What help is available for Sole Directors affected by Coronavirus?

If you run your business as a limited company and you’re the only director, owner and employee, you will be wondering what support is available for you to help deal with the financial impact of Coronavirus.

There are a number of schemes that have been launched by the government to support those whose income is affected as a result of Coronavirus. Here are two of the schemes that have been introduced and some helpful information for them:

  • The Coronavirus Job Retention Scheme
    • encouraging employers to keep their staff on the payroll rather than laying them off by providing a grant which covers up to 80% of their wages and designating the employees as ‘furloughed workers’
    •  the government will reimburse up to 80% of each employees employment costs including employers NI and minimum employers pension contributions up to a maximum of £2500 a month.
    • You can opt to continue to pay the employee 100% of their normal salary but the reimbursement from the government will only cover 80%
    • The scheme for furloughed employees begins from the 1st March 2020 and will last for at least three months and will cover employees who were on the February 2020 payroll.
    • Staff must not work whilst furloughed but they will still accrue their annual leave as normal.
    • The minimum amount of time an employee can be furloughed is three weeks.
    • To access the scheme you must designate affected employees as furloughed workers, tell the employees formally and submit the information to HMRC via a portal – as the scheme is new, the portal doesn’t exist yet but HMRC have confirmed that they are working on it as a priority and hope to have it available by the end of April 2020.
  • The Self Employed Income Support Scheme
    • The scheme means self-employed workers are able to receive up to 80% of their monthly wages up to a maximum of £2500.
    • Being self-employed or a sole trader is someone who works for themselves in business. Directors are technically employees of the company and not self-employed.
    • Payments will be calculated using average monthly profits over the last three financial years. If three years profits aren’t available then HMRC will take an average of the periods that are available.
    • To qualify for Self-Employed Income Support Scheme applicants must have filed their 2018/2019 tax return – if it is still outstanding then applicants have until the 23rd April to submit it.
    • The scheme is only available for businesses whose yearly profits do not exceed £50,000
    • More than 50% of your earnings must be from self-employed work
    • The scheme is expected to be running by the end of June 2020 and payments will be backdated.

Directors of limited companies are not eligible for the Self Employed Income Support Scheme.

Directors of limited companies are eligible for the Coronavirus Job Retention Scheme but this will only cover the salary element of their income.

If you decide to furlough yourself as the Director of your company, you cannot do any work – so no liaising with suppliers or customers but you can fulfil statutory duties e.g. Tax, VAT or Companies House submissions etc.

Can you pay your dividend payments as a salary through PAYE instead now? No, this basically amounts to fraud. HMRC will probably only consider what has previously been submitted through PAYE when they set out the criteria for their calculations so making any changes now is unlikely to make any difference.

There are routes of support for Sole Directors including:

  • Deferred VAT and income tax payments
  • Coronavirus Business Interruption Loan Scheme
  • Statutory Sick Pay relief package for SMEs – may be useful if you contract the virus
  • Universal Credit and Employment & Support Allowance
  • Business rates holidays and the Small Business Grant Scheme
  • HMRC Time To Pay Scheme

More information can be found on the HMRC Business Support website: