In my previous post I stated that ‘As Directors we are not able to furlough ourselves and therefore would not be eligible for the Governments Covid-19 Job Retention Scheme‘.
I also said ‘the details of these measures are still coming out and there is a great deal of confusion so what I’m about to write may well change going forward‘ – and it has (although a bit quicker than I expected).
CONFIRMED self-employed limited company directors CAN be furloughed as employees on their PAYE element, even if theyre sole employee.— Martin Lewis (@MartinSLewis) March 27, 2020
Technically they can't then work for the firm, but can continue to perform their statutory obligations as directors eg official legal filings etc
If you don’t know who Martin Lewis is then check out the Money Saving Expert website. Basically, when this guy says something, especially it’s all in CAPS then he’s checked and double-checked the facts. He wouldn’t make this kind of statement without being absolutely sure. If he says that Limited Company Directors CAN furlough themselves – even if they are the sole employee of the company, then that’s good enough for me.
So, what does that change?
Well, for me it doesn’t change anything at all. I am in a position where I can operate as normal, i.e. I have a dedicated, fully equipped home office. All I am missing right now is a client but, as I don’t intent to furlough myself, I can continue to search and engage as before. I can still work for the company – it’s business (almost) as usual in that respect.
Obviously, this may not be the case for everyone and if 80% of their salary would make a difference to their ability to see this thing out then they should take it.
But that’s the sting here isn’t it – most contractors pay themselves a minimal salary, topping them up with regular dividends. So 80% of £750 is £600 a month – in most cases this is far short of their normal income and maybe not enough to keep them afloat and that’s a major concern.
But contractors who are shouting about being ‘forgotten’ and ‘left out’ really don’t understand the slippery slope they are treading – especially with IR35 set to raise it’s ugly head once more.
Huh? What’s IR35 got to do with this?
3. This is the big one. If Ltd Co contractors had been included in the package we would have lost the IR35 argument FOREVER. If you don't believe me look at what the Chancellor said about sole trader national insurance rates the announcement— Andy Chamberlain (@AndyIPSE) March 27, 2020
I urge you to click the above tweet and then read the rest of his thread.
If we want to be treated as regular businesses and not caught up in ill informed Employment Status determinations and blanket contractor bans then we have to accept the fact that we have done this to ourselves.
Help is being offered to us but as we decided to pay ourselves in the way we do and now it has come back to bite us.
Not a popular opinion I’m sure – but that’s where we are.