On 20th March, the Government announced a series of measures to help the employed and SMEs through the COVID-19 crisis. Notably, contractors and the self-employed weren’t directly included in the most generous and useful measure announced that day – the 80% salary provision for furloughed employees. However, with the UK now effectively on lockdown and many freelancers and contractors facing an uncertain future, independent workers are asking what – if anything – is the Government doing to help the self-employed?
While the 80% salary contribution up to £2,500 is available for employees, it’s still possible under certain circumstances for contractors to access the Coronavirus Job Retention Scheme. If you offer some or all of your services through a limited company then you can claim 80% of the salary you paid yourself as an employee of your limited company under PAYE. To do this you will have to classify yourself as a furloughed worker. You can also do this for the rest of your PAYE salary, provided you are able to secure the furloughed worker classification for that slice of your income. Bear in mind that this scheme cannot be used to recover the portion of your take-home pay that was paid as profits from dividends.
At the time of writing, the Government hasn’t yet got the 80% scheme up and running, but it should be ready soon. Given the seriousness of the situation, it’s important that you petition the Government to include the self-employed within this package.
Income Tax that was due for payment from your Self Assessment on 31st July 2020 has now been delayed to January 31st 2021. This automatically applies to all self-employed workers. You don’t need to apply to claim this and there will be no late payment charges for anyone.
If you’re unwell and unable to work due to COVID-19, you can claim for Statutory Sick Pay. This is currently set at £94.25 per week for up to 2 weeks. This applies if you believe you have contracted Coronavirus or if you’re isolating because someone in your house has it. If you need to provide any evidence of this then you can obtain an isolation note here. If you live with someone with the symptoms, you should get an isolation note from the NHS website here.
These measures include gig economy workers and zero-hours contract workers. If you aren’t sure if this applies to you, it’s worth checking your eligibility here.
The Government also announced that IR35 reform will be postponed until April 2021. Whilst many private sector companies had already put in place conditions to bring contractors inside of this controversial legislation, delaying the changes may at least lead to an increased demand for contract workers once the market stabilises and picks up again.
You will not need to make any VAT payments between 20th March and 30th June 2020. Again, this automatically applies to every business in the UK and you don’t need to apply. You will have until the end of the tax year for 2020/2021 to pay any liabilities which have incurred during this period. If you feel that your business is unable to pay its current tax liabilities then it’s worth checking out HMRC’s Time to Pay System, which could give you some vital breathing space throughout the COVID-19 pandemic.
The Government is making £330 billion of secured loans available to all businesses in the UK. You will pay no interest for six months and the Government will guarantee 80% on these loans. You can find more details on the British Business Bank website, while all major banks will offer this scheme to customers once it’s made available from the week commencing 23rd March.
With pressure mounting on the Government to provide greater support to the UK’s 5m self-employed workers, it’s highly likely that in the coming days the Chancellor will unveil new measures to help freelancers and contractors through COVID-19 – so watch this space.
Charlie Bailey is Co-Founder of Forma, that provides a range of business services for freelancers and contractors. To stay informed about the support available to you and your business during the Coronavirus pandemic, please visit Forma’s Coronavirus Business Support page.