises.
- If registered for VAT, payment for this quarter may be deferred.
- A government-backed loan may be applied for if needed for emergency payments, for example the payment of salaries.
- Deadlines for the filing of accounts with Companies House may be extended by three months if unable to file accounts due to Coronavirus. The extension requires an application.
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