The Government has announced a series of measures to support businesses and people through this period of disruption. Here, the team at Forma has put together an excellent summary of the various schemes, plus a calculator.
Scroll down to use the calculator to see what you may be entitled to as a limited company contractor, or a small business owner.
Please note that we are still awaiting details on the type and level of support umbrella company contractors will be eligible for.
Summary of Schemes and Options Available:
You may be eligible for the schemes below which can refund lost income due to COVID-19:
Coronavirus Job Retention Scheme
Through the Coronavirus Job Retention Scheme, as a PAYE employee of your company, you could classify yourself as a “furloughed worker” and claim 80% of your salary, up to a maximum of £2,500. However, as a contractor, you are likely to pay yourself around £700 a month and take the rest of your salary in the form of dividends. This would mean you are able to claim less than a third of the £2,500 cap. You would need to refrain from any involvement with your business, including business development, responding to emails and LinkedIn contributions if you were to claim this.
You could be entitled to claim for Universal Credit depending on the level of savings you have and you will also need to show spousal income. You can find more at the link below.
3 Month Mortgage Holiday
You could be eligible for a 3 month mortgage repayment holiday – you will need to contact your mortgage provider directly to claim this.
Statutory Sick Pay
As a PAYE employee/ company director, you could claim 2 weeks of Statutory Sick Pay (SSP) if you become sick or are required to self-isolate if others in your household develop COVID-19 symptoms. Here’s how to claim it back.
Deferrals and Debt Financing Available:
The schemes below may provide you with the cash flow that you need in the short term but they would all still require you to pay back what you defer or borrow.
Income Tax Deferral
If you were due to make a Self-assessment income tax payment on 31st of July then you can defer payment until 31st January 2021. Anyone due to make a payment is automatically eligible and you will not need to apply for anything. Click here to find out more.
You can defer your VAT payments for the period 20th March to 30th June until the end of the tax year. There is no penalty for this and you do not need to apply for this.
Commercial Eviction Protection
If you are leasing an office space during this time, then you will be protected from eviction until 30th June but you will need to still repay the rent that is due.
HMRC Time to Pay
If you feel that your business is unable to pay its current tax liabilities then HMRC have a Time to Pay service which will provide you with the additional time you need to continue running your business.
Coronavirus Business Interruption Loan Scheme
The Coronavirus Business Interruption Loan Scheme provides financing to businesses impacted by COVID-19. Loans through this scheme are available from over 40 different providers and would be interest free for 12 months. The Government will guarantee 80% on these loans to the lender as well. Application requirements will depend on which lender you select but are likely to require a range of cash flow forecasting, management accounts and other financial documents.
Many thanks to Forma for providing this great guide.