Owner Kate Upcraft Consultancy Ltd
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Furlough claims for annually paid directors

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Many small company directors were locked out of CJRS-1 and CJRS-2 because they paid themselves an annual salary at the end of March 2020, missing the RTI cut-off date of 19 March. This article was updated on 27 January.

26th Jan 2021
Owner Kate Upcraft Consultancy Ltd
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If those directors managed to pay themselves some salary between 20 March and 30 October 2020 they are eligible to claim for furlough pay under CJRS-3. The problem is how to calculate the amount to claim based on one annual payment of salary, taking into account the monthly pay cap of £2,500.

New examples

On 14 January HMRC published two examples that outline for the first time how furlough claims should be calculated for annually paid directors. These examples were then updated with further examples added on 26 January – see below.

The examples indicate that HMRC expects furlough calculations to be based on day counts. Whilst that may strike you as the obvious way to calculate their furlough pay, there have been two other methodologies used:

  • take the annual amount paid and apply the monthly reference pay cap of £2,500; or
  • take the annual value and divide by 12 and apply the 80% rule (or lower percentage if applicable for the claim month)

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Replies (5)

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By accountant78
27th Jan 2021 12:02

Can this be backdated to 01/11/2020 when CJRS-3 kicked in? Obviously the claim windows for November and December are now closed so can 3 months worth go on a January claim?

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By MDK45
27th Jan 2021 12:38

I paid myself an annual salary for 2018/19 of 8k after the Mar 19th deadline. Does this now mean I can submit a retrospective claim?

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By Paul Crowley
27th Jan 2021 15:29

If directors can cope with just one payday a year, Why do they actually need any furlough at all?
Furlough is for genuine employees who rely upon their money.
A director who does not need regular wages is clearly not relying on them.

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Replying to Paul Crowley:
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By MDK45
27th Jan 2021 15:38

It's nothing to do with that. The timing of paying dividends and salary throughout the year has no bearing on a person's wealth or disposable income.

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By stuartb
09th Feb 2021 09:40

The Treasury's stupidity knows no bounds. They change the rules to fix an eligibility SNAFU and create another. Previously eligible annually paid directors (i.e. those with payroll before 20 March 2020) now ineligible for CJRS 3 (assuming annual payroll date kept the same). All they needed to do was add a rule which said that the eligibility period applied "unless the employee was already eligible for CJRS 1&2". But clearly that was too complicated for them to figure out.

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