HMRC has confirmed that public sector contractors within the scope of the off-payroll working (IR35) rules are eligible for the 80% furlough scheme. There has also been clarification for loan charge taxpayers who want to claim under the Covid-19 support scheme for the self-employed.
Off-payroll workers
Many public sector contractors will probably still be working from home, but if unable to continue to provide their services due to Covid-19 they are eligible for the furlough scheme. It doesn’t matter whether the contractor is working via a personal service company, a PAYE agency or an umbrella company. There are, however, some potential pitfalls:
- The furlough scheme is only available up to the point where an assignment is due to expire (regardless of Covid-19), and there is no obligation for the public sector body to extend the assignment.
- The decision on whether to operate the furlough scheme lies with the end user/supplier, not with the contractor.
- Umbrella companies might only furlough based on 80% of the minimum wage.
The postponement of the extension of the public sector off-payroll working rules to the private sector was a welcome reprieve, but it looks like the government is determined to go ahead with the change from 6 April 2021. A report from the House of Lords calling on wholesale reform of the proposals does not appear to have gained any traction, with the Lords going as far as to say that the off-payroll rules have never worked satisfactorily throughout the whole of their 20-year history.
Loan charge taxpayers
The Covid-19 support scheme for the self-employed required a taxpayer’s tax return for 2018/19 to be submitted by 23 April 2020. This was something of a problem for those hit by the loan charge who have been told they have until 30 September 2020.
However, HMRC has now clarified that for loan charge taxpayers, the scheme will just be based on average trading profits for 2016/17 and 2017/18, with 2018/19 ignored.
As with so much of the current situation, the pace of change can be dizzying, so if you have any questions about your status, please contact one of our Accounting & Business Advisory on 01142 664 432 or info@smhca.co.uk.
Detailed guidance for claiming under the furlough scheme can be found here.
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