Coronavirus (COVID-19) FAQ’s: What help is there for the Self-Employed / Small Company Directors? How to forlough employees etc.
Since my two posts Monday 23 March there have been no updates from the government. We are expecting more announcements but for now I hope that this post helps answer some of the most pressing frequently asked questions.
What financial help in there for the Self-Employed?
Regarding sole-traders / partners of a partnership – currently, very little. Extending the 80% funding of earnings to the self-employed has been discussed in Parliament but for now there are no official announcements.
You will likely qualify for the £73 per week Employment Support Allowance via the Universal Credit system.
My opinion: Don’t panic announcements of help for the Self-Employed are expected very shortly. If you’re allowed to work then considering doing so (see below).
Can the self-employed continue to work?
Yes in most cases. There has been a lot of misreporting on this issue along the lines of “non-essential work should stop”. This is not what the Prime Minister announced or what subsequent Government guidance states.
In truth its non-essential travel to work that should stop. The guidance states: “If you cannot work from home then you can still travel to work, provided you are well and neither you nor any of your household are self-isolating.”
True, non-essential shops and public spaces have been closed so in all cases please read carefully the guidance below before deciding if you can still go to work or not.
Government guidance on staying at home: https://www.gov.uk/government/publications/full-guidance-on-staying-at-home-and-away-from-others/full-guidance-on-staying-at-home-and-away-from-others
How to furlough workers and can directors be furloughed?
Any employee that has been out of work since 1 March (i.e. asked to stay home due to the COVID-19 crisis) can be designated as furloughed.
How to do it?
- Explain to your employee, first verbally and then in writing, that due to COVID-19 the workload is greatly reduced and you’d like to designate them as furloughed. You must have the employees consent. If they consent then they must stay at home and not take on any new employment.
- Agree with your employee the salary they’ll be paid whilst furloughed. Most employers are paying 80% of usual salary (if it varies then based on February’s pay) as this is the amount the government will fund (subject to the £2,500 per month cap). You can however choose to pay 100% but the difference will not be reimbursed by the government.
- Employers will makes claims for reimbursement via a HMRC system that is expected to be up-and-running before the end of April.
Can directors be furloughed like other employees?
The guidance is not yet clear. Whilst you are employees of your own company it is expected that this issue will be clarified when the Chancellor announces more help for the Self-Employed.
What about zero hours contract employees?
It seems that these can be furloughed and paid 80% based on their February pay but this guidance is not yet clear.
My opinion: If your business is coming to a standstill then furlough your workers now (even backdate to when they stopped coming to work). Directors don’t panic – I expect help for your earnings will be clarified along with help for the Self-Employed. If you’re struggling to pay the wages of furloughed workers contact your bank for a Business Interruption Loan (these are being processed quickly by most banks) which you can repay once the HMRC funding is processed.
I hope these FAQ’s help for now. I realise that many questions are left unanswered but I’ll aim to provide advice as soon as these issues are clarified.
Please ensure you’re up to date with my previous COVID-19 posts:
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