Rishi Sunak unveils self-employed economic relief package
The government has upped its response to the coronavirus crisis by vowing to pay low and middle income self-employed workers 80 per cent of their average monthly profits in a package expected to cost the Treasury £9bn.
Chancellor Rishi Sunak announced the much anticipated relief package yesterday, giving self-employed workers the same support announced for furloughed payrolled workers last week.
Sunak said the grant scheme would provide an opportunity for the majority of the UK’s self-employed workers to “claim a taxable grant worth 80 per cent of their monthly profits of the last three years up to £2,500 a month”.
Though the three-month scheme was warmly welcomed by business groups, the relief package will only be available to workers who have annual profits below £50,000 and the grant may not be available until June.
Sunak also hinted that the package may mean self-employed workers would have to pay more national insurance after the crisis to bring them in line with the rest of the workforce as the Treasury begins to confront the question of how to pay for its bumper coronavirus package.
Only applicants that have lost money during the coronavirus economic downturn will be eligible, with workers being asked to only claim for the amount they have missed out on.
Financial services company Hargreaves Lansdown questioned why it would take two months for applicants to receive payment, claiming this gap could leave some in serious financial strife.
Mayor of London Sadiq Khan also pointed out that many of London’s self-employed would not be eligible and that “higher than average earnings do not provide the same financial safety net as they do in other parts of the country”.
Tom Evenett, Head of Tax at Big Four firm EY, echoed the Mayor’s concerns, saying “there will be a group of taxpayers who are just over £50,000 – such a hard cut-off could be seen as rough justice.”
He added that the chancellor’s decision to give the scheme a simple cliff-edge “may look like a good decision to him, but possibly not to the self-employed plumber who is earning £50,001 on average.”
The mean annual private sector salary for workers in London last year was £49,704 according to ONS figures, compared to around £30 for the whole of the UK.
However, the chancellor said the package would be available for 95 per cent of people who are self-employed and called it “one of the most generous in the world.
On the whole the measures were met with widespread applause from trade unions and business advocacy bodies.
Trades Union Congress (TUC) general secretary Frances O’Grady, who was involved in talks with Sunak while he was drawing up the package, said “millions of self-employed workers will sleep easier tonight”.
The Federation of Small Businesses (FSB) national chairman Mike Cherry said: “In this moment of a collective national effort to overcome a global pandemic, today’s package is a significant, multi-billion-pound improvement on what was proposed last Friday.
“Many tax-paying self-employed who will be helped by today’s measures will be relieved.”