The government will pay 80 per cent of self-employed workers’ wages, up to £2,500 a month, to deal with the economic fallout from coronavirus.
The package was announced by chancellor Rishi Sunak today, giving self-employed workers the same support announced for traditional workers last week.
It will be available for any self-employed person who has annual profits of up to £50,000 and will be available from the start of June.
“The government will play self-employed people a taxable grant worth 80 per cent of their monthly profits of the last three years up to £2,500 a month,” he said.
“It will be open for at least three months and I will extend it for longer if necessary.”
Sunak added that the scheme will only be available to people who earn the majority of their income from self-employment and to people who submitted a 2019 tax return.
Sunak said the package will be available for 95 per cent of people who are self-employed and called it “one of the most generous in the world”.
The package of measures were praised by GMB Union general secretary Tim Roache, who said “millions of self-employed workers will sleep easier tonight”.
He added: “Food, rent, utilities aren’t cheaper if you’re self-employed and for many work has dried up, so it’s right and welcome that support will now be put in place.”
It also got the nod of approval from Federation of Small Businesses (FSB) national chairman Mike Cherry.
He said: “The self-employed community underpins the UK economy.
“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.”
Institute for Fiscal Studies (IFS) director Paul Johnson said: “Huge package for self-employed, more generous than for employees as they can keep earning and get 80 per cent of up to £2,500 per month.
“Will be very expensive.
“But it seems that if you reported just over £50,000 profits recently you get nothing, just under and you get full package.”
Today’s announcement comes after Sunak said last week that the government would pay 80 per cent of employees’ monthly wages, up to £2,500, for those who cannot work because of the Covid-19 fallout.
Any business, regardless of size, can apply for the wage bailout and that there was “no limit” to its size.
Sunak also said he would postpone companies’ VAT payments until June, in business relief worth over £30bn.
This came alongside an already announced scheme to offer £330bn of government-backed loans to struggling businesses.
The government had attracted criticism over the past week for the delay in announcing a package for the self-employed.
Boris Johnson said yesterday it was more difficult to formulate measures, because of “the complexity of their working arrangements”.
Sunak echoed the Prime Minister’s statement at parliament earlier this week.
“There are genuine practical and principle reasons why it is incredibly complicated to design an analogous scheme to the one that we have for employed workers,” he said.
“The ability for the government to distinguish between these people, based on tax returns that are over a year and a half out of date, poses some very significant challenges in terms of fairness and affordability.”