Last night, Chancellor Rishi Sunak announced a package of measures designed to support self-employed people. Whilst we are awaiting detail on a number of areas, here’s a summary of what we know so far.
Limited company / Personal Service Company (PSC) contractors
Contractors working through their own limited company (PSC) are not covered by the self-employed package.
PSC contractors will still be able to use ‘time to pay’ and therefore put back payment for Corporation Tax. It is also possible to delay payment of VAT and personal taxes to ease cashflow.
Personal tax instalments due in July 2020 will now not be payable until January 2021. Again, the tax will be due, but not for an extra six months.
There’s no VAT to pay until at least June. Don’t pay VAT now, but be aware it’s likely you’ll need to catch up by March 2021. Don’t forget, this VAT doesn’t disappear, but is delayed in collection, so prepare and submit your returns in the usual way.
Individual self employed workers (those who do not operate through their own limited company)
The grant will be equal to 80% of average self-employed profits up to a maximum of £2,500 per month.
It is only open to those with average self-employed profits of £50k or less.
The grant will be based on average profits in the last three years or a shorter period if three years of records are not available.
If you’ve not filed an 18/19 personal tax return you have four weeks to do so to qualify. The scheme will not be available if you have not filed your tax return for 18/19.
Also personal tax payments on account in July 2020 are now not due until January 2021.
HMRC will contact you if you are eligible for the scheme and invite you to apply online.
Payments can be expected in June, backdated to March. The scheme will be extended if necessary.
There is an expectation that umbrella workers, subject to certain conditions, may be able to receive a salary via the Coronavirus Job Retention Scheme.
Further updates will be provided to Umbrella workers in due course.
The wider benefits system has some additional measures to assist those in financial hardship.
This legislation and other work the Government is doing is part of a constantly changing landscape. We will update you with further developments as soon as we can. For more information, please click here.