Sole Directors and the Coronavirus Job Retention Scheme - MLP Law

Sole Directors and the Coronavirus Job Retention Scheme

  • Corporate & Commercial Law
  • 2nd Apr 2020

Following the Chancellor’s budget measures aimed at this period of disruption due to COVID-19, the Coronavirus Job Retention Scheme was introduced.  Please see our blogs on the Coronavirus Job Retention Scheme for further details on this. This blog focuses on small businesses with a sole director and/or a sole shareholder and whether the Coronavirus Job […]

By aleks

MLP Law

Following the Chancellor’s budget measures aimed at this period of disruption due to COVID-19, the Coronavirus Job Retention Scheme was introduced.  Please see our blogs on the Coronavirus Job Retention Scheme for further details on this.

This blog focuses on small businesses with a sole director and/or a sole shareholder and whether the Coronavirus Job Retention Scheme (CJRS) can apply to them.

In a sole director/shareholder business, the director will usually take some (often limited) remuneration through PAYE and take the remainder as dividends. 

Can a sole director make use of CJRS?

The answer is yes, they can, but this subject to the rules of the scheme and the provisos detailed below:

  • this can only be based upon their PAYE salary and not any sums they take in dividends
  • the director must stop working in the business
  • they can continue to do their statutory duties as a director, but cannot do any revenue generating work (For further details on statutory duties of directors, please see our blog on Directors’ Duties and Responsibilities.)
  • both full-time and part-time directors can apply under the scheme
  • it is advisable that the Company write a letter to the director advising them that they are being furloughed, so there is a formal paper trail

Conclusion

A sole director can apply under the CJRS, subject to the provisions of the scheme and the additional points noted above.  They can continue to do their statutory duties as a director, but cannot do any revenue generating work for the company.

For help and advice, please speak to our Corporate and Commercial team on 0161 926 9969 or email corporate@mlplaw.co.uk.     

About the expert

Stephen Attree

Managing Partner

Stephen is the Owner of MLP Law and leads our Commercial, IP and Dispute Resolution teams which provide advice on all aspects of the law relating to mergers, acquisitions, financing, re-structuring, complex commercial contracts, standard trading terms, share options, shareholder and partnership agreements, commercial dispute resolution, joint venture and partnering arrangements, IT and Technology law, Intellectual Property, EU and competition law, Brexit and GDPR.

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