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Director payrolls - what has changed for CJRSV3

18 November 2020: Annual PAYE schemes often meant that furloughed directors were excluded from the original Coronavirus Job Retention Scheme (CJRS). ICAEW’s Tax Faculty looks at whether they will be eligible under the third scheme.

Many directors of small companies have an annual PAYE scheme, taking funds in year via a current/loan account and then as they near the end of their business year, when the accounts are finalised, repay the loan taking an annual salary and dividends as appropriate.

Eligibility for a CJRS grant under the first two iterations of the scheme required a payment of earnings in the tax year 6 April 2019 to 5 April 2020, reported on an RTI submission made on or before 19 March 2020.

The problem for those with 31 March 2020 year ends was they hadn’t reported the annual payment on an full payment submission to HMRC by 19 March 2020. These people were therefore not “on the payroll” on 19 March 2020.

The third iteration of the CJRS includes those who were paid up to 30 October 2020, which potentially brings those directors excluded from the first and second versions within its remit.

Working out how much grant they qualify for is far more complex and can vary depending on the timing and amounts of payments received. A sting in the tail is that directors who qualified for the first two grants may now find themselves excluded.

To learn more about how the rules apply, join the Tax Faculty for a free webinar at 12:00 on Thursday 19 November 2020, see icaew.com/coronavirus/webinars.