Limited company director template furlough letter for the Coronavirus Job Retention Scheme

Since the beginning of the first national lockdown, IPSE has continued to call on the government to plug the gaps in the support schemes available for the self-employed. Around one in three have been excluded from the Self-Employed Income Support Scheme (SEISS). However, contractors operating through a limited company can access the furlough scheme, flexibly and once again at 80% of PAYE wages. Here we explain how it works - and how you can use our template furlough letter.

Job Retention Scheme extension explained

The Chancellor Rishi Sunak last week announced a return of the full Coronavirus Job Retention Scheme (JRS), commonly referred to as the ‘furlough’ scheme, until the end of March 2021. As with its previous iteration in March, salaried company directors can use the JRS to support the wage (PAYE) portion of their income. Dividends are not, however, considered when calculating your earnings. You will receive 80% of this figure, capped at £2,500 per month.

You will remain a director of your limited company during the furlough period, however you must adhere to all the conditions of the CJRS in this time. Similarly to how the previous system worked in the summer, you will be able to work flexibly, furloughing yourself for those days you are not working. This will make it much easier to operate your business throughout your furlough period.

Furloughed directors can continue to carry out particular duties to fulfil statutory obligations owed to the company. However, you should not do work of a kind you would otherwise carry out during your furloughed hours, for instance, generating commercial revenue or providing services to or on behalf of the company.

The scheme opened for claims on 11 November 2020.

You can also read the full government guidance here or head over to our FAQ page to find out more.

How to access IPSE's template furlough letter 

Just as we did for the first phase of the Job Retention Scheme, the team at IPSE has put together a useful letter which you can issue yourself, to formally make use of the extended furlough scheme.

The letter can be tweaked depending on your personal circumstances. This means you can adapt it to your needs depending on whether you are already on furlough and are looking to extend this, or whether you are looking to furlough yourself for the first time. The letter also sets out how you can make use of flexible furlough arrangements.

If you are not yet an IPSE member, then you can get in touch with us at [email protected] or by phone on 0208 897 9970 to discuss joining options today. 

The template letter can be accessed by members in the resources section of our website here

 

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IPSE is the leading association for contractors, consultants, interims, freelancers and the self-employed. We strive to bring our members the most comprehensive and useful range of information and services and all the latest news about what affects your business.