As Directors adapt their businesses to respond to the Coronavirus pandemic, we've collated a - still developing - list of the most commonly asked questions we're receiving from members, designed to point you in the right direction to finding support for your organisation as quickly as possible.
> Can directors furlough themselves?
Company directors are eligible to be furloughed. This also applies to salaried individuals who are directors of their own Personal Service Company.
Where one or more director is furloughed, this should be formally adapted as a decision of the company, noted in company records and communicated to the director(s) concerned.
HMRC guidance states that, while furloughed, directors can carry out particular duties to fulfil the statutory obligations they owe to their company, “provided they do no more than would reasonably be judged necessary for that purpose.” Directors “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.”
The IoD is lobbying the Government to issue further clarification on the duties that directors can carry out while furloughed.
Coronavirus: Government support for directors
Directors and the Coronavirus Job Retention Scheme
> What government support is available for directors who pay themselves in dividends?
Dividends can not form part of your claim for income support through the Self-Employment Income Support Scheme, nor can they under the Coronavirus Job Retention Scheme. Directors are only eligible for support through the Job Retention scheme on the basis of their PAYE salary.
The IoD understands that this has caused concern for directors of the smallest companies and recognises that is common to take a significant portion of income as dividends due to the potentially variable nature of a director’s salary.
As a result, the IoD is calling for the Government to extend support to company owner directors, including those that may pay themselves primarily via their own company’s dividends.
Press release: Gaps in Coronavirus support need to be filled
Coronavirus: Government support for the self-employed
> What government support is available for the self-employed?
There are a number of government support schemes relevant to the self-employed. Examples include:
- Self-Employment Income Support Scheme (SEISS): This is designed to assist self-employed whose income has been adversely impacted by COVID-19. The scheme will issue a grant to self-employed people or partnerships, worth 80% of their profits up to a cap of £2,500 per month. Directors who pay themselves in dividends are not eligible for this scheme.
- Universal Credit: Universal Credit will be available to those directly affected by COVID-19 or in self-isolation, with no need to attend a job centre. The Chancellor is raising the payments for Universal Credit so that a self-employed person can receive the same amount as someone on statutory sick pay (£95.25 per week).
- HMRC ‘Time to Pay’: The self-employed may benefit from a new helpline to help those concerned with paying tax due to COVID-19. HMRC will also waive penalties related to late payments and interest in cases where a business has administrative problems in contacting HMRC or paying taxes as a result of COVID-19. The dedicated helpline number is 0800 024 1222.
Explainer on government support for the self-employed
> How can the IoD help me?
The IoD has launched its Coronavirus Support Hub which collates the latest government announcements, guidance produced by IoD and other community resources. It includes:
- Government Support: Find out how you can take advantage of government support by reading our explainers, such as support available for SMEs, the self-employed or company directors.
- Information and Advice: Discover how the IoD’s Business Information Service and Directors Advisory Service can help you. You can also read our other advice, around themes such as for remote working and mental wellbeing.
- Directors and Corporate Governance: Read about what Coronavirus means for company directors. Topics include insolvency, board members and Companies House.
- Remote Wellbeing: Learn how your company can best work during the current disruption. Guidance includes tips on work-life balance, mental health and details on the Employee Assistance Programme.
- Learning and Development: Discover how you can continue to lead, inspire and learn amid the pandemic. Our resources include case studies and interviews as well as details of IoD activities in your region.
- Community Resources: Find out about resources from the government and wider business community, including webinars, toolkits and useful links.
> What is the IoD doing to support businesses that aren’t currently eligible for government support?
The IoD is in regular dialogue with all levels of Government with a view to secure increased support for our members. We have identified the following ‘gaps’ in support and have called for the Government to ensure support is extended to businesses that have fallen through the cracks:
- Extending support to company owner directors: Directors of the smallest companies, including consultants and freelancers, often take their income as dividends. Those that provide a clear paper trail should be able to make a furlough claim of 80% of their monthly income subject to tax, up to a £2,500 per month cap, to put them on par with support available for employees and the self-employed. Meanwhile, the duties directors can carry out while furloughed should be clarified.
- Encouraging co-operation from lenders: Banks must be flexible and accommodating to get cash to companies as quickly as possible through the Coronavirus Business Interruption Loan Scheme. Financial institutions should also avoid share buybacks and large executive incentive awards to make sure the money is going where it is most needed.
- Support for firms without premises: Grants available through local authorities for firms that already pay little or no business rates on their premises should be extended to some of the smallest companies and start-ups that do not have premises (including those in co-working spaces).
- Support for start-ups: Many early stage firms and micro-businesses may still struggle to obtain loans and could be ineligible for other schemes. Its crucial further funding and investment support is extended to support our most entrepreneurial and innovative enterprises.
Let us know what Government needs to hear by emailing email@example.com. Moreover, if you are a member we encourage you to sign up for Policy Voice if you haven’t already done so.
IoD Coronavirus Support Hub
Jonathan Geldart: How forgotten small company directors can be helped
Press release: Gaps in Coronavirus support need to be filled
Return to the IoD Coronavirus Hub