Caution urged over official COVID-19 support guidance for atypical workers

Contractors’ advisers, trade bodies and even their MPs are all but cautioning the self-employed to take the government’s coronavirus support guidance with a pinch of salt.

Addressing the chancellor’s speech last week about the Self-Employed Income Support Scheme, an advisory fears that Rishi Sunak almost certainly gave out the wrong information.

Outlining the SEISS for traders “adversely affected” by COVID-19, Mr Sunak said grants could be claimed while -- crucially says ReLegal Consulting; you “continue to do business.”   

'Pretty sure Sunak didn't mean it about the self-employed'

“The chancellor said in his speech that you can claim and keep your business going, [at odds with the Job Retention Scheme where successful claimants cannot work],” the advisory says.

“We’re pretty sure that Mr Sunak didn’t mean that self-employed traders can claim under the SEISS and carry on working at the same time, but that’s how some people are interpreting it.”

Law firm Chartergates reflected: “An…important point to note is that, as it stands, there is no mention [in the guidance] as to whether trading has to cease for an individual to be eligible.”

'Much harder to justify the inconsistent contributions'

Under SEISS, traders who are not PSCs but who set up pre-April 2019 are entitled to a grant of 80% of their average monthly profits for the last three years, up to a monthly cap of £2.5k.

Contractors running their own limited companies might think they need not pay attention to the SEISS but, unveiling it, the chancellor took a swipe at all business soloists.

“I must be honest and point out that in devising this scheme… it is now much harder to justify the inconsistent contributions between people of different employment statuses.

“If we all want to benefit equally from state support,” Mr Sunak said, adding, “we must all pay in equally in future.”  


Commentators believe that the chancellor’s comments imply he either regrets delaying IR35 reform in the private sector, or that NICs are going to increase at the next Budget. Or both.

But it is every type of person who works for themselves not being equally looked after by the government during the coronavirus pandemic, that is bothering Catherine West MP.

Her constituency office is being “inundated” with appeals from the newly self-employed, PAYE freelancers and sole-owner limited companies who are all ‘falling between the gaps.’

“Many of my constituents…[are] not covered by the Self-Employed Income Support Scheme but also in many instances not covered by the Job Retention Scheme [either]”, she added.

'No suggestions of support for limited company owners'

In an urgent letter to the chancellor, the Labour MP said: “There has been no suggestion of support for single owner/employees in limited companies in the statements [you have] made.

“[Most] of those who have been in contact [with me] have paid themselves either no, or a nominal, salary from their business…and have supplemented that income with dividends.”

However it’s not just limited company contractors for whom guidance looks like it needs to become more substantial -- or just catch up with the government’s intentions.

'Fundamentally unfair for umbrella contractors'

The Freelancer & Contractor Services Association said yesterday: “[We are] seeking to ensure that all agency workers, including umbrella workers, receive furloughed pay calculated on average earnings. 

“It is possible [based on the government’s guidance] that some may only receive 80% of National Minimum Wage compared to others who do the same job but might receive 80% of their average wages. This difference is fundamentally unfair and must not be allowed to happen.”

Moreover, warns FCSA’s Julia Kermode, until there is “confirmation from the government,” it will be “impossible” for umbrella companies to calculate furloughed pay based on an average of all earnings due to the “significant risk” that the government will refuse the reimbursement.

Umbrella contractors who wish to press for confirmation can use a template from the FCSA to write to their local MP, given that the association calculates that furloughed pay based on the NMW returns the equivalent of £17,000 a year – equating to just over half the £30,000 which a conventional employee could receive under the CJRS.

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Written by Simon Moore

Simon writes impartial news and engaging features for the contractor industry, covering, IR35, the loan charge and general tax and legislation.
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