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COVID-19: Directors on PAYE can furlough

Update from The Institute of Chartered Accountants in England and Wales (ICAEW)

31 March: The ICAEW has issued guidance that Company directors that receive salaries through PAYE can be furloughed and apply for a grant of 80% of their salary during the coronavirus pandemic.

After examining HMRC guidance, the ICAEW has said that it believes that individuals who are directors of their own family companies and who are themselves paid via PAYE should be eligible for the coronavirus job retention scheme, although the same rules will apply as to other businesses and their employees.

Under the scheme, businesses are able to apply for government grants for employees’ salaries up to the lower of 80% of an employee’s regular wage and £2,500 per month for three months from 1 March. The scheme could run for longer if the restrictions in movements to halt the COVID-19 pandemic remain in place.

The ICAEW is awaiting full details of how the scheme will operate from the HMRC, including for directors paid via PAYE but not receiving a consistent, regular monthly salary. They believe the intention of the scheme is to include those on irregular earnings, but the full details on how the amount of the grant will be calculated for these individuals have yet to be released. 

As with other businesses, such directors would need to have been on the payroll on 28 February 2020 and they cannot work while they are on furlough leave. We do not yet know the extent to which minor directorial duties would be disregarded, or whether the requirement that a furloughed employee should do ‘no work’ would prohibit this.

It is ICAEW’s view that in such times as we find all find ourselves, a pragmatic view should be taken.

We will bring any updates on this subject as and when we receive them.

The ICAEW also have guidance on their website, which may be of interest: