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Support for self-employed affected by coronavirus unveiled by government article
Support for self-employed affected by coronavirus unveiled by government article

“You have not been forgotten,” those were the words of Chancellor Rishi Sunak who last night (March 26) announced a support package for self-employed Brits during the coronavirus outbreak.

Workers affected by the virus can apply for a grant worth 80% of their average monthly profits over the last three years, up to £2,500 per month.

The money will be paid to those eligible in a lump sum, but, the Chancellor warned payments won’t be made until the beginning of June at the earliest.

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What support is available?

Dubbed the Self-Employed Income Support Scheme, financial aid will be available to those with average annual profits of £50,000 or less for at least three months, with the Chancellor advising the support amounted to one of “the most generous packages in the world.”

The announcement came after the UK Government faced criticism for failing to provide support for the five million people who work for themselves across the country.

In a Downing Street press conference Mr Sunak said that the steps already taken had made a difference to British workers, but it was right to go further in the “economic fight against coronavirus.”

It is believed the new scheme will help 95% of people who earn most of their income through self-employed work.

However, when asked what those who work for themselves are expected to live on until summer, Mr Sunak advised that the government had considered the scheme to be the quickest way to offer support.

The Chancellor has also offered those who missed the January 31 tax return deadline a four-week window to file to allow them to apply and stated that people will receive three months’ worth of money in one go come June.

“A crucial part of the UK’s workforce”

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 a simple online form, with the cash being paid directly into a person’s bank account.

Speaking of the scheme, 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.”

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How can I apply?

The new income support scheme is being designed by HMRC from scratch following engagement with stakeholders such as the TUC, Federation of Small Businesses and IPSE – The Association of Independent Professionals and the Self-Employed.

It has been announced it will cover the three months to May, with payments expected to be made at the start of June.

In a bid to minimise fraud only those who are already in self-employment can apply.

Anyone deemed eligible taxpayers will be contacted directly by HMRC with guidance on how to apply – workers are being urged not to contact HMRC directly.

Anyone who pays themselves a salary and dividends thought their own company will not be covered by the scheme, however, will be covered for their salary by the Coronavirus Job Retention Scheme if they are operating PAYE schemes.

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What about people without three years of accounts or the recently self-employed?

When asked what support is available for those without three years of accounts the Chancellor stated the Treasury will work to find a solution and advise the next steps for those in that situation.

However, for those without accounts Mr Sunak admitted there was nothing they could do, and the scheme would not be possible to roll out to the recently self-employed due to a high risk of fraud.

Those who don’t have three years’ worth of accounts or are recently self-employed are being encouraged to make use of a range of other benefits available.

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What other support is available?

Last week the government announced a series of measures to boost household incomes of the self-employed.

Support includes strengthening the welfare safety-net with a £7 billion boost to universal credit, income tax, and VAT deferrals.

Self-employed workers can now access universal credit at a rate equivalent of statutory sick pay.

The minimum income floor of the benefit has been temporarily removed which allows self-employed workers to be treated the same as those employed by a company.

This means that self-employed workers affected by the virus will be entitled to £94.25 per week for up to 28 weeks, which will be paid from day one instead of day four as is typically the case for applicants.

For more about universal credit, visit the government website here.

An alternative for self-employed workers forced to self-isolate or unable to work because of coronavirus is contribution-based employment and support allowance (ESA).

This could see eligible applicants over the age of 25 receive up to £73 per week, permitting you don’t receive a private pension of more than £85 per week.

ESA, which is paid every fortnight in arrears, is now available to those who qualify from day one of sickness instead of the eighth day as is typically the case.

For further details and a guide to applying, visit here.

What’s more, self-employed workers will not be expected to pay the next round of self-assessment tax payments, originally due on July 31, until January 2021 and VAT will be deferred for the next quarter, saving businesses £30bn.

Self-employed Brits can also make the most of £1 billion more support for renters and access to three-month mortgage holidays.

 

If you’re self-employed and concerned about debt during the coronavirus outbreak, speak to an expert advisor on 0808 253 3301.

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Maxine McCreadie

Maxine is an experienced writer, specialising in personal insolvency. With a wealth of experience in the finance industry, she has written extensively on the subject of Individual Voluntary Arrangements, Protected Trust Deed’s, and various other debt solutions.

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Current Version

March 27 2020

Written by
Maxine McCreadie

Edited by
Maxine McCreadie