Many self-employed individuals, whether contractors or freelancers, may not be aware of the help they can get during these trying times. However, we provide accounting for contractors, so we’re always on top of the latest government news and can offer specialist advice.
The UK government is launching schemes and providing ways for the self-employed to be able to carry on businesses as normally as possible so, in this article, we’re taking a look at the measures that have been put in place to help contractors.
Job Retention Scheme
This scheme was designed to help employers to retain staff who can’t work but who are still on the payroll. This is also called ‘furlough’.
Only UK employers who created and started a payroll scheme by 19th March 2020 and have a UK bank account can furlough their employees. In addition to this, employers are only allowed to claim up to 80% of their furloughed staff’s salaries, up to a maximum of £2,500. It’s not mandatory that they make up the other 20%, although they can choose to do so if they want.
Once an employee is on furlough, they are not allowed to work on behalf of the company, which is something to take into account.
Here at Gorilla Accounting, we are completing all Job Retention Scheme work and submissions on behalf of our clients for no additional costs. It is the least we can do for our loyal customers during this tough time.
Bounce Back Loan
This scheme is for small and medium-sized businesses and allows them to borrow between £2,000 and £50,000. The government guarantees 100% of the loan; repayments can be made up to 6 years and you don’t have to pay any interest for the first year.
‘Time to Pay’
This refers to the possibility of spreading tax payments over a longer period of time – the agreement is suitable for businesses that are affected by the current lockdown and social distancing measures. HMRC may even waive penalties related to late payments and interest if a contractor is unable to contact HMRC or pay taxes on time because of the pandemic.
Also, self-employed individuals can defer the payment of their self-assessment return until January 2021.
Statutory Sick Pay
If your employee is sick due to COVID-19, the government will refund the cost of the statutory sick pay to small and medium companies. Employees are allowed this statutory pay for two weeks, which is currently £94.25 per week and will be included in monthly payroll submissions.
Self-Employment Income Support Scheme
This is available for people earning less than £50,000 a year and ensures a maximum of £2,500 per month for 3 months. The majority of your income will have to come from self-employment if you want to be eligible for this scheme and must have submitted a 2018/19 tax return. This doesn’t apply to limited company owners, who can make use of the Job Retention Scheme.
Interruption Loan Scheme
This scheme is targeted at small and medium businesses and allows them to access bank lendings and overdrafts; interest won’t be charged for the first year, since the government will pay it. You may still be eligible for this even if you’ve been previously refused a loan on commercial terms. Banks are not allowed to ask companies to guarantee loans with their savings or property when borrowing up to a quarter of a million pounds.
Funding for Innovative Companies
The government is releasing a £1.25 billion support package for innovative companies affected by COVID-19. This includes the Future Fund, which is a new £500 million loan scheme, and a £750 million investment for SMEs that focus on Research and Development.
The goal is to help companies that are having financial trouble due to the pandemic and to ensure the future of business in the UK.
Employment and Support Allowance
This scheme is available to people that have been directly affected by the virus or self-isolation measures, as long as they’ve paid enough National Insurance contributions in the last 2 to 3 years. The money is paid on the first day of sickness.
Universal Credit
While the pandemic lasts, the minimum income threshold for Universal Credit has been removed for people directly affected by the coronavirus or in self-isolation. They also won’t be required to attend a job centre. The Chancellor is also increasing Universal Credit payments to equalise so that a self-employed individual receives the same amount as someone getting statutory sick pay.
However, if you have savings of £16,000 or more, you won’t be eligible for this scheme.
As contractor accountants, we want to make sure that you’re aware of everything you’re entitled to. These are difficult times for self-employed individuals, so it’s important that you accept the government’s help by applying for schemes, delaying payments or requesting loans if you need them.
We’re limited company accountants, so find out more about how you can benefit from the government’s schemes during the COVID-19 pandemic by getting in touch with us today on 0330 024 0406.
