The Chancellor, Rishi Sunak, has unveiled an unprecedented package of support from the Government to help self-employed workers who may be struggling financially as a result of Coronavirus.
After recognising the anxiety of the nation’s self-employed workforce, the Chancellor told them they’d ‘not been forgotten’ before unveiling an income support scheme (SEISS) which is unparalleled in its scale.
Government to ‘Cover 80% of Monthly Income’
In a move that mirrors the measures that were recently introduced for employees, the Chancellor announced that self-employed workers would be covered for up to 80% of their average monthly profits – up to a cap of £2,500 per month.
Their allowance will be taken from an average income over the last three financial years. For those self-employed people who do not have three years’ worth of profits, assessments will be made from the amount that they do have.
The scheme will cover those who make the majority of their wages through self-employment. Furthermore, unlike furloughed employees, the three month scheme can be accessed by people while they continue to do business.
The money will be paid in a single lump sum and will arrive no later than June 2020 – though it will be backdated to accommodate for the delay.
The scheme is open to those with trading profits of up to £50,000 per annum and, if eligible, you will be contacted by HMRC.
Inevitably, there are people who will feel this policy does not offer the requisite financial security. For instance, only those who are already in self-employment are able to apply. To qualify, you must have filed a self-assessment tax return for 2019. If you haven’t done this already, you have an extension of four weeks from today in which to do so.
The Chancellor said the scheme was targeted at ‘those who need it most’ and labelled it an ‘unprecedented level of support’ and ‘one of the most comprehensive ways of supporting the self-employed anywhere in the world’.
Does the Scheme Include Limited Company Directors?
Unfortunately for those of our clients with their own Limited Companies, this scheme does not cover those who ‘pay themselves a salary and/or dividends through their own company’, such as a Limited Company Director.
However, if those individuals are operating a PAYE scheme, they will be covered for their salary by the Coronavirus Job Retention Scheme.
‘Parity of Support’?
Following recent fiscal interventions to help employees – such as a Government guarantee to cover 80% of a ‘furloughed worker’s’ wages – similar blanket policies were proving difficult to implement for those who work for themselves.
The Prime Minister, Boris Johnson, for example, had said that there were “particular difficulties” relating to those who were not on a PAYE scheme, but that “parity of support” across the workforce was what he wanted his Government to achieve.
Given the complexities associated with the self-employment industry, and the many different types of contractors, consultants, freelancers and self-employed workers in the UK (hairdressers, taxi and delivery drivers, tradespeople, IT consultants, etc.), it’s taken the Government longer to put together this package of support.
That delay had led to confusion amongst self-employed workers. Some have even disregarded official health warnings to stay indoors – risking their own health and that of others they come into contact with – in order to continue earning money to provide for their families.
The Treasury, though, is hoping that the measures unveiled on Thursday evening will ease many of the concerns felt by the UK’s contractor workforce. Coincidentally, the changes came on the same day that the G20 nations announced a $5tn stimulus to be injected into the global economy.