Employees that can no longer maintain their workforce because they have been badly impacted by the coronavirus pandemic can use the government’s Job Retention Scheme to put their employees on furlough. This is a grant that covers 80% of the employees’ monthly wage up to a maximum of £2,500 per month.
An employee can be furloughed for any amount of time and with any working pattern as long as they pay PAYE tax. A worker is eligible for furlough whether they work full-time, part-time, on a zero-hours contract or through an agency.
The answer to whether contractors are eligible to apply for the Job Retention Scheme differ according to how you contract.
If you are a contractor working through an umbrella company, you will be eligible to receive furlough pay. This is because the umbrella company employs you and deducts your tax contributions through the PAYE system.
The umbrella company will be responsible for setting up payments to the furloughed contractor and this should be agreed between the agency and worker.
This is the case whether you contract in the public or private sector, however many public sector contractors may be required to continue working as many perform essential roles.
If you contract through a limited company and have made yourself an employee of that company, therefore paying tax through PAYE, you may also qualify for furlough pay. This should be applied for on the government’s website.
It is worth noting that although the Job Retention Scheme covers 80% of your PAYE income, dividends are not counted. This may cause significant loss of income to some limited company contractors who partially pay themselves through dividends.
Unfortunately, self-employed contractors that pay tax through self-assessment and not PAYE will not be eligible for the Job Retention Scheme.
If you are a self-employed contractor whose work has been badly impacted by the coronavirus pandemic there are other options out there, namely the Self-Employment Income Support Scheme.
The government has recently extended this scheme so even if you didn’t claim for the first and second grants, you can still claim for the third.
Contractors must apply online through the HMRC website and make an honest assessment about whether their business has experienced a significant reduction in profits due to the pandemic.
You must claim by the 29th January and will receive 80% of your average monthly trading profits which is paid out in a single instalment covering 3 months’ worth of profits with a limit of £7,500.
To be eligible for the Self-Employment Income Support Scheme contractors must have traded in the following tax years:
There are further criteria:
Finally, you must declare on your application that you:
Unfortunately, this criteria has left many self-employed workers unable to claim help.
For more information about the Self-Employment Income Support Scheme, check out the government’s guidelines on eligibility and how to apply here.
Amidst the global pandemic, as well as upcoming changes to IR35 from April 6th 2021, many self-employed contractors are considering making the move to an umbrella company.
After all, an umbrella company offers contractors a level of security and support they would otherwise not receive when going it alone.
With an umbrella company, contractors are paid a salary, pay tax through the PAYE system, are entitled to statutory rights such as sick pay, and have business and admin tasks such as invoicing taken care for them. Contractors are free to work on whichever contracts they choose and when, but can be assured that they have a safety net if the unexpected should happen, as we have seen in 2020.
Working through an umbrella company also makes the contractor exempt from looming IR35 reforms which are set to badly impact the thousands of self-employed contractors out there.
Set to come into motion from 6th April this year, the changes to IR35 will mean that many limited company contractors will be caught out by the legislation and will therefore be forced to pay more in tax.
However, by working through and being employed by an umbrella company, contractors will be exempt from IR35, making life that little bit easier.
If you are considering making the move to an umbrella company, there’s never been a better time.
The next step is to find the best umbrella company out there for your needs. After all, there’s plenty of choice when it comes to who you will work with, so it’s always best to do your research to find your perfect fit.
That’s where Umbrella Supermarket’s handy umbrella comparison calculator comes in handy. In just 2 minutes you can enter a few personal details and browse a list of umbrella companies best suited to your needs. Whether you are looking for more money or help with things like childcare credits, we help you cut out the noise and focus on the companies best suited to you. Why not try it for yourself?
Any contractor considering switching to an umbrella company will want to know how to find the best provider to work with.
Although you could spend your precious time and energy searching the web for the best umbrella company, there is an easier way – using an umbrella calculator.
In this guide, Umbrella Supermarket explains why every contractor should use an umbrella calculator in 2021.
If you are considering contracting you will need to decide on PAYE or umbrella.
It can be a difficult decision to make and contractors will inevitably be questioning which option will be the best for them.
To help every contractor get on the right track for them, in this guide Umbrella Supermarket looks at PAYE vs umbrella, outlining the key differences and how this will impact you.
There are many reasons that contractors across the UK opt to work under an umbrella company.
Umbrella companies offer an easy way to contract and remove the need for the contractors to worry about the burdens of admin, finances, tax and IR35, all things that limited company contractors have to deal with.
For this reason, many contractors will be weighing up their options and questioning whether it is worth using an umbrella company in 2021. To help make the decision that little bit easier, Umbrella Supermarket has put together this guide on the pros and cons of using an umbrella company.
Any contractor that is considering operating through an umbrella company in 2021 will need to understand Umbrella Company fees - from why an umbrella company charges fees, how they are paid to how much the contractor will pay.
In this guide, Umbrella Supermarket answers those all-important questions to help every contractor know exactly where they stand when it comes to umbrella company fees.
If you’ve made the decision to contract through an umbrella company in 2021, you will next need to find an umbrella company that’s right for you.
After all, there are lots of umbrella companies out there, so how do you know which one to choose?
To help you find the best umbrella company for you, in this guide Umbrella Supermarket outlines what makes a good umbrella company, so you can rest assured you’re making the right move.
One of the many advantages to operating through an umbrella company for contractors is that they become an employee of their chosen provider.
In turn, this means that the contractor will be automatically enrolled onto the umbrella company’s workplace pension scheme.
To help contractors find out more about umbrella company pensions Umbrella Supermarket has put together this handy guide.
If you are considering contracting through an umbrella company you will naturally have questions and queries over how they work.
After all, making the move to umbrella can be a big step for contractors. To help, in this guide Umbrella Supermarket explains how to get started with an umbrella company and share our top tips for using one in 2021.
PAYE or umbrella is a question asked by every contractor. Which one you opt for will have a big impact on your contracting career and lifestyle. So, it's important to make the right decision for you.
To help makes things a little bit easier, Umbrella Supermarket has put together this guide on PAYE or umbrella, outlining the key differences between each, to help you make the best and most informed decision for you.
One of the many benefits to working through an umbrella company is that you will receive holiday pay as well as a range of other statutory benefits including sick pay, maternity and paternity pay.
To find out more about umbrella company holiday pay, and how to calculate how much you will be entitled to, Umbrella Supermarket has put together this handy guide.
Contractors must make several decisions throughout their contracting careers. One big decision contractors have to make is how they will operate.
One way that contractors can work is through an umbrella company.
Umbrella companies have become an increasingly popular way to contract in the past few years, offering many benefits to the contractor. But, how do you know whether this option is right for you?
To help every contractor make the right decision for them, in this guide, Umbrella Supermarket explains when not to use an umbrella company.
There are tons of benefits to using an umbrella company, which is why they have become such a popular option for contractors in recent years.
After all, an umbrella company takes away the stress and hassle of operating through a limited company whilst offering contractors a range of advantages, such as statutory rights, paying them a salary, deducting correct tax levels and National Insurance, and taking care of tasks like expense processing and invoicing.
However, as more and more contractors opt to use the services of an umbrella company, more providers have started to claim that they are HMRC approved.
To bust the myths around HMRC approved umbrella companies and get straight to the facts, in today's guide Umbrella Supermarket look at whether HMRC approved umbrella companies really exist, so you know exactly where you stand.
If you're considering making the leap to contracting, you will understandably want to know how much you will have to pay in umbrella company costs. After all, this amount comes directly out of the contractor’s pocket, so it’s important to be clued up on how much you should expect to pay.
To help contractors, in this guide Umbrella Supermarket answer the all-important question of how umbrella companies cost in 2021.
