With Covid-19 (Coronavirus) having a massive impact on businesses across the UK, it’s understandable that our Limited Company contractors are keen to understand the business support measures that have been announced by the Government.
We’ve created a guide to all of the measures that can be read here, and below you can read the answers to most frequently asked questions that we are getting from our clients:
Can I claim the self employed business support package?
The government has announcement a self-employed business support package, however it is not applicable to those that take dividend income from their companies. It only applies to those that file self-employed pages through self-assessment rather than those than operate via their own ltd company.
If you have recently moved from self-employed to Limited and filed a self assessment tax return for 2018/19 that had the self employed pages completed, with profits less than £50,000, then you will be eligible and HMRC will be in touch with you in due course.
If you became self employed from 6 April 2019 onwards, unfortunately you will not be able to claim any support through this package.
Those who pay themselves a salary and dividends through their own company are not covered by the scheme but may be covered for their salary by the Coronavirus Job Retention Scheme if they are operating PAYE schemes and out of contract. This can be claimed by making yourself a ‘furloughed worker’ (see more on this below) and paid via the company payroll we operate but won’t be available to claim until the end of April at the earliest. It will cover 1st March to 31st May and will pay out 80% of the salary that was paid in February 2020. The salary cannot be amended for February 2020 or additional employees added.
How do I make myself a furloughed worker? And what do I do next about this?
Under the Government’s Coronavirus business support measures, it has been indicated that some Limited Company contractors may be covered by the ‘Job retention scheme’ and therefore can furlough themselves if unable to work due to Covid-19. The scheme covers Directors who are no longer earning through their Limited Company. If you are still in contract and have income coming into the company then you will not be covered.
The job retention scheme allows an employer to “furlough” (temporarily lay off) a worker between 1 March 2020 and 31 May 2020 (although Rishi Sunak has announced this will be extended if needed). This is designed to help employers pay 80% of the salary of employees and is subject to a cap of £2,500 per month per employee.
To take advantage of the job retention scheme, your business will need to designate you (the employee) as a “furloughed worker” and submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal (HMRC will set out further details on the information required). This system is being urgently set up as the existing HMRC systems cannot deal with these payments. It is not expected to be set up before the end of April 2020.
What can I do right now?
If you want to furlough yourself under the job retention scheme:
At the moment, the Coronavirus Job Retention Scheme is being developed and launch is planned for around the end of April 2020. There is no relief currently available however you can collate the information you’ll need to submit:
- the number of employees being furloughed
- the claim period (start and end date)
- amount claimed (the minimum length of furloughing is 3 weeks)
- your bank account number and sort code
- your contact name
- your phone number
This will only apply to those who were on the payroll as at 28 February 2020 and have not been able to work at all in this period due to COVID-19. If you have been able to work but on reduced hours, then unfortunately you will not be able to claim any support through the Coronavirus Job Retention Scheme.
If you want to claim through the self-employed business support scheme:
It seems that any funding will not be available until June 2020. Therefore in the interim if you need support you can look at deferring the second payment on account due by 31 July 2020. Other options available are to defer VAT payments and discuss with HMRC if necessary any time to pay arrangements if you can’t pay any tax liabilities on time. HMRC’s dedicated helpline to discuss this further is 0800 0159 559.
Plus, there are further options to claim universal credit or loan funding through the business interruption loan scheme.
My contract has been cancelled or deferred what shall I do?
It seems that a lot of people are in the same boat as you, and whilst contracts are being deferred it is probable that no employment roles will be offered either. We expect most contractors in this position will see their contracts reinstated once the lockdown restrictions have been lifted. In the meantime, we’re advising clients to take advantage of the business support measures set out above where they can.
As and when we do have further information on schemes available, we will be updating our main guide here, so please bookmark the page.