The Government has now announced several schemes designed to help businesses and self-employed people through the Coronavirus pandemic.
Here’s a summary of what’s been announced to date.
Self-employed contractors including Construction Industry Scheme
If you are a self-employed individual (you do not have a limited company) or a member of the Construction Industry Scheme, then you are likely to qualify for a grant under the Self-employment Income Support Scheme.
- The scheme is open to those with average self-employed profits of £50k or less.
- The grant will be equal to 80% of average profits up to a maximum of £2,500 per month.
- HMRC will work out what you’re entitled to by looking at average profits in the last three years or a shorter period if those records are not available.
- You must have filed your 2018/19 tax return to be eligible. If you still haven’t filed the return, the Government has extended the deadline to 23rd April 2020 – please get in touch for help.
- HMRC will contact you if you are eligible and you will be able to apply online.
- Payments would be made in June, backdated to March.
Limited company contractors (PSCs)
If you are a PSC/limited company contractor then you are considered an employee of your own company, so you will be able to access financial support through the Coronavirus Job Retention Scheme if your contract ceases or is put on hold.
- The Scheme enables employers to make a claim to cover wages for employees on temporary leave (furlough) due to coronavirus.
- If you are furloughed you can receive a grant to cover 80% of your regular wage or £2,500 per month, whichever is lower.
- Ben Kerry, head of labour markets at HM Treasury stated in a CBI webinar “[PSC Directors] will have some statutory duties and obligations such as filling out their accounts, but they are still allowed to undertake their statutory duties while they are being furloughed. “So that would not count as doing work…[which is essential as] one of the key conditions of the furlough scheme is that the employee is not allowed to work for the employer.” Statutory duties are really limited so if as a director you are still talking to customers; you are still talking to clients customers or suppliers; if you are still marketing your business to keep your business going and you’re still posting on social media; unfortunately you won’t be able to claim”.For most PSC directors, the grant will be much lower if you’ve traditionally taken your income as a mixture of salary and dividend. The grant will be based on the salary part of your income, which is typically the tax-free allowance.
- Some PSCs are seeking to work for other PSCs and have other PSC owners work for them so they can be furloughed on a higher salary/wage. We would recommend anyone to seek specialist advice before taking this path.
- This issue has been featured widely in the press and the Government pressured to take action, though there are no indications yet as to whether the scheme will be altered.
- There are several cash flow measures that you can utilise. For example, personal tax instalments due in July 2020 can be delayed until January 2021 and corporation tax can be paid over a longer period using the ‘time to pay’ scheme based on what you expect to be able to afford. In addition, VAT registered contractors can take advantage of newly-announced VAT ‘holidays’. If you have a VAT payment due between 20th March 2020 and 30th June 2020, you can defer the payment, though your VAT return should be submitted in the usual way.
Whilst the schemes are relatively generous for those who qualify, there are certainly gaps. We, along with other board members of the FCSA, are pressing Government for clarification on grants for Umbrella workers.
There is an expectation that umbrella workers, subject to certain conditions, may be able to receive a salary/wages via the Coronavirus Job Retention Scheme, though there is no clarity as yet about how this will work. We recognise the urgency of this matter and will provide updates as soon as we have them.
We are closely monitoring all Government announcements and will pass on relevant information as soon as it is available. If you wish to speak to a member of our team, our lines are open as usual from 9am to 5.30pm Monday to Wednesday and 8.30am to 5.30pm on Thursday and Friday. We are experiencing high call volumes at present, so please bear with us.