Help available for contractors and contracting companies during the current Covid-19 crisis.

In the current, very fluid situation we thought it would be useful to summarise what help may exist for contractors and contracting companies during the current Covid-19 crisis.

Help available to Contractor Companies

There is a three month postponement of VAT payments, between 20th March and 30th June 2020. This is automatic, ie it doesn’t have to be claimed for, but it is our understanding that Vat returns still have to be made to schedule, and you are advised by the government that “Customers who normally pay by direct debit should cancel their direct debit with their bank if they are unable to pay. Please do so in sufficient time so that HMRC do not attempt to automatically collect on receipt of your VAT return.”

Under the Coronavirus Job Retention Scheme, If you hire employees you can claim the 80% promised by the government for employee’s salaries that would otherwise have been laid off. At the time of writing this scheme is not up and running, and there seems to be some conflicting advice as to whether or not this support measure will be extended to directors of contracting companies who pay themselves a salary via PAYE. Under the scheme, you would need to categorise any affected employees as “furloughed workers”. See the following link for details: https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/covid-19-guidance-for-employees

Under the Coronavirus Business Interruption Loan Scheme, it should be possible for affected companies to access to loans on attractive rates to cover a shortfall in income caused by the pandemic. See https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/covid-19-support-for-businesses

HMRC have also scaled up their Time to Pay offer to all firms and individuals who are in temporary financial distress as a result of Covid-19 and have outstanding tax liabilities. For example, it may be possible to re-arrange payments of Corporation Tax under this scheme.

Help available to Contractors as individuals

Income tax - For Income Tax Self-Assessment, payments due on the 31 July 2020 will be deferred until the 31 January 2021.This is an automatic offer with no applications required.

Mortgage Payments. A lot of mortgage companies are offering 3 month breaks for individuals who may be struggling to meet mortgage payments. The advice is for customers experiencing difficulty related to Coronavirus to contact their main mortgage lender to discuss revised payment arrangements.

Statutory sick pay benefits for affected individuals. You can get £94.25 per week Statutory Sick Pay (SSP) if you’re too ill to work, or if you are caring for affected people in the same household and have been advised to do a household quarantine. It’s paid by your employer for up to 28 weeks. As statutory sick pay is paid by the employer it may be of little benefit to contractors employed through their own companies, but it should also be available to employees of umbrella companies.

In addition to the above, there may be further measures announced, as the Chancellor, Rishi Sunak, has said the Government is currently working on a COVID-19 support package for the self-employed, with a proposed amendment to the Coronavirus Bill. IPSE has created a petition which urges for further support for the self-employed, which you can view and support here: https://www.change.org/p/uk-parliament-create-an-emergency-fund-to-support-freelancers-with-coronavirus-income-loss