Further to our previous emails detailing the various support measures announced by the Government, we are increasingly being contacted by company directors to ask what support is available for themselves as individuals.
Whilst the various Government measures which have been announced have no doubt gone a long way to giving essential support to most individuals and some businesses, it appears that directors of limited companies have found that they appear to be somewhat lacking in support.
Many company directors/shareholders typically remunerate themselves using a small salary processed through PAYE with additional amounts paid via dividends.
Unsurprisingly they are not eligible for the Self Employed Income Support Scheme as they are not self-employed and additionally when the scheme was announced company directors were specifically named as not qualifying.
So just what support is available for limited company directors? Sadly, the answer appears to be that the only available option is using the job retention scheme. It is important to note however:
- This scheme will only cover the element of a directors remuneration paid as salary through a PAYE scheme
- Dividends will not be covered by this scheme
- It is not possible to now increase a directors salary to necessitate a higher claim as it will be calculated as the higher of:
- The amount you earned in the same month last year
- An average of your monthly earnings from the last year
- Directors would only qualify for this scheme if they were doing no work at all for the business which is probably unlikely in many cases
The inference appears to be that at present the Government expects company directors to continue working and to fund their remuneration out of the business cash-flow. In order to do this, many businesses may need to apply for some form of working capital assistance either through the Coronavirus Business Interruption Loans or other finance options available from lenders.
Should you require further clarification on the above, or any other matter, please contact your Fairhurst partner.