COVID-19: Help for limited company/PSC contractors
What help can you get?
The Coronavirus Job Retention Scheme (CJRS) aims to avoid the need for redundancies by enabling businesses to offer Government-funded temporary leave, also known as ‘furloughing’ to businesses whose income is impacted by Coronavirus.
This scheme is relevant to you if you’re a contractor who is also a director of your own limited company, often referred to as a Personal Service Company (PSC). You can use the scheme to furlough yourself and claim wage costs from the Government if your contract work is put on hold or ceases as a result of Coronavirus. Please read our guidance on what you can and cannot do when you are furloughed.
How does it work?
The CJRS allows you to claim 80% of your usual monthly wages, up to a maximum of £2,500 per month, from the Government. The grant is subject to tax and National Insurance in the usual way, though the Employers’ National Insurance and any mandatory employers’ pension contributions elements can also be claimed back, if applicable.
If you are an employee of your own limited company and using the scheme to furlough yourself because your work has temporarily ceased, then it’s important to be clear about the income you should expect to receive. If like most limited company directors, you have paid yourself via a small salary and received the rest of your income via dividends, then the amount you receive will reflect 80% of the salary element only.
Claiming the grant
The system for grant claims is not yet available but is planned to come online towards the end of April. When preparing to make your claim, please contact us for advice and support to ensure you are claiming the correct amount.
Before you make your claim you will need the following to hand:
- Your name, phone number, and ePAYE reference number
- The number of employees being furloughed
- The claim period & the amount claimed
- Your bank account number and sort code – HMRC will reimburse you directly.
Please note that CJRS payments from HMRC should be included when calculating the company’s taxable profits, but because your company will have used these to pay a tax deductible salary in any case, the impact should be neutral overall.
You can read the complete guidance on the Coronavirus Job Retention Scheme but if you have any questions about how it relates to your specific circumstances, please don’t hesitate to get in touch.