Coronavirus: Self-Assessment Payment Deferral and Job Retention Scheme payment to Directors

30th March 2020

Self – Assessment Payment Deferral

 It was recently announced that all self-assessment tax payments due by 31 July 2020 are no longer due by this date (the second payment on account for 2019/20). Due to the current crisis, this payment has now been deferred until 31 January 2021.

Originally, it was announced the deferment only applied to self-employed tax payers but HMRC have now extended this to all those within self-assessment.  

Please be aware, although you may not have a tax bill this July, more tax may be due than normal at the end of January 2021. This is because your January payment will now include the 2019/20 second payment on account as well as the normal balancing payment due for 2019/20 and first Payment on Account for 2020/21.

Coronavirus Job Retention Scheme – Payment to Directors

When this scheme was initially announced, questions were raised regarding whether these rules could apply to directors. A particular area of concern was whether directors of owner managed business could furlough themselves, given that it may contradict company law.

We have been in contact with HM Treasury and we can confirm that directors are permitted to be ‘furloughed’ and the company can then make a claim for 80% of their salary payments (does not include dividend payments) up to £2,500 per month, to be reimbursed by the government.

The treasury confirmed that an owner-manager’s legal responsibilities as a company director does not disqualify them from being furloughed under the scheme if they would otherwise qualify because they receive a salary through PAYE and they meet the other scheme criteria.

In terms of duties, it has been confirmed that a director can be furloughed and still be undertake their statutory and administrative obligations, such as filing accounts. This providing that is all they are doing, so they cannot be undertaking commercial activity at the same time.

This concession for directors is in place because the scheme is set up with the intention to support firms who cannot provide client services due to the current crisis and so they have no option to furlough. It is crucial that the director does not undertake any non-statutory work and any claim paid by HMRC is likely to be closely scrutinised to check the validity of any claim.

Therefore, when advising our Payroll teams of any furloughed staff, please include any directors that may be unable to work for the company.

When any further information is made available we will let you know.

Please remember we are here to help as much as possible through these challenging times. We will continue to keep you updated as further announcements are made over the coming days.

Links to our other articles.

Coronavirus: The Coronavirus Job Retention Scheme – update

Coronavirus: Help for the self-employed – updated guidance

Coronavirus: Business update – Help for the self-employed

Coronavirus: Business update – The Coronavirus Job Retention Scheme

Coronavirus: Business update – Summary of all available support

Coronavirus: Business update – Latest announcements

Read our latest ‘Hot Topic’ COVID-19: measures for UK businesses

Coronavirus: Business update – Business Rates & IR35

Coronavirus: Latest measures to support UK businesses

Coronavirus – Update for Businesses

Useful links

UK Government guidance

NHS – condition overview

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