New Announcement For The Self-Employed

Tonight, Chancellor Rishi Sunak announced support for the self-employed. The scheme introduced is aimed to assist 95% of those who are currently self-employed.

As stated during the chancellor’s briefing, the Government will pay those who are self-employed a grant of 80% of their average monthly profits over the last 3 years – up to a maximum of £2,500 a month. This is in line with the support offered to those who are employed.

A 2019 tax return must have been submitted in order to qualify for the scheme. For whose who are late in submitting their tax returns to HMRC, they will now have a 4 week period to submit their return. Submission within the 4 four weeks will make the individual eligible for the scheme.

Grants are open to anyone with trading profits up to £50,000 and whose income is mainly generated from self-employment. This is to minimise the risk of fraudsters. Tax officials will contact those who are eligible, rather than them having to apply. The payment is a one off lump sum payment and with be paid in to the accounts of qualifying individuals. 

The scheme is initially set to last the three months of, March, April and May and the lump sum payment will be received in June. The Scheme has the ability to be extended should that prove necessary.

Those who have only recently become self-employed unfortunately will not receive the grant. Without information to assess their income levels, the chancellor stated there is not much the Government can do to help them.

At this stage company owners, who pay themselves a combination of a low salary and dividends will not be included in this scheme. They may however get support through the Coronavirus Job Retention Scheme for employees should they operate pay-as-you-earn schemes.

The chancellor stated the government has been “designing these things at pace”, so, while schemes may have flaws, “given the circumstances, we shouldn’t let the perfect be the enemy of the good”.

He promises the government have limited some of the risks for the self-employed, scheme such as making it for people who have an actual tax return – “the genuine self-employed, not just telling us out of the blue”.

The chancellor also added: “It does throw into light the question of inconsistency and if that is fair.”, refering to the way the self-employed are currently taxed. This could be a hint that there may be a reform on how they are taxed once the pandemic is over.