Hopes that contractors will receive adequate COVID-19 support have faded further, after the Chancellor extended the help available for the self-employed and ignored calls to prevent PSC workers falling between the cracks of Government aid.
Days before the Self-employment Income Support Scheme (SEISS) was due to end on 31st May, Rishi Sunakannounced that the Government will continue to help millions of solo workers until August. However, nearly three quarters of a million freelancers and contractors working via personal service companies do not qualify for this.
Having already confirmed that employees will receive a percentage of their salary until the end of October under the Coronavirus Job Retention Scheme (CJRS), albeit with employers to pay 10% and 20% towards this in September and October respectively, Sunak was under pressure to deliver for millions of sole traders.
In many ways he did. This extension means those eligible for the initiative can claim a second and final grant worth 70% of their average monthly trading profits, which will be paid in one single instalment capped at £6,570.
While the Government contribution will fall from 80% to 70% (£7,500 to £6,570), individuals yet to apply for their first SEISS grant can still receive the initial 80%. The deadline to apply for this is 13th July, with the sum paid within six working days.
After describing the SEISS and the CJRS as schemes as a “lifeline for millions of people and businesses”, the Chancellor explained that as “we begin to re-open our country and kickstart our economy, these schemes will adjust to ensure those who are able to work can do so, while remaining amongst the most generous in the world.”
On the whole, business bodies were in agreement, with the likes of CBI and FSB quick to praise the Government for its support. For example, Mike Cherry, National Chair of FSB, said: “Small firms have long been the backbone of the UK economy and these policies will help keep it that way. Keeping the self-employed and those who work in a small business attached to the labour market is crucial to prevent scarring of the economy - the package today gives certainty and support to millions.”
However, a reported 2m individuals working through their own limited companies, which includes 710,000 freelancers and contractors, have arguably been left behind. Ineligible for the SEISS, as employees of their company, the majority of contractors will receive little from the CJRS. This is because many pay themselves a low salary.
Understandably, this doesn’t sit comfortably with most contractors. Recent Qdos research shows their dissatisfaction, with 77% of more than 1000 of the view that the CJRS does not offer substantial support.
While the Chancellor will face renewed pressure to make arrangements for contractors, at this stage - and given it was revealed this is the final grant available under the SEISS - the likelihood of independent workers being properly catered for seems unlikely.
Self-employment Income Support Scheme (SEISS)
Available to self-employed workers (sole traders), not limited company contractors
Extended until August, with one taxable grant of up to £6,570 available to cover lost income for June, July and August
Applications for the second grant open in August
Applications still open for first grant (up to £7,500), until 13th July
Government contribution decreasing from 80% (£7,500) to 70% (£6,570) for second grant
Find out more and check your eligibility here.
Coronavirus Job Retention Scheme (CJRS)
Available to limited company contractors, as employees of their PSCs
Scheme closes for new entrants on 30th June
Pays 80% of PAYE up to £2,500 per month, falling to 70% in September and 60% in October
From 1st July, employees can return to work part-time, with the Government to release further information in due course
For more information and to apply, please visit the Government website.
With over 25 years’ experience, Qdos provides leading tax support and insurance for freelancers, contractors and the self-employed. From tax protection and a number of vital business insurance policies, we offer a range of services that protect the UK’s growing independent workforce.
Ask away! One of our team will get back to you!