furlough for company director letting property

silvercar

I know that Martin Lewis has confirmed that a limited company can furlough it's one and only director employee to claim 80% of their PAYE back if they are not working. In this case the company owns a couple of properties that are let out and managed by agents. So the work of the director is very limited to legal requirements of a director that I know can continue and rarely answering any questions from the agents.
In this case could the director claim furlough? Basically they have little to do work wise for the company generally, but there are tenants struggling with rent and receiving furlough from the government would mean he could show more leniency to tenants at this time.

Jeremy535897

I don't see why not, provided that they really can do no more than the duties you describe. The director must have been on an HMRC registered payroll at 28 February 2020 and must have received salary through the payroll. Dividends do not count.

Hermann

I don't think there is enough detail available yet to be certain but the intention is clearly to limit any work to legal filings that are required for the company to remain a legal entity.

I think that dealing with agents that purely relate to your everyday income producing activities would not count.

Perhaps you could organise your furlough in 3 week blocks with a short period of work in between as that is allowed.

sliphi

silvercar said:

I know that Martin Lewis has confirmed that a limited company can furlough it's one and only director employee to claim 80% of their PAYE back if they are not working. In this case the company owns a couple of properties that are let out and managed by agents. So the work of the director is very limited to legal requirements of a director that I know can continue and rarely answering any questions from the agents.
In this case could the director claim furlough? Basically they have little to do work wise for the company generally, but there are tenants struggling with rent and receiving furlough from the government would mean he could show more leniency to tenants at this time.

A sole-director my be furloughed by the company that they work for.
That would make them eligible, as any other employee, to claim 80% of their pay (subject to max £2.5k pcm) paid to them under PAYE as at 28 Feb 2020

A director that is furloughed is not permitted to carry on any work on behalf of the company, with the exception that they may continue to perform your statutory obligations as a company officer, eg, official legal filings, etc.

Dealing with the management agent is not, as at the last time I looked, part of the the statutory roles of a company director, but happy to be proved wrong.

In my experience, there's usually heck of a lot more to running a successful rental business, whether as an individual or under a corporate structure, than employing the services of a managing agent, and sitting back watching the rental income flood in.

neilmcl

The only duties you can perform are those of the office holder, any work that involves generating an income is not allowed. I think HMRC would take a very dim view of them paying you whilst your company is still receiving an income.

Hermann

In addition, in what way has the work available to be done to manage the rental income been reduced by COVID19 to be able to qualify for furlough in the first palce?

silvercar

Hermann said:

In addition, in what way has the work available to be done to manage the rental income been reduced by COVID19 to be able to qualify for furlough in the first palce?

I understood he was saying to me that the company was facing reduced income as tenants couldn't afford the rent at this time. If he was able to furlough himself that would provide some income and so he could be more sympathetic to tenants struggling.
With tenants in situ and managing agents employed to deal with issues, I doubt there is much for him to do day to day, especially as he only has a couple of properties.

silvercar

Hermann said:

In addition, in what way has the work available to be done to manage the rental income been reduced by COVID19 to be able to qualify for furlough in the first palce?

There was hardly any work before or after. Basically a passive income, classed by hmrc not as PAYE or as self employment but as "other income". As in this case he is set up as a limited company, it is part PAYE and part dividend. The question is whether he could apply furlough to the PAYE and this would enable him to be easier on struggling tenants.
Even if we say that being a landlord of managed properties involves some work, that could be consolidated into one week of the month and furlough apply to 3 weeks. 

Hermann

Guidance has been updated now...

Company Directors

As office holders, salaried company directors are eligible to be furloughed and receive support through this scheme. Company directors owe duties to their company which are set out in the Companies Act 2006. Where a company (acting through its board of directors) considers that it is in compliance with the statutory duties of one or more of its individual salaried 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.

Where furloughed directors need to carry out particular duties to fulfil the statutory obligations they owe to their company, they may do so provided they do no more than would reasonably be judged necessary for that purpose, for instance, they should not do work of a kind they would carry out in normal circumstances to generate commercial revenue or provides services to or on behalf of their company.

This also applies to salaried individuals who are directors of their own personal service company (PSC).

sliphi

silvercar said:

...
Even if we say that being a landlord of managed properties involves some work, that could be consolidated into one week of the month and furlough apply to 3 weeks. 

So what happens if a major incident occurs that requires landlords approval because it exceeds the typical £50/£100 limit an agent may have authority to approve?

Wait 3 weeks because the business is shut down?

This current crisis will not last forever, and when it comes to an end, some businesses will have to face up to some of the decisions they make during this time of National Emergency.

silvercar

sliphi said:

silvercar said:

...
Even if we say that being a landlord of managed properties involves some work, that could be consolidated into one week of the month and furlough apply to 3 weeks. 

So what happens if a major incident occurs that requires landlords approval because it exceeds the typical £50/£100 limit an agent may have authority to approve?

Wait 3 weeks because the business is shut down?

This current crisis will not last forever, and when it comes to an end, some businesses will have to face up to some of the decisions they make during this time of National Emergency.

claiming the Furlough money back from the government is retrospective at the moment. so they would know if any work had been done or not, before they claim.
Can't help thinking this isn't black or white.