New government measures are promising to pay the self-employed 80% of their profits, up to £2,500 a month, to help them cope with coronavirus crisis,
The announcement was made today (March 26) by Chancellor Rishi Sunak. However there was also a warning that there will be future rises in self-employed contributions in the future as the “difference between employees and self-employed can no longer be justified.”
The payments will be worked out on the basis of the last three years. For those who have less than three years the government will “be forced” to only look at the lesser amount.
Payments would initially be for three months, expected to be made in June backdated to this month.
The Self-Employed Income Support Scheme will mean those eligible receive a cash grant worth 80% of their average monthly trading profit over the last three years. The government said this covers 95% of people who receive the majority of their income from self-employment.
Cleaners, plumbers, electricians, musicians, hairdressers and many other 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.
Chancellor Rishi Sunak said: “Self-employed people are a crucial part of the UK’s workforce who’ve understandably been looking for reassurance and support during this national emergency.
“The package for the self-employed I’ve outlined today is one of the most generous in the world that has been announced so far. It targets support to those who need help most, offering the self-employed the same level of support as those in work.
“Together with support packages for businesses and for workers, I am confident we now have the measures in place to ensure we can get through this emergency together.
“The scheme will be open to those with a trading profit of less than £50,000 in 2018-19 or an average trading profit of less than £50,000 from 2016-17, 2017-18 and 2018-19. To qualify, more than half of their income in these periods must come from self-employment.”
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 income support scheme will cover the three months to May. Grants will be paid in a single lump sum instalment covering all three months, and will start to be paid at the beginning of June.
Individuals should not contact HMRC now. HMRC will use existing information to check potential eligibility and invite applications once the scheme is operational.
Those who pay themselves a salary and dividends through their own company are not covered by the scheme but will be covered for their salary by the Coronavirus Job Retention Scheme if they are operating PAYE schemes.