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Got Furlough? August Changes Incoming

Another week, another sting in the tail for some contractors who are using umbrella companies.

If it wasn’t bad enough that many contractors felt they had no choice but to move to an umbrella company, from a limited company because of the imminent (and now deferred) IR35 legislation, those self-same contractors are now finding themselves struggling to get any furlough payments from their umbrella company to cover the loss of wages they have seen since COVID hit.

It goes without saying, those who kept their limited company status, (assuming they had declared their incomes fully), have been able to benefit from furlough payments during this time. But those who had recently made the move to an umbrella, or those who were less lucky have found themselves with an umbrella company provider who won’t pay.

Part of the issue appears to be the issue of holiday pay, which can still be accrued during furlough. And another whammy is about to hit, when furlough payments change from the start of August, and are tapered off, with the employing company expected to foot a greater share of the bill. The taper scheme expects employers to start to pay NI and pension contributions from that time, which of course, with no revenue to cover those charges coming in from the contractors, umbrella companies aren’t prepared to pay.

The main issue is of course, that furlough hasn’t been set up to deal with contractors and those working in an umbrella in any way that is practical and fair. Which means, just like so many other financial matters, it is the self-employed who are going to take the hit.

What can you do? Well, the first thing if you are furloughed is to check with your umbrella company to see if you are going to continue to be covered. The second is to see if your industry work is starting back up and you can actually get back to work if you hustle a little.

The third is to lobby – write to your MP and explain how unfair furlough is to the self-employed and contractor workers. See if they can petition the government to make some amendments to take contractors into account.

There’s no doubt it’s hard out there right now, but hopefully life is returning to normal and life, and revenues will pick up soon, if they haven’t already.

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