Chancellor unveils support
Self-employed offered grants, but not until June
Rishi Sunak: generous
Five million self-employed workers have been offered a package of grant support and tax measures to help them cope with the health lockdown.
However, Chancellor Rishi Sunak said the money would not be available until June, prompting warnings that thousands of businesses could go bust as they cannot survive that long without income.
The new deal includes a taxable grant worth 80% of average profits over the past three years, up to £2500 per month. It will be available for an initial three months but will be extended if necessary.
Mr Sunak said the grant is only available for those with trading profits of up to £50,000, who make a majority of their income from self-employment. This is to ensure help is targeted to those in need and does not subsidise the mega-wealthy. Those who have more than £50,000 in annual trading profits – amounting to 200,000 people – will not be eligible. The typical award likely to be £940 a month and the total costs are estimated at £3 billion a month.
He said it would cover 95% of self-employed people who have three years trading, adding that it was more complicated to devise a scheme for this sector of the workforce. It is for sole traders and partners, it does not include those who have set up as limited companies and are therefore employees.
If we all want to benefit equally from state support, we must all pay in equally in future– Rishi Sunak, Chancellor
The government said anyone who missed the tax filing deadline in January would have four weeks from today to submit their tax return. The tax authorities will contact those who are eligible for grants.
However, many trades people, shop owners, musicians and others wondering if they will get through the next two months before any money comes through. Figures reveal the average self-employed worker will lose about £800 a month from the lockdown.
The Chancellor, describing the Self-Employed Income Support Scheme as “one of the most generous in the world” hinted at equalisation of taxation in future by saying “it is now much harder to justify the inconsistent contributions between people of different employment statuses.
“If we all want to benefit equally from state support, we must all pay in equally in future,” he said.
John McDonnell, 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.”
Carolyn Fairbairn: ‘essential support’ (pic: Terry Murden)
Dame Carolyn Fairbairn, director general of the CBI, 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.”
Liz Cameron, Chief Executive of the Scottish Chambers of Commerce, said: “The chancellor has managed to deliver a support package for the self-employed that prioritises the good over the perfect. It is a complex issue and we acknowledge the challenge the Treasury has faced to make sure they aren’t forgotten.
“In the main, this support scheme will be a great relief to the vast bulk of the 320,000 self-employed people in Scotland who are essential to the fabric of our economy particularly in rural areas. Our plea now is that cash must flow quickly to support our businesses, employees and communities.”
Andrew McRae, FSB’s Scotland policy chairman, said: “This scheme will provide lifeline cash to self-employed people, with help targeted at those on low and moderate incomes.
“It will take a number of weeks for this programme to deliver. Therefore, those who qualify should try their banks for interim finance if required, while doing what they can to manage their outgoings. This will be much easier said than done, but with help on its way many of the self-employed will rest a little easier.”