The chancellor, Rishi Sunak, has announced a unique set of measures to help protect the income of the self-employed and freelancers. The Self-Employed Income Support Scheme will provide direct cash grants of 80% of profits, up to £2,500 per month for at least three months.
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 your income in these periods must come from self-employment.
In an attempt to minimise fraud, only those who are already in self-employment and meet the above conditions are assured that they will qualify. HMRC will identify eligible taxpayers and contact them directly with guidance on how to apply. Provisions via the welfare system and local council funding are already in place for individuals who do not meet all of the scheme's criteria. It has also been suggested that those self-employed workers may still be able to apply, whilst providing as much supporting information as possible. The cash will be paid directly into people’s bank accounts.
The income support scheme, which is being designed by HMRC from scratch, will cover the three months to May. Grants will be paid in a single lump sum installment covering all 3 months, and will start to be paid at the beginning of June.
The financial package will be a huge relief to many, who have been in the precarious position of foregoing their income to adhere to the ‘stay at home’ advice.
The package has taken far more time to conceive and push through compared to the employed package for larger business. Difficulties identifying the self-employed, determining a regular pay package, identifying who is struggling and in need of financial help, along with attaining bank details of individuals, have been the four main hurdles faced by the Treasury.
Kevin Wellman, CEO of the Chartered Institute of Plumbing and Heating Engineering (CIPHE) said, “We are delighted that the Government has listened to our recommendations, put forward via the the Construction Industry Council (CIC). The bodies involved in the CIC have worked tirelessly to put the health, wellbeing and financial security of those in the construction industry at the forefront of the Government’s Covid-19 response.
“We at the CIPHE have seen first hand the many difficulties faced by the self–employed in our industry and there is still much work for Government and HMRC to put the necessary systems in place. In the meantime those in the industry must have immediate access to other available government support, ranging from universal credit to business continuity loans where individuals have a business bank account.”
The CIPHE warns it is still unclear how the new measures will be policed and if individuals will have to pay back some of the grant, should earnings for the rest of the financial year be high. Questions have also been raised around future changes in taxation to ensure a level playing field for the self-employed. Kevin continued, “While we wholly welcome the chancellor’s announcements, we do need to see further clarification on the financial package available, along with firm timescales for payments. We at the CIPHE are working around the clock to get relevant information out to our members and give recommendations to Government on your behalf. These announcements are good for the industry, but there is still much work to be done.
Information on the Self-Employed Income Support Scheme can be found at: https://www.gov.uk/guidance/claim-a-grant-through-the-coronavirus-covid-19-self-employment-income-support-scheme