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Corona Diaries: Government Package for the Self-employed – are you happy with it?

Rishi Sunak, the chancellor, has just announced outline details of the rescue package for the self-employed.

Here’s a summary of the key points from Daniel Barnett Employment Law:

  • a newly self-employed income support scheme will pay self-employed people a taxable grant worth 80% of average monthly income, capped at £2,500pm
  • income will be calculated by taking the average income over the last three years
  • self-employed people can claim these grants and continue to do business (so, it’s not the same as furlough leave, where employees have to remain at home)
  • the scheme is open to anyone with trading profits of up to £50k (this covers 95% of self-employed people). Self-employed people who earn more will not qualify
  • the scheme is only open to those who make the majority of income from self-employment; if you are employed but have a ‘side job’ which is self-employed, you will not be eligible
  • the scheme is only open to those who have submitted a tax return for 2019 (to minimise fraud). However, those who did not submit their tax return by the due date of 31 January 2020, and have not yet submitted one, can still submit a tax return for 2019 within a further four weeks from today
  • there are no steps to take. HMRC will contact eligible self-employed people directly and pay the grant straight into their bank account after inviting them to fill out an online form
  • the self-employed income support scheme will be open to people across the UK for at least three months. However, the scheme is unlikely to be up and running before the end of June, so it will not help with immediate cash flow issues

Seems like a fair and generous package in line with what’s being offered to employees, but not all freelancers will be eligible.

Initial thoughts from my NUJ colleagues:

“I’ve just watched Sunak’s briefing, and am relatively pleased with what has been announced. It doesn’t go far enough to help those at the bottom of the freelance earnings scale, but the timescale for payments notwithstanding, by large it seems fair and reasonable.

Sunak claims that the scheme will benefit “95%” of the self-employed and stated clearly that the remaining 5% are those with profits of over 50K/year who won’t be ineligible for the income support grant. But what about those who, say, became self-employed in the last tax year, and have savings? They cannot claim Universal Credit. Sunak’s 95:5% ratio cannot be correct, and I suspect a significant number of self-employed will suffer.” Dr Francis Sedgemore, Chair, NUJ Freelance Industrial Council

“Sky News reported that only a third of freelancers could be eligible, something to do with them paying comparatively less tax.

Ltd companies are apparently not eligible, those who already received top-ups from Universal Credit, moved to UC from existing benefits like Working Tax Credits, (I know of several freelancers in this position) not eligible.

Twitter is already full of a lot of people who became self-employed since the beginning of the last year tax year who are ineligible, there seem to be a lot of these around, possibly a higher number than anyone imagined.

The money will be with freelancers by the beginning of June, backdated, but what are freelancers supposed to do until then?

Those who earn very slightly more in employment than in self-employment in the last tax year are also ineligible.” Matt Salusbury, NUJ London Freelance Branch Chair, Deputy Editor, The Freelance

“It’s certainly more complex than the headline leads us to believe. I’ve seen a lot of people express concern that that due to starting freelancing recently or having time out for caring/illness that they will miss out on this package.

Some photographers will have high overheads for studio/office rent, equipment lease fees, insurances and software.” Dr Natasha Hirst, Photographer, Freelance Industrial Council  

NUJ statement here.

And from Caroline Norbury, CEO of the Creative Industries Federation and Creative England:

“We are seeking urgent clarity for those creative workers who may be most in need and fall between these schemes including those who commenced self- employment after April 2019, recent graduates, those paid in dividends, temporary workers and those short-term contractors normally paid by PAYE. We must ensure that these packages are truly comprehensive and accessible to all.”

Lots of chat about this on Twitter – the main concern seems to be that nothing will be paid until June. What do people do until then? Can you apply for Universal Credit to tide you over? What if you’re above the savings threshold? Newly registered as self-employed? Or a contractor or a sole director/small limited company like me – and therefore not eligible? Not all sole directors are like Boris’ mates!

I asked my accountant Elaine Clark for advice and she sent me this post. Martin Lewis is on the case finding out about sole traders who are a Ltd company and whether they can get help through the Government package. In the meantime, let’s keep making noise on Twitter.

Send your questions/comments to @NUJOfficial @NUJ_LFB @Bectu @Creative_Fed @EquityUK @CarolineNorbury @TracyBrabinMP @IPSEWestminster @RishiSunak and tag me @niccitalbot.

It’s Friday. It’s spring – don’t forget the clocks go forward. Enjoy the sunshine and have a relaxing weekend.  

Photo by Andrew Neel on Unsplash

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By Nicci Talbot

Founder + Director, Firebird Media

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