Home > Business > Coronavirus: UK government unveils aid for self-employed

Coronavirus: UK government unveils aid for self-employed

Comments are Off

Article: BBC News
Image: Mortgage Introducer

Self-employed workers can apply for a grant worth 80% of their average monthly profits to help them cope with the financial impact of coronavirus, the chancellor has announced.

The Treasury has stressed that those self-employed people eligible for support will be contacted by HM Revenue and Customs (HMRC), so do not need to do anything at this stage.

The money – up to a maximum of £2,500 a month – will be paid in a single lump sum, but will not begin to arrive until the start of June at the earliest.

Rishi Sunak told the self-employed: “You have not been forgotten.”

Wage subsidies of 80% for salaried employees were announced last week.

Shortly after the chancellor spoke, the number of people in the UK who have died with Covid-19 – the disease caused by coronavirus – jumped by more than 100 in a day for the first time.

The total now stands at 578.

The government had faced criticism for failing to provide support for self-employed and freelance workers in its earlier package of economic measures.

Mr Sunak said the steps taken so far were “already making a difference” but it was right to go further “in the economic fight against the coronavirus”.

  • Self-employed people will be able to apply for a grant worth 80% of their average monthly profits over the last three years, up to £2,500 a month.
  • At least half their income needs to have come from self-employment as registered on the 2018-19 tax return filed in January – anyone who missed the filing deadline has four weeks from now to get it done and still qualify.
  • The scheme is open to those who earn under £50,000 a year – up to 3.8 million of the 5 million people registered as self-employed.
  • Unlike the employee scheme, the self-employed can continue to work as they receive support.
  • The money, backdated to March, will arrive directly into people’s banks accounts from HMRC, but not until June.
  • The grants will be taxable, and will need to be declared on tax returns by January 2022.
  • Company owners who pay themselves a dividend are not covered.

The scheme does not cover people who only became self-employed very recently – the chancellor said they would have to look to the benefits system for support.

Coming up with a workable scheme had been “difficult”, he continued, because the self-employed were a “diverse population” and some of them earned a great deal.

But in all, the “fair, targeted and deliverable” plan would help 95% of people who earn most of their income via self-employment.

“We have not left you behind, we all stand together,” he added.

The Federation of Small Business, which represents many self-employed workers, welcomed the intervention, saying: “Although the deal is not perfect, the government has moved a very long way today.”

But Labour’s shadow chancellor John McDonnell said he was worried the money would come “too late for millions”.

“People need support in the coming days and fortnight… there is a real risk that without support until June the self-employed will feel they have to keep working, putting their own and others’ health at risk.”

Torsten Bell, from think tank the Resolution Foundation, said the very significant package stood in “stark contrast” to the “much less generous” support being given to employees who lose their jobs or see their hours cut during the crisis.

  • Analysis By Faisal Islam – Economics editor

The Coronavirus Self-Employment Income Support scheme is another extraordinary, multi-billion pound support, reflecting the brutal economic impact of a shutdown designed to keep the pandemic in check.

In recent days, Treasury ministers appeared to be trying to dampen down expectations, telling MPs it was problematic to establish a fair scheme, and the employee job retention scheme would be the logistical priority.

The government wants to set up the scheme to keep employed jobs as the priority first, so the banks will need to be relied on to support many of the self-employed with overdrafts to tide them over until the grant goes into their bank accounts in about 10 weeks’ time.

The sting in the tail? The chancellor said he can no longer justify, after things get back to normal, that self-employed people pay less tax than the employed. But that is for another day.

Others who face missing out include:

  • People who work short-term freelance contracts which were paid through a PAYE scheme, but now have no future work. They are, in effect, unemployed and will need to claim benefits
  • Those who have their own business for extra income on top of their paid employment. If their self-employment income is less than their other job, then they will not be eligible for this scheme
  • Those who have set up a limited company and pay themselves a wage and dividends, often on the advice of accountants. They account for about 10% of the self-employed. They may be able to claim via the government’s job retention scheme for the wages element of their income, but not the dividend
  • Those whose trading profit is more than £50,000 a year
You may also like
How to Promote Your Startup on a Shoestring Budget
A beginner’s guide to digital marketing in 2020
How to Use LinkedIn to Find a Job (Plus, Tips for Updating Your Profile So You Get Hired)
Back to work – but are your staff prepared to follow?