The government has unveiled a range of measures designed to help businesses and individuals, such as contractors and freelancers, during the COVID-19 crisis. With the pandemic impacting many freelancers, perhaps the most significant measure for contractors has been the delay of the extension of IR35 into the private sector until April 2021.
However, beyond IR35, here are some of the measures the government has so far taken as it looks to help the UK’s freelance sector through the current crisis.
Self-employment Income Support Scheme (SEISS)
SEISS provides taxable cash grants for self-employed workers, initially over the course of two rounds. The first round, which took place in May and June 2020, offered grants worth 80 per cent of earnings from a three-month period, up to a maximum of £2,500 per month from March to May 2020.
The second round, which Chancellor Rishi Sunak at the time would be the final round, offered grants worth 70 per cent of average monthly earnings from a three-month period, up to a total of £6,570.
Following the resurgence of COVID-19 in September, SEISS was extended for a further six months, albeit at a far lower level of 20 per cent of average trading profits, capped at £1,875, for the first three months.
Those eligible must have had trading profits for 2018-19, or average trading profits from the last three years, of less than £50,000 and must earn more than 50 per cent of their income from self-employment. Among other eligibility criteria, eligible individuals must have lost trading profits as a result of the pandemic.
Statutory Sick Pay (SSP)
Limited company directors who are forced to self-isolate are entitled to claim SSP of £94.25 per week for two weeks. To be eligible, directors must be on the payroll of their company and earn over £118 per week.
Contractors working under umbrella companies who self-isolate are entitled to claim SSP from their umbrella company.
Coronavirus Job Retention Scheme/Job Support Scheme
Aimed at small businesses, the Coronavirus Job Retention Scheme initially allowed businesses to claim government support to pay 80 per cent of employee wages up to a maximum of £2,500 per month.
As COVID-19 lockdown eased in the summer, the government contribution dropped to 70 per cent, with employers required to top up the remaining 10 per cent.
In September 2020, it was announced that the scheme, due to expire at the end of October, would be replaced from November 1 by the Job Support Scheme. Under the replacement scheme, employees are required to work 33 per cent of their contracted hours, for the remaining unworked hours, the government and the employer will each pay one third of the wages. The scheme will last six months.
VAT and income tax deferral
VAT payments that have been deferred until next year now no longer need to be repaid in a lump sum in March 2021. Instead, those who have deferred their VAT payments can split them into smaller, interest free payments over 11 months.
Meanwhile, contractors and self-employed workers have also been able to defer their income tax payments. Initially, this was only until the end of January 2021, but this can now be extended by a further 12 months from January next year.
Time to Pay Arrangements
Businesses and individuals with outstanding tax liabilities and who are in, or are facing, financial distress can apply for a Time to Pay (TTP) arrangement through HMRC. If approved, this will enable those affected to pay their outstanding liabilities in monthly instalments.
Self-employed workers and contractors who have no income can apply for support through Universal Credit. The typical monthly payments of just over £400 have now been increased to £1,000 per month, while the application criteria for self-employed people have been relaxed, making it more accessible.