Sole Directors and the Coronavirus Job Retention Scheme

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.