The Government has said that the three-month cash grants for the self-employed would be increased from 55pc to 80pc of average monthly trading profits, capped at £7,500. The grant is intended to cover them for income lost from the start of November to the end of January.
However, freelancers and contractors do not have the safety net of an employer to guarantee them sick pay. The Government has brought in special measures to provide financial support for members of this group who lose their income, however not everyone is eligible. So what is available and do you qualify?
There has been two rounds of grants so far and a third and fourth round will cover the self-employed from November until February and then from February to the end of April. These are paid in three month installments and calculated based on the person’s profits over the past three years.
The third round, which opens to applicants at the end of November, will pay 55pc of typical earnings up to a maximum of £5,160.
The Government has not yet said how generous the fourth and final grant will be.
Not all freelancers and contractors are eligible. To qualify you must derive most of your income from your self-employed work, have filed a self-assessment tax return for 2019 and not be making profits in excess of £50,000 a year.
Those that do not qualify have been told they should apply for help via the benefits system.
They may be able to claim employment and support allowance (ESA) and/or Universal Credit. The weekly payment for ESA is typically £73.10 or £57.90 for people under the age of 25.
The payments for Universal Credit have been temporarily raised so that the self-employed receive the same amount as someone on statutory sick pay (£94.25 a week).
The Government has also said it will make it quicker and easier for people to access these benefits.
Delays on tax payments
HM Revenue and Customs (HMRC) has set up a dedicated helpline for businesses and the self-employed that find they’re facing financial difficulties. They will be able to receive advice and may be able to delay tax payments. Those concerned that they won’t be able to pay their tax bill because of coronavirus should call 0800 0159 559.
Support for small businesses
Self-employed workers who have set themselves up as a business may benefit from some of the other measures introduced by the Government to minimise the economic impact of coronavirus. These include cash injections of £10,000 for Britain’s smallest businesses, relief from having to pay business rates and the opportunity to apply for loans.
Are the measures enough?
More than a million people are missing out support because they do not qualify for a grant, figures from think tank the Institute for Fiscal Studies show.
Many are not eligible for benefits either. Anyone with personal savings of £16,000 or more – anything invested in a business does not count – is not entitled to any support via Universal Credit. They will have to wait until they have burned through their savings buffer in order to qualify.
Who do they exclude?
Those who have only recently become self-employed are not eligible for a grant as they will not have filled in a tax return last year.
The package also excludes those making profits of more than £50,000 a year and contractors who have set themselves up as a limited company and pay themselves via dividends.
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