Readers questions: I have a limited company and I am the only person who works for the company and I am the only director. Will I get the government grant for COVID-19 as self-employed?
Expert answer: The expert for this reader’s question is Helen Christopher from Orange Genie, who looks at the grants that a self-employed limited company owner can get from the Government due to COVID-19.
Statutory Self Employed Income Support scheme
The government have announced help for the self-employed by way of the Statutory Self Employed Income Support scheme. The details of the scheme specifically exclude those workers who pay themselves via a combination of salary and dividends, so Limited company contractors. Instead, this group are being offered support under the Coronavirus Job Retention Scheme (CJRS). We understand at this stage the scheme will be available to single director/shareholder companies, but guidance is changing daily and we still await some clarification.
Coronavirus Job Retention Scheme
The CJRS will be available to all businesses in the UK with a registered PAYE scheme. Where the business is unable to offer work to its employee, due to Covid-19, the employer can “furlough” the employee. This means that the employee temporarily does not work but the employer wishes them to return when the situation settles. In these circumstances, the employer is able to claim a grant for 80% of the employee’s usual wage, up to £2,500 per month plus National Insurance costs.
The grant is based on salary amounts only – dividends will be ignored.
Applications for the scheme are due to open in April and will be done via a new HMRC portal. Employers will need to calculate the amount they are claiming and should contact their accountant for help. Payroll will be reported through RTI as normal and the employer will then make a separate grant application. Only one claim can be made every 3 weeks and claims can be backdated to 1 March.
If between now and April the business experiences Cash flow issues they can apply for a Coronavirus Business Interruption Loan and seek time to pay arrangements with HMRC. All VAT payments are now automatically deferred until at least June 2020 and the July payments on account due for Self-Assessment have been postponed to January 2021.
Do you have a question that you need an expert answer to? Here is where you can ask your questions.