UK Government Plan to Help the Self-Employed

UK Government Plan to Help the Self-Employed

The UK government will issue up to 80% of the average monthly profits in grants to the self-employed. With this move, the government hopes to assist the self-employed cope with the adverse financial effects of the coronavirus outbreak.

Self-employed individuals will receive a maximum of £2,500 per month. They'll receive the money as a lump sum at the beginning of June. According to Chancellor Rishi Sunak, this shows that the government has the self-employment in mind.

Just last week, the government announced 80% wage subsidies for salaried employees.

At the moment, the number of COVID-19 deaths in the UK stands at 578. Just after Chancellor Rishi announced to help the self-employed, the number of COVID-19 deaths rose by 100.

Before the announcement, people blamed the UK government for not extending help to the self-employed in the aid packages that it announced earlier. In the government’s defence, Chancellor Sunak said that the steps the government already took were making a difference.

Self-employed individuals will benefit from government grants as follows:

• They will be eligible for up to 80% of their average monthly profits. The average will be for the past three years. The government will peg the maximum monthly grant at £2,500.

• The 2018-19 tax returns filed in January should show that 50% or more of their income came from self-employment. Those who missed the filing deadline can still receive the grant so long as they file their returns in the next four weeks.

• Those who receive the grant should earn less than £50,000 annually. In absolute numbers, this is 3.8 million of the 5 million registered as self-employed.

• The difference between the employed and self-employed schemes is that the self-employed can continue working as they receive support.

• Self-employed people will receive the money in their bank accounts in June from the HMRC. The government will backdate the funds to March.

• The grants are taxable, and all beneficiaries should declare them as they file returns by January 2022.

• Company owners who receive dividends are not eligible for the self-employment grant.

Additionally, those who just recently became self-employed do not qualify for the grant. Such individuals should get support from the benefits system. 

Chancellor Sunak added that coming up with a practical scheme was not easy because of the diversity of the self-employed. Some of these individuals earn a lot of money. However, this plan will benefit 95% of those who get most of their income via self-employment.

Speaking on the BBC's Question Time show, Communities Secretary Robert Jenrick said that even if one is unable to provide complete three-year financial records, the government will work with whatever they offer and find a way to help.

Following the grant scheme for the self-employed, the Federation of Small Business (FSB) celebrated the government's move. According to the FSB, the government has made a significant move, despite being imperfect.

John McDonnell, the Labor shadow chancellor, expressed worry about the funds being too late for millions. He argued that people would need urgent support within the next two weeks. Otherwise, the self-employed will feel compelled to work, endangering others' lives.

Jeremy Corbyn, Labor leader, blamed the government for not recognizing early enough just how financially severe the COVID-19 crisis is. Torsten Bell of the Resolution Foundation think tank pointed out the government for giving more support to the self-employed than employees who lose their jobs or have their hours cut.

The multi-billion pound Coronavirus Self-Employment Income Support scheme shows the brutality of the pandemic to the economy. The shutdown worsens the problem even though it helps to control the spread of the virus.

The government aims to create a scheme that prioritizes employed jobs. As such, banks will have to support the self-employed with overdrafts until they receive the grants in their bank accounts in ten weeks.

Chancellor Sunak said that that he can no longer justify that the self-employed should pay less tax than the employed. However, this will be a discussion for another day.

The UK currently has 11,600 COVID-19 positive cases. The actual number of positive cases is likely to be far higher. Even though Dr Jenny Harries (England's deputy chief medical officer) declined to give predictions, the demand for intensive care will likely peak in two or three weeks.

Dr Jenny said that the UK is just starting to feel the pinch of social distancing interventions. However, she thinks that things are moving in the right direction. The government has imposed strict controls in everyday life to curb the spread of the virus.