You are here: Home - Specialist Mortgages - News -

Self-employed to receive taxable grant worth up to £2,500 a month

0
Written by: Paloma Kubiak
26/03/2020
The scheme doesn't open until June, but the Government said that 95% of the self-employed will be eligible
Self-employed to receive taxable grant worth up to £2,500 a month

The ‘forgotten’ army of self-employed workers will be eligible for financial support from the government, the chancellor has confirmed.

Speaking at the daily conference updating the nation on coronavirus and the government’s response to the pandemic, Rishi Sunak confirmed the self-employed adversely affected by the health crisis will be eligible for financial help.

They will be able to receive a taxable grant worth 80% of average monthly profits based on the last three years of tax returns, up to a maximum of £2,500 a month.

It will be open to those across the UK for at least three months, starting in June, though Sunak said it can be extended for longer if necessary.

The chancellor said the government scheme will help 95% of the five million self-employed workers and only those who have a tax return for 2019 will be able to apply. For those who have recently gone self-employed, they won’t be eligible for this support.

For those who may only have one or two years of accounts, the government will use those profits to form the basis of the grant.

The remaining 5% who won’t be helped by the scheme are those who have a trading profit in the region of £200,000 and Sunak said the help is for those who make the majority of their money from being self-employed.

Importantly, self-employed will be able to gain the grants and continue to do business. However, it’s only available to those with trading profits up to £50,000 a year. HMRC will contact these workers direct and pay the grant into bank accounts.

Further, for those self-employed workers who missed the January 2020 tax return deadline, they will have four weeks from today to submit their return.

As the scheme will open from June, Sunak confirmed that for now, self-employed workers can apply for Universal Credit.

‘Fair and deliverable’

Sunak said it has been very difficult to come up with a rescue package for the self-employed, adding: “We’re covering the same amount of income as we are for furloughed employees, who also get a grant worth 80%. That’s unlike almost any other country, making our scheme one of the most generous in the world.

“The scheme I have announced today is fair. It is targeted at those who need it the most and crucially, it is deliverable. It provides an unprecedented level of support for self-employed people.”

However, in delivering the package of measures, Sunak hinted at equalising tax and national insurance for the employed and self-employed. Currently self-employed pay less in NI, though unlike salaried workers, they don’t have access to sick pay or holiday pay.

He said: “It’s an observation…the inconsistency between the self-employed and employed and the action today represents £10s of billions of pounds, treating them [self-employed] the same as employed and it throws into question whether it’s fair for everyone going forward.”

‘Forgotten workers’

The government has faced criticism over the lack of financial support offered to the self-employed. This was heightened after the government announced the Coronavirus Job Retention Scheme, guaranteeing 80% of a worker’s wage but it didn’t include help for the self-employed. They had no other option but to apply for Universal Credit.

Charity Turn2us reported a 1,800% increase in self-employed workers using its online benefits calculator in the last week since the announcement of the scheme.

It also calculated the up to five million self-employed households will be up to £780 a month worse off due to the coronavirus outbreak.

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Your Mortgage Guides

Your Mortgage Award Winners 2019-2020

Download our guide to the best mortgage lenders in the UK

Read More >

Read previous post:
TSB and Barclays withdraw more mortgage products

Hundreds of mortgage products are being pulled from across the market as the coronavirus crisis deepens

Close