Covid-19: Support for Contractors and Freelancers

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The government has announced a raft of measures aimed at both businesses and individuals in order to support them during the Coronavirus crisis. The most important measure announced for the contractors and freelancers is the delay in the extension of off-payroll in the private sector to April-2021.

The majority of the measures are still aimed at businesses to help with the cashflow and we are hoping in the coming days more support will be extended to contractors and self-employed to help with the crisis.

We will keep you posted on the new measures being announced through our social media page.

Statutory Sick Pay (SSP)

If you are a director of a limited company and self-isolating, you are entitled to claim SSP at £94.25 per week for the first 2 weeks. Please note you should be on the payroll of the company to be entitled to SSP and earning more than £118 per week.

If you are working for an Umbrella company and self-isolate, by law you are entitled to claim SSP from the Umbrella company and they cannot pass this cost on to you.

The SSP cannot be claimed through the RTI and the government will be developing a new system. We will let you know as and when the system is live.

Self-employment Income Support Scheme (SEISS)

The SEISS provides a taxable cash grant to self-employed individuals worth 80% of their average trading profits for the last 3 years (2016/17, 2017/18 and 2018/19), up to a maximum of £2,500 per month for the 3 months from March to May 2020. This may get extended if needed.

To be eligible, the trading profits of 2018/19 or the average trading profits of last 3 years should be less than £50,000 and more than 50% of the income should stem from self-employment.

The scheme will only be open for who have submitted their tax returns. The return could be submitted by 23rd April 2020, for those who are late. In addition the individual must have lost trading profits due to Covid-19 and they must have traded in 2019/2020, intend to trade in 2020/2021 and are trading at the point of application or would have been except for Covid-19.

The grant is likely to be paid in June 2020 directly into the bank account of those who are eligible.

HMRC will contact and invite those that are eligible to apply. BE WARY OF SCAMS

Directors and shareholders of limited companies are not eligible.

This is a grant and no repayment will be required.

Coronavirus Job Retention Scheme

The Job Retention Scheme is aimed at small businesses, who will be able to get support from the government to pay 80% of their employees’ wages (maximum of £2,500 per month per employee) for those employees that would otherwise be laid off due to the conditions imposed by the virus. The scheme will offer support for the next 3 months.

It will be necessary to:

  • Designate an affected employee or employees as ‘furloughed workers;
  • Employees need to be notified of this change
  • Submit information to HMRC about the relevant employees and their earnings through a newly created online portal (which will be live by end-April 2020)

Please note this is a grant and you won’t be required to pay this back to the government.

We believe PSC contractors may be able to take the benefit of the scheme.

VAT deferral

Businesses whose VAT payments are due between now and June-2020, can defer the payments till April-2021. You do not need to make an application for the same and can simply defer the payments.

Note: The VAT is only being deferred and you are still required to pay this before April-2021. Also, you need to continue to file your VAT returns as normal to avoid incurring any interest or penalties. We advise you contact your bank to cancel your direct debit if you wish to defer the payment.

Income Tax payment on account deferral

Contractors and self-employed individuals pay their income tax in advance through payment on account in January and July. The payment on account for July-20 can be deferred till 31st January 2021.

This will apply automatically, and you do not need to make an application for the same. There will be no interest or penalties on the deferral.

Please note the tax still needs to be paid in January-2021, because this is a deferral and not a grant.

Time to Pay Arrangements

Businesses and individuals that have an outstanding tax liability and are facing financial distress, can apply for HMRC’s Time to Pay arrangements (TTP).

In order to apply for the TTP, you will need to call HMRC on their Covid-19 dedicated helpline: 0800 0159 559. They will usually discuss your financial affairs before agreeing a TTP arrangement as it is reviewed on case by case basis. If they approve you can pay the outstanding liabilities as monthly instalments.

Before calling them, we would advise you keep the following details handy:

  • personal information like names, address, activities of your business
  • your tax reference number (UTR, PAYE reference number, VAT number, Corporation Tax number etc.)
  • the outstanding tax liability
  • your finances - total monthly expenditure and income
  • how much you or your business can afford to pay

You can also write to them sending a proposal for the time to pay arrangement. Please note HMRC may charge interest on the payment plan at 3.25% per annum.

Universal Credits

For self-employed or consultants with no income, they should contact Universal Credit for further support. This is typically worth £409.89 per month and has been increased to £1,000 per month for the next 12 months.

The application rules for the self-employed has been relaxed making it more accessible to self-employed individuals.

Other Measures

  • Business rate reliefs for certain business rate payers including a business rates retail holiday and additional grant funding.
  • Additional funding: A one-off grant of £10,000 to businesses currently eligible for Small Business Retail Relief and £25,000 grant to businesses with a rateable value below £51,000.
  • A Coronavirus Business Interruption Loan Scheme
  • Businesses have been asked to check the terms and conditions of their insurance policies, if they cover for pandemics and government ordered closures.

The full details can be read here.

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