While most of the small business community welcomed the Chancellor’s announcement last week that they would support businesses with pay-out of 80% of their self-employed income, the contractor community was once again overlooked. It was confirmed in the announcement that “those who pay themselves a salary and dividends through their own company are not covered by the scheme but will be covered for their salary by the Coronavirus Job Retention Scheme if they are operating PAYE schemes.” Disappointing, but not exactly surprising given this government’s obvious dislike of the flexible workforce.
This is, of course disappointing, but there is no point in complaining and we must therefore look to the other initiatives the government has rolled out that contractors can take advantage of.
Coronavirus Job Retention Scheme (JRS)
The JRS allows companies to reclaim 80% of the salaries of “furloughed” workers up to £2,500 per month. Only the payroll aspect of a director’s remuneration will be covered. So, if you are in the vast majority of contractors who pay a minimal amount of salary, normally around £720 per month, you will be able to claim 80% of this amount.
At the moment this is due to run for three months, but there is a good chance that this will be extended,
While it’s generally accepted that a furloughed worker can carry out absolutely no work, according to the Confederation of British Industry (CBI), directors will be able to carry on undertaking their statutory duties such as filing accounts etc.
VAT bill deferral
If you have a VAT return due in the next three months, you won’t need to pay the bill until March 2021. There is no need to apply for this and all businesses are eligible. However, you will still be required to submit the returns and if you have a direct debit in place to pay your VAT, you must cancel this at your bank. If you don’t HMRC will likely collect the payment as normal.
You can, if you wish to avoid a debt build-up for example, continue to make payments as normal.
Self assessment bill deferral
Whether a sole trader or a company director, it is very likely that you will have a self assessment payment on account due on 31st July 2020. Due to the financial situation, HMRC will no longer expect this to be paid until 31st January 2021. Again, you can pay this as normal if you wish.
For the avoidance of doubt, both of the above measures are deferrals rather than write offs. You will still need to pay the VAT and tax due, just at a later date.
Statutory Sick Pay (SSP)
While not exactly a fortune, the self-employed (including contractors) who are ill and cannot work due to COVID-19 can claim Statutory Sick Pay (SSP) of £94.25 per week for two weeks. This covers individuals who have or believe they have contracted the virus and for those who are in self-isolation.
Extra time to file accounts
This is not financial support but a relaxation of your compliance obligations. If you have accounts due to be filed at Companies House, you can apply for a three month extension to file these. If you cite Covid-19 you will automatically be granted the extension. It’s unclear how long this relaxation will last but for now we expect any accounts due to be filed between now and 30 June 2020 to be included.
Please be assured that the team at Acumenica Group are continuing to work and continuing to support you throughout these uncertain times. Whie our offices are closed, all the team members are working from home and our phone lines and emails are operating completely as normal.