Employees continued by companies in difficulty during the coronavirus epidemic will get 80% of their wages subsidized by the government, but ministers have been criticized for not going so far for self-employed workers.
Now Chancellor Rishi Sunak has announced measures to support them.
What help is there?
If they have suffered a loss of income, a taxable benefit will be paid to self-employed workers or partnerships, worth 80% of their profits up to a limit of £ 2,500 per month.
Initially, this will be available for three months in a lump sum payment and will start to be paid from the beginning of June.
It will be called the Coronavirus self-employed income support scheme and is open to those who have negotiated in the last financial year, who continue to negotiate now and intend to continue doing so this year.
Who is eligible?
More than half of an applicant’s income must come from self-employment.
The system will be open to those with a commercial profit of less than £ 50,000 in 2018-19, or an average commercial profit of less than £ 50,000 from 2016-17, 2017-18 and 2017-18.
Those who are self-employed recently and do not have a full year of accounting will not receive any help under this scheme.
The new government aid adds to a six-month delay in paying taxes through the self-assessment system.
Those with the lowest incomes are lining up to receive more generous and faster bonus payments, previously announced.
How can I apply for help?
The chancellor said that this will cover 95% of self-employed workers who derive most of their money from self-employment. This is how it works:
- HM Revenue and Customs (HMRC) will use existing information to identify suitable information and invite questions
- The application will ask them to confirm that they meet the eligibility requirements
- It will be paid directly into a bank account, which eligible taxpayers will have to confirm on the application form
- People don’t have to contact HMRC now, if they are eligible HMRC will contact them directly
How many people are interested?
There are over five million self-employed workers in the UK, earning an average of £ 781 per month. The number has increased rapidly since the financial collapse of a decade ago.
About a fifth are in the construction sector, according to the Office for National Statistics (ONS), with hundreds of thousands of others working in the automotive sector, professional services and education.
As part of the latest announcement, the chancellor also suggested that tax breaks for self-employed workers could end in the future. This signals a huge change in UK tax policy, potentially equating the tax treatment of self-employed workers.
How does the new aid compare with employees?
Unlike employees, there is no sickness allowance for self-employed workers, although there are tax breaks from being self-employed, such as lower national insurance.
A plan had already been announced for those who were employed.
The government claims that 80% of gross wages in the private sector, up to £ 2,500 per month, for those who do not work and who would otherwise have been laid off will be covered by these grants from HM Revenue and Customs (HMRC).
These will be backdated in March and the program will last at least three months. The idea is to prevent mass unemployment.