Can I claim the allowance for the self employed?
The Coronavirus self-employment income support scheme does not apply to contractors, consultants and freelancers who use a limited company.
“Those who pay themselves a salary and dividends through their own company are not covered by the scheme but will be covered for their salary by the Coronavirus Job Retention Scheme if they are operating PAYE schemes.” – HM Treasury
Am I able to claim 80% of my salary using the Coronavirus Job Retention Scheme?
Potentially, yes. If you had a PAYE scheme set up on 28th Feb 2020, and yourself and/or employees were on your payroll on this date too. You can only claim for salaries – dividend payments cannot be included in your claim.
You do this by formally ‘furloughing’ yourself and/or your employees. This means that you’ll change your employment status (by issuing a simple letter), and whilst furloughed you or your employees can no longer work, in return for a grant to cover 80% of salaries.
We’ve put together a more detailed guide of furloughing yourself/your employees here.
Is there anything I can claim from the government regarding my dividends?
People who are paid a salary by PAYE can be furloughed using the job retention scheme but dividends are not covered by that or the self employed scheme.
However, banks will be offering loans to small and medium sized businesses under the government’s Coronavirus Business Interruption Loan scheme.
If I furlough myself can I still do work for the company?
As a company director, you can continue with statutory company duties (for example dealing with VAT, PAYE and company accounts) but you must not perform any additional work for the company, such as revenue generating activities. The details are unclear, but this may mean you cannot spend time looking for, or interviewing for new contracts whilst furloughed.
The only work that can be performed whilst furloughed (apart from directors duties above) is receiving training or taking part in volunteering.
How will HMRC ensure furloughed workers are not working?
At the moment, we’re not too sure but we’d expect HMRC will direct compliance teams at this in the future. As ever, with HMRC it’s better to be safe than get caught out.
My or my employees’ salaries varies, what figure should I use for furloughing?
You can claim for the higher of either:
- the same month’s earning from 2019; or
- average monthly earnings from the 2019-20 tax year.
You must use the base salary only – commission and bonuses should be excluded. If you have been employed by your company for less than 12 months before the claim, then you will need to use an average of the actual monthly earnings since your start date.
How can I claim back the 80% for my furloughed salary?
You will need to submit information to HMRC about workers who have been furloughed, and their earnings, via a new HMRC online portal. The portal will hopefully be open in April.
What if 80% of the employee’s wage falls below the National Minimum/Living Wage?
National Minimum/Living Wage is a rate payable for hours worked. As no hours are being worked by the employee, it does not matter if 80% of wage falls below the minimum hourly rate. If, however, you are asking furloughed employees to undertake training, you must ensure that the pay covering the time spent training is at/above NMW/NLW.
Can I retrospectively alter my salary so that I can claim more?
No, this is fraud. Any salary payments that have been submitted to HMRC cannot be amended.
I’ve not paid myself a salary this year – can I make a payment for January?
No. You have to make a real-time electronic submission to HMRC (RTI) when you issue a payslip. This cannot be done retrospectively.
Can I delay the payment of corporation tax?
Currently it’s not possible to delay a Corporation Tax payment but you can contact HMRC to discuss a payment plan.
Take a look at the HMRC’s Time To Pay section of our guide for more details.
Can I delay the payment of self assessment?
Contractors and consultants who draw dividends usually pay self-assessed income tax in advance, via ‘payments on account’, due in July and January. The July 2020 payment will be deferred until January 2021.
This scheme is available automatically, and you don’t need to apply. You can simply skip your July 2020 payment on account and no penalties or interest will be applied.