The Government has announced a raft of new measures for self-employed workers. These included:
- 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
Responding to the announcement the Money Advice Trust says that the Chancellor’s introduction of a Self-employed Income Support impacted by Coronavirus is welcome but does not provide the immediate cash support many need. The charity continues to call for a dedicated hardship fund for self-employed people affected by the Coronavirus impact.
Joanna Elson OBE, Chief Executive of the Money Advice Trust, the charity that runs National Debtline and Business Debtline, said “This new incomes support will come as a relief to the millions of self-employed people whose businesses have been hit by the Coronavirus outbreak – but having to wait until June for payments to come through will cause real hardship for many. The Government should introduce a dedicated hardship fund for self-employed people who are struggling in the meantime.”
“Nearly every single call we are taking at our Business Debtline service is from self-employed people affected by the impact of Coronavirus. The electricians, plumbers and taxi drivers we are hearing from, who cannot work from home, are losing money by the hour – and telling them they can try and access Universal Credit is not enough.”
“The Chancellor’s task is an incredibly difficult one and he has already shown he is prepared to make big, bold decisions when needed. I would encourage him to do so again and introduce a dedicated hardship fund for self-employed people, to help them cope with the difficult two months ahead.”
Dame Gillian Guy, Chief Executive of Citizens Advice, said “The government has rightly taken bold action to support the millions of self-employed people who could otherwise struggle to keep their heads above water during this national emergency. This scheme will understandably take some time to set up, so the focus should now be on cushioning people from an immediate financial shock.”
“With the benefits system under immense pressure, bill holidays and a pause on debt collections could help to ease the strain on family incomes. We look forward to working with the government to make sure no one falls into unmanageable debt as a result of this public health crisis.”
Duncan Swift, President of insolvency and restructuring trade body R3 said “Even without the current coronavirus outbreak, self-employed people and sole traders often have unpredictable income levels, making it harder for many to save for a rainy day. The Government’s announcement is a welcome, if limited, step towards evening out the support available for workers across the economy.”
“The limitations do stand out. The self-employed will have a sizeable gap to bridge between now and June when the help will actually be available. That could be too long to wait for those with no safety net. There are quite a few gaps in the support: for people who have only recently started working for themselves or who pay themselves through dividends, there may be no help at all.”
“Anyone who is in financial difficulty or starting to see signs it may be around the corner should seek advice from a professional as soon as possible. The earlier you seek advice about your personal finances, the more considered a decision you can make, and the greater range of options you have for improving your situation.”
National Chairman of the Federation of Small Businesses (FSB) Mike Cherry said “This bold support package from the government will give much-needed help to vast numbers of self-employed workers, guaranteeing 80 per cent of income to those affected, with earnings of up to £50,000.”
“This is a time of national emergency, and it is very welcome that the Government has listened to FSB and responded with a multi-billion-pound package to support the most financially vulnerable entrepreneurs, and to do so through the self-assessment system.”
“This follows help in the Budget and since, that was aimed squarely at small businesses such as a cut in the jobs tax, cover for small employers that cannot pay their employees, business rates holidays, cash grants, mortgage holidays, rent protections, and interest-free, fee-free loans. We hope the raft of support will keep as many small businesses as possible afloat.”
“The self-employed, however, remained a glaring gap. They needed more help, and especially those with least resources to prepare for this storm. We have heard despairing stories from hard-working hairdressers, bakers, childcare providers, freelancers, drivers and many others, seeing the businesses they’ve spent years building dry up in a matter of days. It is many of those strivers who today’s package will support.”
“The self-employed community underpins the UK economy. They are the individual risk-takers who don’t expect the same benefits as employees. In this moment of a collective national effort to overcome a global pandemic, today’s package is a significant, multi-billion-pound improvement on what was proposed last Friday.”
“Many tax-paying self-employed who will be helped by today’s measures will be relieved. Although the deal is not perfect, the Government has moved a very long way today.”
“This is an incredibly challenging situation for everyone. While the healthcare response is paramount, overcoming the economic disruption also requires a speedy response in the interests of jobs and future growth. Today’s announcement will give hope to many hard-working, self-employed entrepreneurs, and it is important that the scheme is ready on-time and delivered as soon as possible. As this will be run through self-assessment, it is vital that any late filers submit their 2018-2019 return, right now, or they risk missing out.”
CVR Global Partner Ian Defty said “It is easy – as some people do – to level criticism at a government in times of national turmoil, and there are doubtless holes in Rishi Sunak’s package of support for the self-employed today, but the measures are, to me, a landmark in more ways than one.”
“When you think that we have 66.5 million people in the UK – and five million are self-employed, that is a very considerable proportion of the working population. Yet far too often, partially due to the disparate and varied nature of what they do, they have been something of a forgotten army in the UK workforce.”
“But there is no doubt that, thanks to support of organisations such as the FSB, the BCC and the TUC, their voice has been heard and now taken into account by the Chancellor.”
“I know from dealing with self-employed people through work and socially for more than three decades, that they have struggled to access benefits and support and found mortgages and loans hard to come-by and that has seen them slip through the cracks far too often but the offer of Government support today goes a long way to support those caught up in the current extraordinary circumstances.”
“When you think that many of them are tradespeople carrying out work which is essential to everyday life in the UK, and working on key projects, that cannot be right. There are those who are not caught in this net but as the Chancellor said, those who have been in business for just a few months are very difficult to cater for, but clearly he is considering those who don’t yet have three years of trading figures.”
“There will be paperwork and form-filling for the self-employed to do, hopefully limited, but much of the burden of delivering this package of support will fall on the HMRC, which again will come as a relief for those involved. It does clearly highlight, however, the need for the self-employed to ensure that, going forward, they have to be as steadfast and timely in preparing and filing their tax returns and other occupational red-tape as larger commercial operations are.”
“The Chancellor also gave passing reference about the self-employed ensuring they declare all they earn, and this will be costing those who have been less than fastidious in that regard, it is a painful lesson to learn in a time of very real need.”
Jonathan Geldart, Director General of the Institute of Directors, said “The Government has taken a much-needed step forward on support for the self-employed, many of whom have seen business evaporate due to the outbreak, and have as much need for support as employees. The Treasury has worked at pace to overcome the challenges in making this announcement, and is seeking to listen to the voice of our members about the impact the coronavirus outbreak is having on the economy.”
“Support cannot reach these people fast enough. The system must strip back bureaucracy where it can, and proving eligibility must be straightforward. We welcome the principle that in these extreme circumstances incomes should be protected up to a certain level for both employees and self-employed, but it’s not clear how it will help directors of the smallest companies who rely on dividends, only getting paid if their company makes a profit. Setting up a business is fraught with risk, many fail, but at the moment they are falling between two stools.
“If businesses and the self-employed are going to have to sit tight until Government support comes through, banks must step up. So far we’ve heard too many worrying reports of firms being turned away for crucial bridging finance. Government must work with financial institutions to ensure the message of forbearance gets through.”