Off-payroll Working: Coronavirus

(asked on 15th May 2020) - View Source

Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what assessment he has made of the economic effect of the covid-19 lockdown on people that are deemed by HMRC to be employees under IR35 rules.


Answered by
Jesse Norman Portrait
Jesse Norman
This question was answered on 20th May 2020

Under the off-payroll (IR35) rules, individuals working like an employee, but through a company, will pay similar levels of tax to other employees. In the public sector, it is the end client who determines an individual’s employment status for the purposes of the rules. Outside of the public sector, it is the individual’s Personal Service Company (PSC) that must determine their status.

The Government has announced a package of support for individuals to deal with lost income and the costs of absence due to COVID-19. For deemed employees working in the public sector, the Government expects many public sector organisations to continue to pay staff and not furlough them.

Owner-managers paying themselves a salary through PAYE can benefit from the Coronavirus Job Retention Scheme. Employers can use a portal to claim for 80% of the usual monthly wage costs of furloughed employees (employees on a leave of absence) up to £2,500 a month, plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions for that wage. The CJRS is open to all UK employers from 1 March 2020. For companies with a sole director, directors can continue to undertake their statutory duties while furloughed and still be eligible for the CJRS, as long as they do no work beyond these duties.

In addition, SMEs may also have access to support through the temporary Coronavirus Business Interruption Loan Scheme. This supports SMEs with loans, overdrafts, invoice finance and asset finance of up to £5 million, for up to six years. More information about the full range of business support measures is available at www.businesssupport.gov.uk/coronavirus-business-support/.

Individuals who are employed by a Personal Service Company (PSC) are entitled to statutory sick pay (SSP) on the same terms as any other employee. PSCs which are eligible and make payments under SSP as a result of COVID-19 will be entitled to a rebate where they meet the criteria of that scheme. Those not eligible for SSP (e.g. the self-employed and very low earners) will be able to receive support through the benefits system.

Individuals who have paid sufficient NICs, including through multiple jobs, will be entitled to new style Employment and Support Allowance. If they have not made sufficient contributions, they can apply for Universal Credit. These individuals will benefit from the Budget announcements to remove the seven day wait in new style Employment and Support Allowance and, if they are self-employed, the Minimum Income Floor in Universal Credit.

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