Furloughing for directors – more questions answered

A term that was unfamiliar to most people just a few weeks ago is a now hot topic for Business Control clients. There’s recently been some clarity over how the scheme will work for directors – here’s what we know.

Remind me: what’s furloughing?

The government’s Coronavirus Job Retention Scheme enables employers to effectively put their staff contracts on ice. If you ‘furlough’ one or more of your team,
the state will pay them up to £2,500 a month (to cover 80% of their wages) and, following the current crisis, you’ll either be able to start paying them again or begin redundancy negotiations.


Will my employees still work for me while they’re furloughed?

They’ll still be contracted employees, but they won’t be able to carry out any of their daily duties.


I’m a company director – can I furlough myself?

In a recent update from HM Treasury, you can if you are on PAYE payroll. 


Is this a good course of action for directors?

It depends on many different factors. Some of our clients are certainly considering furloughing themselves – particularly those trading in sectors, such as recruitment, where they can see that there’s unlikely to be any business activity for the foreseeable future.


Will I automatically be able to claim 80% of my salary?

It all depends how you pay yourself. Most of the directors we deal with at Business Control pay themselves a nominal director’s fee – to minimise their tax obligations – and top up their earnings with dividends. 


So how much can I claim if I pay myself a nominal fee?

In the last year, most of our directors paid themselves around £715 per month, which would mean that you could claim 80% of that, which is £572. 


And how will I get this money?

We don’t know how this process works yet. Do the government pay you directly? Do they pay the money to the company? The details are still being thrashed out. But things are moving quite quickly and we are expecting clarification soon. Please check back here for details in the future.


What work can I do while furloughed?

Interestingly, the rules are different for directors than employees. This week, HM Treasury explained that, while you can’t carry out any revenue generating tasks, you’ll be able to carry out what are known as your ‘statutory duties’ and obligations.


Can I go and get another job?

You could certainly work for someone else while furloughed. 

What’s the minimum length of time I can furlough myself for?

Three weeks. 


What if I need to furlough myself more than once? 

It’s not clear if this is possible for directors. Although, you can furlough an employee for three weeks and bring them back on board. And then if you decide that they need to be furloughed again, then you can have another three-week period, so long as the scheme is continuing to run during that period.


Where can I claim?

The online service you’ll use to claim is not available yet. We expect it to be available by the end of April 2020.


Where can I find more information?

Take a look at the government’s dedicated page here.

Don’t forget to check out the rest of our Accounting for COVID-19 blogs here, and please check back periodically to get the very latest insight and information from the Business Control team.

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