Chancellor Rishi Sunak has revealed plans to pay self-employed people 80% of their monthly income up to £2,500 if their work has been hit by the coronavirus pandemic.
The plans will bring support for self-employed people in line with what the government has promised for employed workers who are paid through PAYE, although the scheme will not be available until June.
People will be able to apply for the scheme if they have submitted a tax return for 2019. HMRC has extended the deadline for another four weeks to submit a return to help more people access the scheme.
The scheme will offer a taxable grant up to £2,500 a month based on their average income over three years. It will apply for those who make the majority of their income from self-employment and who make trading profits of up to £50,000. Sunak said it will cover 95% of the self-employed and those it doesn’t cover have average income of £200,000. The three months income will be paid as one lump-sum in June.
For those without three-year tax returns, the government will look at ‘what they have’. For those who are ‘very recently self-employed’ they will not be included.
‘If you are eligible HMRC will contact you directly, ask you to fill out a simple online form and pay the grant straight into your bank account,’ Sunak said.
Up until the lump-sum is paid in June, Sunak said for those waiting will be able to access business support loans as well as universal credit.
Tax rises on the way?
Sunak also strongly hinted that self-employed tax rules could be brought in line with the PAYE system in future to pay for this support.
‘If we all want to benefit equally from state support we must all pay in equally in future,’ he said. ‘It is just an observation that there is currently an inconsistency in the tax treatment of the employed and self-employed’
When questioned by journalists if the government will align the tax treatment of the self-employed with the employed, Sunak said he was not ‘anticipating future policy’. However he said it ‘is now harder to justify’ the argument that the two groups should pay different taxes if both are being now treated the same in terms of government support.
Last week the chancellor revealed plans to pay 80% of wages to workers who are paid through PAYE if their companies decided they did not need to work during the pandemic.
Sunak said the government would publish details on the job retention scheme later this evening to help more businesses
‘If any business is struggling I would urge you to log on to businesssupport.gov.uk and look at what sort of support is available.