Coronavirus: Self-employed to receive cash grants of up to £2,500 for next three months
The government will pay direct cash grants for self-employed people of up to £2,500 per month for at least the next three months.
The Chancellor, Rishi Sunak, announced today (March 26) that up to 80 per cent of their average monthly trading profit over the last three years will be covered by the scheme to mitigate the financial impact of the coronavirus crisis.
It came amid mounting concern from the self-employed that they had been left behind amid a slew of schemes to help businesses.
The government said the Self-Employed Income Support Scheme would cover 95 per cent of people who receive the majority of their income from self-employment, such as many cleaners, plumbers, electricians, musicians and hairdressers.
The Chancellor 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.”
Who is eligible?
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, an individual must
- have received more than half of their income in these periods from self-employment; and
- already be in self-employment.
The scheme also applies to members of partnerships.
Those who pay themselves a salary and dividends through their own company are not covered by the scheme. However, they will be covered for 80 per cent of their salary by the Coronavirus Job Retention Scheme if they are operating PAYE schemes.
How will I apply?
HMRC said it will identify eligible taxpayers and contact them directly with guidance on how to apply once the scheme is operational. Do not contact HMRC now. Further details will be announced.
When will it be paid?
The scheme will cover the three months to May and grants will be paid in a single lump sum instalment covering all three months. It will start to be paid at the beginning of June.
How was the scheme drawn up?
HMRC is designing the scheme from scratch after consultation with the TUC, the Federation of Small Businesses and IPSE - The Association of Independent Professionals and the Self-Employed.
Are there any other measures available for the self-employed?
Before grant payments are made, the £7billion injection to the Universal Credit will help some self-employed people, who will also benefit from the wider income tax and VAT deferral schemes. For renters, £1billion of support has been announced, while homeowners can access three-month mortgage holidays from their lenders.
Business leaders and politicians react
Cambridge’s Labour MP Daniel Zeichner said: “I broadly welcome this announcement, but it has been a long time coming and we need to see the detail.
“What worries me most is that the money won't be coming through until June when I have hundreds of people contacting me right now who have no work and no income and no savings to fall back on.
“I'm not sure the Chancellor completely grasps what life is like for many people.”
John Bridge, chief executive of Cambridgeshire Chambers of Commerce, said: “We welcome the measures outlined by the Chancellor of the Exchequer, Rishi Sunak, this afternoon to support the self-employed and sole traders whose businesses have been affected by coronavirus.
“The Chancellor’s announcement offers a lifeline to the vast majority of the UK’s 5 million self-employed people, many of whom have seen their livelihoods vanish overnight.
“Chambers, along with other business groups, have worked constructively with government to ensure the self-employed receive similar support to those who are employed through PAYE.
“We welcome the scale of this scheme and recognise the complexities involved in its design although it is not a panacea for all ills. It is now critical that the government delivers this practical support to people on the ground as soon as possible. As more information becomes available we will advise the details.”
The CBI also welcomed the announcement.
Dame Carolyn Fairbairn, CBI director-general, said: “Many self-employed people across the UK will be hugely relieved tonight.
“These new measures will provide essential support to those facing significant uncertainty and loss of income.
“Given the complexity of the task, it’s understandable this will take time to deliver. Fast clarity on how and when money will reach their bank accounts will help individuals to plan.
“The self-employed make an immense contribution to our society and across many industries. They will play a critical role in the UK’s recovery once we overcome the worst of the virus.”
The Federation of Master Builders (FMB) said it would be welcome relief for many self-employed people in the construction industry.
Brian Berry, chief executive of the FMB, said: “Construction workers across the country will now be taking a collective sigh of relief knowing they will now be protected in the same way that employees will be if they lose work due to Covid-19.
“I am delighted that the Chancellor has heeded our calls to be generous with his offer to the self-employed, who make up almost 40 per cent of those working in the construction industry.
“Building companies will now also be able to close sites to protect workers and public health without having to worry about the losses faced by self-employed workers on those sites. We now urge the Treasury and HMRC to ensure that all support packages are up and running as soon as physically possible.”
More by this authorPaul Brackley