Self-employed people are to be allowed to claim a taxable grant of up to £2,500 per month to help them through the coronavirus outbreak, Chancellor Rishi Sunak has announced.
The new ‘Self-Employed Income Support Scheme’ will allow millions of self-employed workers to access emergency cash covering the next three months, worth up to 80% of their average monthly trading profit.
This brings parity with the ‘Coronavirus Job Retention Scheme’, announced by the Chancellor last week, where the Government committed to pay up to £2,500 each month in wages of employed workers who are unable to continue working through the outbreak.
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.
Applicants will need to be able to show that more than half of their income in these periods have come from self-employment and only those already in self-employment, and whom meet the above criteria, will be eligible to apply.
Self-employed people are advised not to contact HMRC to apply now, because the HMRC will use existing information to check potential eligibility and invite those who are eligible to apply later this year.
Responding to the announcement, TUC General Secretary Frances O’Grady said: “With so many of the self-employed facing a collapse in their earnings the Chancellor is right to act.
“This is a welcome step forward for self-employed and freelance workers across the economy, from construction to the creative industries.
“It’s vital that support reaches workers as soon as possible. Many are already dealing with severe hardship.
“Unions look forward to being consulted on how this scheme is rolled out.”
But opposition parties have criticised the plans, saying today’s announcement doesn’t go far enough and leaves self-employed people waiting months for vital financial support.
John McDonnell MP, Labour’s Shadow Chancellor, said: “We’re relieved that the Chancellor, responding to the advocacy of the Federation of Small Businesses and trade unions and others, has brought forward the protection scheme for the self-employed.
“My worry is that if people cannot get access to the Scheme until June it will simply be too late for millions. People need support in the coming days and fortnight.
“Asking people to rely on Universal Credit when more than 130,000 people are queuing online will be worrying to many people, so there is a real risk that without support until June the self-employed will feel they have to keep working, putting their own and others’ health at risk.”
Ian Blackford, the SNP’s leader at Westminster, said: “It is disappointing that it has taken this long for the UK government to announce measures for millions of self-employed people across the UK, and it is extremely concerning that the people with bills to pay and families to feed will have to wait until June for the support they need now.
“Many self-employed people rely on a regular flow of income, including thousands from low-income households and key workers, and they need support now.
“However, the Chancellor’s delayed plans fail to deliver for many households already in difficulty.
“While they are being forced to wait for months, they are also being asked to apply to a Universal Credit regime which continues to have a five week wait. This is unacceptable and people will struggle to make ends meet.
“I have repeatedly pressed the UK government to bring forward a package of support that delivers fairness and financial safety. The Prime Minister pledged parity – that rhetoric has failed to have been matched by the UK government’s measures.
“The UK government must use the tax and welfare system to provide a guaranteed income for everyone, and bring forward emergency Universal Basic Income – including increasing UK Statutory Sick Pay to the EU national average, including self-employed people in the Coronavirus Job Retention Scheme, and strengthening welfare protections by increasing Child Benefit and making Universal Credit more flexible.”
Plaid Cymru’s Treasury Spokesperson, Ben Lake MP, added: “This will be a big relief for many very worried self-employed people.
“Concerns still remain, particularly that it will be at least two months until any money reaches the bank accounts of many already struggling self-employed people.
“An emergency Universal Basic Income, as Plaid Cymru called for, would have overcome many of the technical issues that has delayed this scheme and that will continue to mean a delay in people receiving support.
“This is a significant announcement and there will be significant detail that we will need to comb through.
“I hope, however, that this will mean that very many self-employed people will see a glimmer of light at the end of this currently very dark tunnel.”