Contractors & FreelancersCOVID-19Small to Medium Businesses

What Can Owner Managers / PSC Contractors Do For Financial Support During The COVID-19 Crisis?

By April 1, 2020 No Comments

Although the Government have announced some help for the self-employed, about a quarter of the UK’s workers who consider themselves as ‘self-employed’ will not be helped in any meaningful way by the measures announced.

Business owner alone in a meeting roo

Owner managers and people who own a private services company (PSC) have been largely excluded from relief measures.

The relief to which company directors are entitled is 80% of PAYE contributions on condition that they are furloughed, i.e. they cannot provide normal services due to the COVID-19 pandemic and can only perform statutory duties such as filing accounts. Even tweeting on business-related matters could land you in trouble. For most, if not all, Directors, this will result in a monthly income of about £600, as most of their income is paid in the form of dividends rather than salary.

Perhaps a better option, assuming you’re unable to work due to the COVID-19 crisis, is the Coronavirus Business Interruption Loan Scheme (CBILS). If your company meets the criteria and your proposal would be considered viable in non-apocalyptic circumstances, you can access a loan of up to £5 million, with the Government guaranteeing 80% of the loan which will be interest free for the first 12 months. This could allow you to use your down time to develop and/or diversify your business in preparation for the return to normalcy, for example. In turn you would keep working, do something productive and put food on the table. But, ultimately, this is still a loan, and hence will need to be repaid. It also requires you to estimate how long you think that the COVID-19 outbreak will last*, to prevent you from over/under-borrowing. 

*now unless your company provides viral pandemic estimation services you might be a bit lost here – we could see disruption for as little time as 3 months or as much as 18 months+!! 

There are other generic business breaks available, such as deferred filings and payments, which will provide some assistance, albeit not substantive assistance.

Other than that, sadly there is not much that owner managers and company directors can do. There are advocacy groups out there like IPSE who are fighting the good fight, so give them your support. Get in contact with your MP to press your case. Point out the inconsistencies between the two types of self-employed taxpayers the government has now decided exist and how they are being supported during this crisis. As Andy Chamberlain, IPSE’s Director of Policy and External Affairs, has observed: If ever there was a demonstration of the independence, self-resilience and downright “not-an-employee-ness” of contractors, this is it”. Just as Mr. Sunak is issuing implied threats about how self-employed workers may be taxed once this is all over, this situation has revealed a silver lining in the form of yet more compelling evidence that IR35 reform is extremely flawed. You do have to really want to see that silver lining, though.

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