Chancellor Rishi Sunak has announced a new income support scheme that will cover up to 80 per cent of monthly profits for self-employed workers adversely impacted by coronavirus, and promised they will get full access to Universal Credit.
Speaking at the government’s daily briefing on its approach to the coronavirus outbreak today, Mr Sunak said that up to 95 per cent of those who derive the majority of their earnings from self-employment will be able to access the scheme.
The self-employed “have not been forgotten”, he said. “You will be able to claim these grants and continue to do business.”
However, applicants will not have access to cash immediately, with the scheme due to open “no later than the beginning of June”.
The chancellor said that the government had therefore changed the welfare system so that the self-employed can access Universal Credit “in full”.
This would mean that a self-employed person “with a non-working partner and two children, living in a social rented sector, can receive welfare support of up to £1,800 a month”.
Mr Sunak also indicated that the self-employed could be expected to shoulder a higher tax burden in future to address “inconsistency” across different employment types.
“If we all want to benefit equally from state support, we must all pay in equally in future,” he said.
The announcements come after a Commons select committee heard yesterday that the government had processed almost half a million claims for Universal Credit in the past nine days, with more than 100,000 registrations on Tuesday alone.
Self-employed income support scheme
Mirroring the scheme for employers claiming for “furloughed” employees during the crisis, the self-employed who have been impacted will now be able to claim taxable grant worth up to 80 per cent of their monthly earnings, to a cap of £2,500 a month.
The figure will be calculated based on average monthly earnings for the past three years, and to be eligible applicants must have a 2019 tax return. This, Mr Sunak said, would help to minimise fraud.
The government has also provided a retrospective extension of the January filing deadline for tax returns to four weeks from today, “to make sure no one who needs it misses out on support”.
Mr Sunak said that to ensure the scheme provides “targeted support for those most in need”, it will be open only to those with annual trading profits up to £50,000, and only for those who make the majority of their income from self-employment.
The scheme will be open for a minimum of three months initially, and will be extended “for longer if necessary”.
Once it opens, those who are eligible will be contacted directly by HMRC and asked to fill out an online form, Mr Sunak said. They will then be paid “three months’ [grant] in one go”, he said.
In the case of the newly self employed who do not have three years’ worth of tax returns, HMRC will work with them to calculate the correct figure as best as possible.
He added that HMRC is working on the scheme “urgently”, and will deliver it earlier than June if possible.
Mr Sunak said: “The scheme I have announced is fair, it is targeted at those who need it the most, and crucially it is deliverable, and it provides an unprecedented level of support for self-employed people.”
The latest announcements follow a flurry of emergency measures taken by the chancellor to prop up businesses, individuals and the economy.