Thank you for contacting me about support for self-employed and freelance workers.
I share your desire to support everyone across the economy, and I read the Bectu proposals with great interest. During the current pandemic, it is crucial that everyone, no matter what their field, is supported to the fullest possible extent.
I am happy to say that the Chancellor has put in place measures to support self-employed workers. The Self-Employed Income Support Scheme allows claimants to receive a first taxable grant worth 80 per cent of trading profits, up to a maximum of £2,500 a month. In order to claim the grant, the self-employed individual needs to have submitted their Self-Assessment tax return for the tax year 2018 to 2019 and have traded in the tax year 2019 to 2020, amongst other criteria. I welcome the Chancellor's announcement that this scheme will be extended, with applications opening in August for a second and final grant.
The Coronavirus Job Retention Scheme can be applicable to full-time employees, part-time employees, employees on agency contracts, and employees on flexible or zero-hour contracts. These grants currently cover 80 per cent of furloughed employees’ usual monthly wage costs up to £2,500 a month, as well as the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions. Colleagues at the Treasury assure me that they have done all they can to make sure the scheme covers as many employees as possible. The scheme is available online at: https://www.gov.uk/guidance/claim-for-wages-through-the-coronavirus-job-retention-scheme. I welcome that the Scheme has been extended until the end of October.
I do, however, understand that every individual circumstance cannot necessarily be accounted for. In the event that you have been affected by the pandemic, yet you are ineligible for the aforementioned schemes, I urge you to apply for Universal Credit. The Chancellor has recently increased Universal Credit by £1,000 a year for 12 months in order to support people through Covid-19.
I welcome the decision to extend the Coronavirus Job Retention Scheme. On 12 May 2020, the Chancellor announced that the Scheme will continue until the end of October, with new flexibility introduced from August to get employees back to work. This includes furloughed workers being able to return to work on a part-time basis, with employers being asked to pay a percentage towards the salaries of furloughed staff. Furthermore, recent statistics indicate that the CJRS has so far protected over 9 million workers and almost 1.1 million businesses. I believe this extension is a crucial step in supporting employees and businesses during the current pandemic, and I fully support the measures taken to encourage workers to return to work at the appropriate time.
From Wednesday 1 July, there will be no minimum furlough period that an employee can be on temporary leave, a change from the previous minimum of three weeks. However, any furlough arrangement reported in a claim to HMRC must still cover a period of at least one week. The CJRS will be closed to new entrants on 30 June, such that employees furloughed must be placed on furlough on or before Wednesday 10 June in order to access flexible furlough. Employers planning to claim a grant from 1 July must have completed their first claim (for the period ending 30 June) by Friday 31 July.
In June and July, nothing will change for employers and the Government will continue to pay 80 per cent of people’s salaries. However from August, the level of the grant will be slowly reduced and employers will be required to top up the government payment to ensure employees receive 80 per cent of their normal pay, up to a monthly cap of £2,500, throughout.
- In August, employers will be asked to pay just Employer NICs and pension contributions. The Government will continue to pay 80 per cent of wages, up to a cap of £2,500.
- In September, employers will pay Employer NICs and pension contributions, and 10 per cent of wages to make up 80 per cent total, up to a cap of £2,500. The Government will pay 70 per cent of wages up to a cap of £2,187.50 for the hours the employee does not work.
- In October, employers will pay Employer NICs and pension contributions, and 20 per cent of wages to make up 80 per cent total, up to a cap of £2,500. The Government will pay 60 per cent of wages up to a cap of £1,875 for the hours the employee does not work.
As I understand it, income from dividends is a return on investment in the company, rather than wages, and is therefore not eligible for this support. It is not possible for HMRC, due to their reporting mechanisms to distinguish between dividends derived from an individual’s own company and dividends from other sources, and between dividends in lieu of employment income as returns from other corporate activity. My Ministerial colleagues in the Treasury tell me that expanding the scope would require HMRC to collect and verify new information which would take longer to deliver and put the other schemes which the Government is committed to delivering as quickly as possible at risk.
I realise this may not be the response you wanted to hear, but I hope it comes as a reassurance that if you are paid a salary as a company director by PAYE, then you can be furloughed through the Coronavirus Job Retention Scheme. Salaried company directors are eligible to be furloughed under the Job Retention Scheme. A company, acting through its board of directors, can decide if one or more individual salaried director can be furloughed whilst in compliance with the company’s statutory duties such as those outlined under the Companies Act 2006. Any such decision should be formally adopted by a company, noted in its company records, and communicated in writing to the director or directors concerned. Individuals under furlough should not be working, however it is my understanding that furloughed directors may fulfil statutory obligations they owe to their company by carrying out certain duties that might be reasonably judged necessary to do so. Furloughed directors should not do any work they would ordinarily be doing for the generation of revenue or provision of services for their company.