Contractors’ Questions: Do I fall through the gaps of covid-19 income support?

Contractor’s Question: Between October 2018 and 28 February 2020 I worked as a Contractor within the public sector via an umbrella company provider. During the period, I paid £43,000 of my income in Employer NIC, Employee NIC and Income Tax via PAYE.

My most recent contract ended on February 28th 2020 (unrelated to Coronavirus just the end of a six-month contract which was extended twice). But it appears that I am ineligible for both the Coronavirus Job Retention Scheme (CJRS)and the Self-employed Support Scheme (SEISS). To add insult to injury I am ineligible to claim Universal Credit as during that time I have accrued savings in excess of the threshold. Is this all correct and I do fall through the gaps, or am I missing a trick?

Expert’s Answer: The government has created a generous package of support for the self-employed, but there is no doubt that it assists some parts of this diverse sector more than others. One group that is particularly struggling is temporary workers and people working through umbrella companies.

Although people in this group often consider themselves self-employed, in many cases they are technically ‘workers.’ Unfortunately, under the current system their situation is essentially determined by their umbrella companies they are technically employed by.

The government has, however, advised businesses that if workers recently finished contracts with businesses such as umbrella companies – on or after March 19th (updated from February 28th) – they can re-employ them and put them on the Coronavirus Job Retention Scheme, so they can be furloughed with 80 per cent of salary (although please note, there is debate as to what this salary comprises). The same applies to workers who were recently made redundant.

This won’t cost umbrella companies and other businesses any money, so it is worth contacting them to access the CJRS.

In addition, public sector bodies are also being encouraged to pay their umbrella company workers who are unable to work because of Coronavirus up to 80 per cent of their salary for the duration of their contract, as per the Cabinet Office guidance at PPN02_20.

These measures won’t, of course, cover everybody in the umbrella company worker category and unfortunately the best source of support for them, for the moment, is likely to be Universal Credit. The criteria for applying for this have been relaxed, however, and the government has temporarily raised the rate of Universal Credit to the same level as Statutory Sick Pay.

The expert was Ryan Barnett, economic policy adviser at IPSE (the Association of Independent Professionals and the Self-Employed).