We’ve had a lot of calls about what help and support there is for Ltd company director/shareholders, particularly focusing on their individual remuneration.

As a reminder:

  1. The government announced details of the Coronavirus Job Retention Scheme. This is a scheme which will pay 80% of an employee’s (i.e. someone on PAYE) salary, up to a cap of £2,500 per month. This will be backdated to 1 March. The employee will need to be on unpaid leave.
  2. We are expecting the government to announce support for the self-employed. Draft proposals are for the self employed to receive 80% of their monthly net earnings, averaged over the last three years, or £2,917 whichever is lower. We can only assume this will be based on 2017, 2018 & 2019 as we have not yet completed 2020 but this will be subject to the final guidance issued.

So where do Ltd company director/shareholders fit into this?

Ltd company directors are not technically self employed. Whilst a lot of company directors see and refer to themselves as self employed, if they run their business through a Ltd company, then technically they are not self employed. They are an officer/director of a company and fall within the definition of an employee. So, based on the above directors will not qualify for self employed help.

So will Directors qualify for the Coronavirus Job Retention Scheme?

This is where we are waiting on further details from the government. The guidance at present states that it is for PAYE employees (which directors are), but it is for employees who are furloughed – this means on unpaid leave. As a Ltd company director/shareholder will you put yourself on unpaid leave?

Even if this was the case what level of earnings are taken into account?

This scheme is for PAYE employees. Most Ltd company director/shareholders pay themselves a small PAYE salary (between £9-12k for tax and NI reasons) and top up with dividends. As dividends are not PAYE this “income” will not be included when working out how much is available on the scheme. So even if director/shareholders do qualify for the scheme then the amount of PAYE is not in line with their actual take home pay (factoring in dividends). It appears on first glance that this group of individuals will not receive the same level of support as other types of workers.

We hope that further guidance giving clarity will be issued soon. In the meantime if you do have any queries please let us know. We are here to help and support during this difficult time.

Please see the below link for details of the government support currently available.

https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/covid-19-support-for-businesses

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