Contractor furlough extends until April 2021 as coronavirus continues

Furlough for contractors who operate through their own limited company but cannot work because of the continuing coronavirus pandemic has been extended until April 2021.

Serving to highlight its importance, the chancellor is still featuring the scheme’s extension as his ‘pinned Tweet’ – almost three weeks after he announced it on December 17th 2020.

In line with Douglas Ross MP who said Rishi Sunak extending the CJRS granted firms “certainty”, a legal adviser says it represented “an early Christmas present” for contractors.

'Limited application to limited companies'

But Hannah Morrison of law firm Brabners also told ContractorUK that the scheme’s terms remain unchanged, so furlough still has “limited application to contractors who are PSCs.”

A limited company boss broached the same issue of no change in the Coronavirus Job Retention Scheme’s small print (which prohibits work), with the chancellor directly.

In a letter to Mr Sunak, the company director wrote: “We have furloughed my co-director and received CJRS funds, which have helped to keep us afloat.

“[But] why is it that in [self-employed] businesses, the SEISS has paid 80% of the previous declared trading profit to the owners of the business and they have been able to continue working, whereas my furloughed co-director has been unable to work?” 

'Parity of support'

The director added: “[I would like to see] parity of support for our business, based on our previous declared tax return, to put us on the same level as SEISS-eligible businesses.”

Under the latest CJRS extension, the government will continue to pay employers so that staff receive 80% of their usual salary for hours not worked, until the end of April 2021.

The scheme’s initial monthly cap of £2,500 will apply, and firms do not need to have claimed a CJRS grant previously (for employees before October 30th), to be eligible to claim.

'Tougher than normal January'

The Federation of Small Businesses regards the extension as a “positive move,” saying it should help employers get through a “tougher than normal January and February.”

But in a letter to Boris Jonson, written after the CJRS was extended, the president of the British Chambers of Commerce said the government ought to go further.

“Businesses feel let down by the government,” began BCC president Baroness Ruby McGregor-Smith, in a letter to the prime minister dated December 21st.

'Simply not enough'

She added: “From the start, they have responded at pace to your asks of them throughout this crisis, but firms cannot be expected to keep up with constantly shifting goalposts.

“The schemes you have put in place, in particular the job retention scheme, have saved many firms and jobs so far. However, the current package is simply not enough to compensate for the severe, ongoing economic impact of the pandemic.”

Speaking on condition of anonymity, a small business expert told ContractorUK the opposite, arguing that given CJRS salary support was previously tapering off, 80% coverage from the government until April 2021 is “surprisingly generous.”

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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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