What help are self-employed getting from the Government?
The Government will continue to support the self-employed under new measures announced by Chancellor Rishi Sunak on Sept 24th, 2020. The extension to the Coronavirus Self Employed Income Support Scheme (SEISS) is designed to protect people in a similar way to employed workers, although some groups still look set to miss out.
The key questions we’re asking are: What help has been provided? What new measures are in place for the winter season? Who is eligible? And, how do you claim the proposed assistance?
What help is being provided?
Sunak announced his original package of measures in the spring. If a contractor suffered a loss in income, a taxable grant was made available to the individual or partnerships worth 80% of their profits up to a cap of £2,500 per month. SEISS was open to those who were trading in the financial year 2018-19 and who planned to continue doing so, but whose business has been impacted by COVID-19.
The help was initially given as one lump-sum payment designed to cover a three-month window. During the summer a second and final payment was announced covering 70% of profits, up to a cap of £2,190 per month for an additional three months – £6,570 in total. Some 2.6 million people claimed at least one of these support payments.
What new measures have been introduced?
Sunak’s winter economy plan has included fresh support grants for the self-employed – although these are less generous than the previous payments. At the start of November, an initial, taxable grant will cover 20% of avenge monthly trading profits, paid out in a single instalment again covering a three month period. This grant is limited to £1,875 in total. The second grant (amount yet to be specified) will cover three months from the start of February 2021 until the end of April 2021.
Who is eligible?
The schemes have always been 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. More than half of a claimant’s income needs to come from self-employment.
Contractors who have recently started working in a self-employed basis will not receive any help under this scheme. This is due to the fact that they are yet to file an annual tax return, thus, HMRC does not have base figures to calculate a grant from.
Individuals with the lowest incomes will receive more generous benefits payments compared with those received before the pandemic. The Government’s initiative also seeks to extend deadline parameters for tax payments through the self-assessment system. Plans can be arranged that would give people more time to pay their full tax bill (up to January 2022).
How do people claim?
The Chancellor is quoted to have said that the scheme will cover up to 95% of those who make their money working as a self-employed contractor. Although there has been a significant campaign raised by MPs in aide of the many people who will miss out on the support.
So how did it all work? HMRC will use existing information to identify those eligible and will extend invitations for application. Once the applicant has confirmed that they meet the eligibility requirements grants will be paid directly into their chosen bank account.
Contractors who pay themselves a salary and dividends through their own company are not covered by the scheme. Though, they will have some of their salary covered by job retention schemes if they operate via declared PAYE. Other support measures have been released previously to support small business operations.
So with these questions answered, how many people will be affected? Well, there are 5.02 million people who are classed as self-employed in the United Kingdom who earn an average of £781 a month.
Statistics say that about 3 million self-employed contractors may be covered by the new scheme, so far 2.6 million have signed up. According to the Office of National Statistics, a fifth of the self-employed workers who have enrolled are in the construction sector, with hundreds of thousands of others working in the motor trade, professional, and education services.
To contradict the new support platforms, the Government have to be extremely conscious that these measures are set up to be finite in both duration and fiscal spending. As such, Sunak has also suggested that tax breaks for self-employed workers such as lower national insurance may end in the near future.
Have your say.
What is your experience with the Government’s support systems? Have you had any trouble claiming a grant or other assistance? Do you feel the Government has done enough?
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