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The Chancellor has announced a new scheme to protect the income of low and middle-income self employed people.
The Chancellor has announced a new self-employed income support scheme for those whose earnings come mainly from self employment who are affected by the coronavirus pandemic.
The Government will pay self-employed people a taxable grant based on their earnings over the last three years [or less if they have only been trading for a year or so], worth up to 80% of their average earnings and capped at £2,500 a month. The scheme will run for at least three months.
It matches the job retention scheme announced previously for employed people who are not able to work due to the coronavirus pandemic. The Chancellor made the point that treating both employed and self employed people equally brought up an issue of fairness and this would be reviewed. Commentators believe this may mean increased NI/tax contributions in the future for self employed people.
Those eligible are anyone with trading profits of £50,000, whose income is made up mainly of self employed work and who are already self-employed and have filed a tax return from 2019.
The Chancellor says the scheme will cover 95% of the self employed and it will be accessible from the beginning of June at the latest [and backdated] through HMRC who will pay the money direct into their account after they have filed the necessary information.
He added that this was in addition to other measures previously announced for the self employed, including deferring self assessment payments until January and opening up access to Universal Credit in full to the self employed. And he said anyone who missed the January deadline for their tax return would get an extra four weeks from today so they can benefit from the income protection scheme.
First reactions include those in the childcare sector, who have welcomed the scheme, but are worried about the delay in payments coming through. The Early Years Alliance is calling for interim support for childminders who are providing care for key worker families and vulnerable children and facing falling incomes due to parents keeping their children at home.
Many are worried about those will miss out on the scheme. It is calculated that up to two million people registered as self-employed could miss out, including those who became self-employed after the start of the tax year on April 5th, those who made too little money to pay tax and about one million contractors who work through limited companies.
*More information about the scheme are here.