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Can I Claim For Individuals Who Are Not Employees Through the Furlough Scheme?

Posted 2 months ago

Can I Claim For Individuals Who Are Not Employees Through the Furlough Scheme?
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At Nextfin we have reported extensively on the development of the government’s Coronavirus Job Retention Scheme, and what it means for businesses. Most recently, the Chancellor announced that employees who were furloughed under the Scheme can return to work on July 1 on a part-time basis while still having their pay subsidised by the government. 

But what about those who are not technically deemed as employees under employment law? In this guide, we outline who you are able to claim for under the scheme. 

Who exactly can I claim for?

Under the provisions of the Scheme, you can claim a grant for individuals - as long as they’re paid via PAYE. According to the Government, the following can be claimed for:

Individual

Details

Office holders

  • “Can be furloughed under the scheme. The furlough, and payments during the period, will need to be agreed between the office holder and the PAYE operator on the income they receive for holding their office.” 

Company directors

  • “Salaried company directors are eligible to be furloughed and receive support under the scheme. Where a company (through its board of directors) considers that it is in compliance with the duties of one or more of its individual directors, the board can decide that such directors should be furloughed.” 
  • “Where one or more individual directors’ furlough is so decided by the board, this should be formally adopted as a decision of the company, noted in the company records and communicated in writing to the director(s) concerned.”

Salaried members of Limited Liability Partnerships (LLPs)

  • “Members of LLPs who are deemed as employees for tax purposes under the Income Tax Act 2005 are eligible to be furloughed and receive support through the scheme.”
  • “To furlough a member, the terms of the LLP agreement (or any such agreement between the LLP and the member) may need to be varied by a formal decision of the LLP, for example to reflect the fact that the member will perform no work in the LLP for the period of furlough, and the effect of this on their remuneration from the LLP.”

Agency Workers (including those employed by 

  • “Where agency workers are paid through PAYE, they are eligible to be furloughed and receive support through this scheme, including where they are employed by umbrella companies.”
  • “Furlough should be agreed between the agency, as the deemed employer, and the worker, though it would be advised to discuss the need to furlough with any end clients involved. As with employees, agency workers should perform no work for, through or on behalf of the agency that has furloughed them during hours which you record them as being on furlough, including performing such work through or on behalf of the agency for the agency’s clients.”

Limb (b) Workers

  • “Where Limb (b) Workers are paid through PAYE, they can be furloughed and receive support through this scheme.”
  • “Those who pay tax on their trading profits through Income Tax Self-Assessment, may instead be eligible for the Self-Employed Income Support Scheme (SEISS), announced by the Chancellor on 26 March 2020.”

Contractors with public sector engagements in scope of IR35 off-payroll working rules

  • “Public sector bodies will follow the Crown Commercial Services guidance in the vast majority of cases. In a small number of cases, for example where organisations are not primarily funded by the government and whose staff cannot be redeployed to assist with the coronavirus response, it may be appropriate to claim under the Coronavirus Job Retention Scheme. Contractors who are deemed employees according to the off-payroll working rules might be eligible for this scheme.”

Author: Sacha Bright & Oliver Murphy

Disclaimer

To the best of our knowledge, the information we have provided is correct at the time of publishing. Sacha Bright is not a solicitor or accountant and we recommend that you seek professional advice on any topic discussed. Nextfin is not liable for any damages arising from the use of or inability to use this site or any material contained in it, or from any action taken as a result of using the site. 

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