Directors receiving a salary through PAYE could be furloughed under the Government’s employee retention scheme, a major regulator has suggested.
According to the Institute of Chartered Accountants in England and Wales (ICAEW), individuals who are “directors of their own family companies” and who are paid via PAYE “should” be eligible for the Coronavirus Job Retention Scheme.
However, as furloughed workers cannot undertake any other paid work, it is unclear if furloughed directors will still be able to undertake their secretarial and statutory duties.
The scheme enables businesses to retain staff by covering up to 80 per cent of wages of furloughed workers, up to a maximum of £2,500 per worker per month. Employers can optionally make up the remaining 20 per cent.
An extended version of the scheme now also covers employer National Insurance Contributions (NICs) and pension contributions of furloughed workers.
Commenting on the possibility of furloughing directors, the ICAEW said it is “awaiting full details of how the scheme will operate”, but believes directors should be eligible after examining current guidance.
“After examining HMRC guidance ICAEW 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,” the regulator said.
“We are awaiting full details of how the scheme will operate from HMRC, including for directors paid via PAYE but not receiving a consistent, regular monthly salary. We understand the intention of the scheme is to include those on irregular earnings, but full details on how the amount of the grant will be calculated for these individuals have yet to be released.”
For more information on the Coronavirus Job Retention Scheme, please get in touch with our expert team.