Help for self-employed workers – the winner and losers and how it works – The Sun
THE government will pay 80 per cent of self-employed workers earnings that have been lost due to the coronavirus crisis.
The "unprecedented" bailout package for people who work for themselves comes a week after the government promised an 80 per cent wage guarantee for PAYE employees.
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Chancellor Rishi Sunak shared details of the Self-Employment Income Support Scheme as he addressed the nation with an update on the national emergency.
He told the five million self-employed workers: "You have not been forgotten. We will not let you behind. We are all in this together."
Those who have been adversely affected by the coronavirus crisis will be given a taxable grant worth four fifths of their lost earnings, worth up to £2,500 a month.
It will be calculated using the average monthly profits from the past three years.
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The scheme be open for at least three months, although it may be extended if necessary.
It's expected to cost the government around £3billion per month.
Self-employed workers won't need to apply for the grant. Instead, those entitled to the scheme will be contacted by HMRC.
The Chancellor, who's only been in the job for just over a month, continued: "We’re covering the same amount of income for a self-employed person as we are for furloughed employees, who also receive a grant worth 80 per cent.
"That’s unlike almost any other country and makes our scheme one of the most generous in the world.
"Providing such unprecedented support for self-employed people has been difficult to do in practice.
"And the self-employed are a diverse population, with some people earning significant profits."
Here we break down who are the winners and losers of Mr Sunak's bailout deal for self-employed workers:
Who are the winners?
Mr Sunak says that the scheme will help 95 per cent of freelancers, including those who made under £50,000 profit in the past three years.
That includes cleaners, plumbers, electricians, musicians, hairdressers and any other self-employed workers who earn less than the annual threshold.
'I had to borrow £200 from my son'
MASSAGE therapist Juliette Easter has been so badly hit by coronavirus shutting down businesses that she has borrowed £200 from her teenage son to get her through this month.
The 47 year-old would normally earn up to £600 a week from her Mobile Massage north London business which she has run for three years, giving her just under £3,000 in a good month. Now that has ground to zero.
She has turned to borrowing cash from her son Joshua, 18, as debts which she would normally have expected to pay easily have been left unpaid.
She told The Sun: “My last client was two weeks ago. I only have £100 in my account and I want that to go back to my son. I reckon I can survive another three days with bills incoming.”
“There’s been nothing for people like me. I pay my taxes, I declare my earnings, I try and do everything right, but I’ve had no help.”
“Obviously a mum never wants to borrow cash from her son, but I have gone from a thriving business to zero in just a month.
I don't feel good about it, but we need that cash for the house and he knows he'll get it back as soon as I get my first job when work starts again.”
She welcomed the new measures – but is still worried about cash in the short-term.
She said: "It doesn't really help me straight away. I want them to offer immediate assistance to people most in need. I do understand that is hard for the government to work out who that applies to but I worry what I will do for tomorrow and next week.”
Those long-term self-employed workers who have been unable to operate their businesses or lost work because of the outbreak will also be able to backdate their lost earnings to March 1.
Households where the majority of earnings come from self-employment will also be entitled to help.
People who missed the January self-assessment deadline have also been given an extra four weeks to submit their tax return and become eligible for the grants.
Who are the losers?
The most obviously losers are the very recently self-employed. Freelancers who have been working for themselves for fewer than three years can submit the accounts they have but Mr Sunak admitted that those without accounts may not be eligible for the scheme.
They won't be able to claim the grant at all and instead will have to rely on savings and Universal Credit if they cannot cope with the loss of income.
People who are suffering now will also have to hold off until June 1 to get the payout.
Self-employed people who earn more than £50,000 also wont be able to get help through the scheme.
Mr Sunak says that this is to "make sure that the scheme provides targeted support for those most in need".
Only people who's majority of income comes from self-employment will benefit from the scheme.
That means if you have two jobs and a smaller part of your income comes from working for yourself then you won't be able to get help.
I worry it will take too long
ELECTRICIAN and dad-of-three Darren Lawton, 37, is worried he won’t be able to pay his bills as his business suffers during the coronavirus shutdown.
Geordie Darren, who has run North East Electricals, said:“I’ve had one job since the shutdown started. Yesterday, an elderly lady rang and her electrics had gone off.
“I couldn’t leave her in the dark with no power, I felt I had to go. But then I worry about giving her the virus – so I had my hand sanitiser and I have a protective suit, overshoes and a mask.
“I made her stay in the other room and kept my distance while I worked. I’ve earned just that £50 since it all started.”
Darren has always saved for a rainy day, but he could never have foreseen losing his own income, as well as that of his wife.
Darren’s wife Nichola, 38, has also lost work and – without government help – he is fretting how to look after kids Amelie is 8, Dexter is 6, and Finlay, 4.
He says:“My own mortgage is £600 per month, council tax is £320. On top of that I have all my utility bills.
“I have a bit saved, but you hear it’s months we’ll be in shutdown for and I won’t last that.
On the new measures announced today, he said: "It's good news. I won't complain too much about it – it's far better than what I thought I had last week – my main anxiety is how long it will take to come through.
“I worry for others. It will take until June? I hope I can cling on till then, but I know a lot of other people need that money now."
Those who pay themselves a salary and dividends through their own company will not be covered by the Self-Employment Income Support scheme.
Instead, their salary will be covered by the Coronavirus Job Retention Scheme if they are operating PAYE schemes.
Applicants will have to wait until the start of June before getting paid and they can only be backdated until March 1.
Any loss of earnings due to coronavirus made before then won't be covered.
The grants are taxable, which you will also need to take into account.
What help was already in place for the self-employed?
A range of measures has already been set out to help the self employed. These include:
Claiming Universal Credit and benefits
Those who work for themselves have already been told that they may be able to claim Universal Credit if their business has temporarily closed.
Last week, as part of the jobs retention scheme, Mr Sunak upped the Universal Credit standard allowance – the amount you're paid each month – by £1,000 a year.
The rise will come into force from April 6 on top of a planned increased linked to inflation.
The current Universal Credit standard allowance ranges between £251.77 and £498.89 depending on your age and circumstances.
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
In addition, Mr Sunak is suspending the self-employed Universal Credit minimum income floor for everyone affected by coronavirus.
The Universal Credit minimum income floor applies to those who've been self-employed for more than a year.
It's used to work out how much Universal Credit you get on top of your earnings, and is based on what you're expected to earn rather than your actual wages in reality.
This will be suspended as of April 6.
Self-employed workers may also be able to claim contributory Employment and Support Allowance (ESA).
You need to have two to three years worth of National Insurance contributions to be eligible.
Deferred income tax and VAT payments
Workers also now have longer to pay their income tax, under new help revealed by ministers.
The government has pushed back payments due in July 2020 under self-assessment to January 2021.
VAT payments have also been delayed from now until June 30.
Loan, mortgage and credit card 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 to see what it’s offering.
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.
You'll need to enter your postcode and financial information so the charity can see what help is available in your area.
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