Will the self-employed get help from the Government during coronavirus lockdown?

SELF-employed workers can get up to 80 per cent of their profits lost because of disruption to their business caused by the coronavirus crisis. 

Chancellor Rishi Sunak announced the "unprecedented" bailout package aimed at helping the Britain's army of self-employed workers this evening in an address to the nation.

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Hairdressers, bakers, childcare providers, taxi drivers and café owners who are in despair at seeing their business fall away have criticised the Government for "excluding" them from his jobs retention scheme so far. 

Average monthly profits from the last two years of up to £2,500 a month will be used to calculate how much self-employed workers can claim.

The scheme is similar to that promised to workers on the PAYE payroll last week by Mr Sunak.

But it will only be available to available to people who's the majority of their income comes from self-employment and they must have been working for themselves for the past two years in a bid to cut back on fraudulent claims.

Anyone who missed the January self-assessment deadline is also being given a four week extension to file their tax return.

Here's what help has been promised to self-employed workers during the coronavirus crisis:

What's help has been promised for self-employed workers today?

The government is to pay up to 80 per cent of wages for self-employed workers based on their average monthly profits over the last two years.

This will be up to a limit of £2,500 a month. It’s only available to those with profits of up to £50,000.


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How will it work and when will I get paid?

You won’t get paid until the first week in June but payments will be backdated until March 1.

It will only be available to those “adversely affected” by the coronavirus shutdown and half of their income in these periods must come from self-employment.

HMRC will contact directly, ask you to fill in form and pay into your bank account.

Those who pay themselves a salary and dividends through their own company are not covered by the scheme but will be covered for their salary by the Coronavirus Job Retention Scheme if they are operating PAYE schemes.

What help has previously been promised for self-employed workers?

Increased Universal Credit payments

Universal Credit is the controversial new welfare system, which replaces six benefits – including working tax credit and housing benefit – with one monthly payment.

You may be able to claim Universal Credit if:

  • you’re on a low income or out of work
  • you’re 18 or over (there are some exceptions if you’re 16 to 17)
  • you’re under state pension age (or your partner is)
  • you and your partner have £16,000 or less in savings between you
  • you live in the UK

There's no set amount you can earn, or set number of hours you have to work, as these vary by claimant.

The Universal Credit standard allowance – the amount you're paid each month – currently ranges between £251.77 and £498.89 depending on your age and whether or not you're part of a couple.

You can get extra on top if you have children, a disability or health condition, or you care for someone with a disability.

But on Friday, March 20, Mr Sunak revealed he was upping these limits by up to £1,040 for new and existing claimants from April 6.

This is on top of a planned increase linked to inflation.

The rise is automatic so you don't need to do anything to get it.

In addition, Mr Sunak suspended the self-employed Universal Credit minimum income floor for everyone affected by coronavirus.

He says this will enable more self-employed people to access the benefit at a rate equivalent to statutory sick pay for workers, which is at least £94.25 a week.

The Universal Credit minimum income floor applies to those who've been self-employed for more than a year.

It's the amount you're thought to earn each month, and is used to work out how much Universal Credit you get on top of your earnings.

But critics say the problem is that self-employed people's incomes fluctuate which means they can end up with less in benefits than those on fixed hours.

The idea is that the minimum income floor is the equivalent of someone of your age working full time on minimum wage.

If you earn below this level in any month, you are treated as earning the minimum income floor.

If you are earning more than the minimum income floor, your actual earnings are taken into account instead.

This is also coming in from April 6 for new and existing claimants.

Those off work from coronavirus may also be able to get help with their income loss by signing up to contributory Employment and Support Allowance (ESA) either instead or at the same time as getting Universal Credit.

To be eligible, you need to have worked as an employee or been self-employed and paid enough National Insurance contributions in the past two to three years.

Deferred income tax and VAT payments

The Government has also given people longer to pay their income tax, extending payments due in July 2020 under self assessment to January 2021.

VAT payments have also been delayed from now until June 30, although Turn2Us points out that most self-employed people earn below the £85,000 threshold to pay VAT in the first place.

Check if you're eligible for grants and loans

The Government has launched a scheme to help businesses in England only (the rules are different elsewhere) with loans and grants but whether you qualify if you're self-employed depends on whether you're also a small business.

Under this, small businesses that already pay little or no business rates may qualify for a one-off grant of £10,000.

Here, you don't need to do anything as your local authority will write to you if you are eligible.

Loan holiday

You may also be entitled to loan, mortgage and credit card payment holidays, as well as having interest or fees on debts frozen.

Contact your financial provider in the first instance to see what it's offering – although be prepared for long waits on the phone.

Check for charitable grants

Many charities offer non-repayable grants to help individuals on low incomes.

You can use Turn2Us's grant finding tool to check if you're eligible.

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