The government has announced a new Self-Employed Income Support Scheme to support those who work for themselves as they struggle to cope with impact of the coronavirus crisis.
Unveiling the plan, Chancellor Rishi Sunak said that self-employed people facing financial difficulties would receive a taxable grant based on their previous earnings over the last three years.
It will be worth up to 80 per cent of earnings and it will be capped at £2,500 a month.
The figure will be calculated using average monthly profits over the last three financial years. Support will initially last three months. However, it may be June before people can access the money.
Mr Sunak said that the scheme would only be open to those who are already self-employed and have a self-assessment tax return for 2019. It will apply to those with trading profits up to £50,000 a year.
The government says that 95 per cent of people who are majority self-employed will benefit from the support scheme and he hopes people will be able to access it no later than June. The scheme will be backdated.
The money will be paid in a single lump sum and anyone who missed the January deadline for their tax return will get an extra four weeks to submit.
Self-employed people who are eligible for the new scheme will be able to apply directly to HMRC for the taxable grant, using an online form, with the cash being paid directly into people’s bank account.
To minimise fraud, only those who are already in self-employment and meet the above conditions will be eligible to apply. HMRC will identify eligible taxpayers and contact them directly with guidance on how to apply.
The Chancellor described the scheme as an “unprecedented level of support” and said ministers had worked to ensure it was targeted at those who need it the most.
Unveiling the scheme, he said he was treating the self-employed like the employed and told them: “You have not been forgotten” and he added: “We are all in it together”.
However, he also implied that he was looking to reform the tax system in the future.
He told a press conference announcing the scheme there was “currently an inconsistency” between what the employed and self-employed pay, despite the actions taken “treating them the same”.
Asked about the self-employed and freelancers who don’t have three years’ worth of accounts, Mr Sunak said the Treasury would look at what they do have.
However, those who are recently self-employed and do not have a full year of accounts will not receive any help under this scheme.
Full details of the Self-Employed Income Support Scheme will be announced by the government later.
Other support measures aimed to help the self-employed include changes to sick pay, aimed at giving assistance to sole traders. The Minimum Income Floor in Universal Credit is being suspended ‘for everyone affected by the economic impacts of coronavirus’.
The move means that self-employed people can now access Universal Credit at a rate equivalent to Statutory Sick Pay for employees – approximately £95 a week.
The ‘new style’ Employment and Support Allowance will be payable for people directly affected by COVID-19 or self-isolating according to government advice from the first day of sickness, rather than the eighth day.
People will also be able to claim Universal Credit and access advance payments where they are directly affected by COVID-19 or self-isolating, without the current requirement to attend a Jobcentre.
The Chancellor announced last week that the government would cover 80 per cent of at-risk employees’ salaries for three months, as part of a raft of measures aimed at supporting the economy during the crisis.
Under the Coronavirus Job Retention Scheme, all UK employers will be able to access support to continue paying part of the salary of employees that would otherwise have been laid off.
The scheme will cover 80 per cent of a regular salary up to £2,500 a month, which is just above the median income. All UK businesses are eligible.
To discuss any issues that you are facing as a result of coronavirus and how you can access support please contact WNJ on 01772 430000. We are here for you.