Chancellor Rishi Sunak announced self-employed grants last week with help for self-employed and freelance workers ...
He continued, "I know many self-employed people are anxious about the level of support available to them. We will not leave you behind. We are all in this together!" So, the new scheme of income support means that the self-employed and freelance workers are treated with the same parity as furloughed employees who are covered under the Coronavirus Jobs Retention Scheme.
It will pay those people "who make the majority of their income from self-employment" up to 80% of their average monthly profits from the last three years, up to a maximum of £2,500. The support package will be open initially for 3-months, but could be extended if necessary.
To qualify, individuals much have filed a 2018/19 self-assessment tax return which should ensure fraud is minimised. People who only started self-employment in 2019/20 need to "look at the extra support available in the welfare system" which is a shame, but understandable.
The Chancellor also gave those self-employed and freelance workers who didn't file their tax return before the 31st January 2020 deadline an additional 4-weeks to get one filed to ensure they are included in the scheme.
It has been mooted that these individuals should be able to claim under the new scheme as if they were self-employed. However, HMRC suggests that if you are a director of your own company and paid through PAYE you should be covered under the Job Retentions Scheme, but how does a director of a one-director company furlough themselves from their own company?
Many directors take a small salary and the rest in dividends, so if you are like this, you'll only get up to 80% of the small amount you're paying yourself already. It's a bit of a dilemma, isn't it? The dividends won't count.
More clarity is coming all the time, but there will definitely be a wait which the systems are put in place. If a self-employed or freelance worker qualifies, HMRC will contact them directly and ask them to complete an online form, which isn't available yet. The grant will come from June onwards and will be backdated to 1st March 2020.
But what do you do until then? if you've just watched your income disappear in front of your eyes, what can you do right now? Well, the Government recommends accessing a Business Interruption Loan or claiming universal credit in full, but again, there may be a number of reasons a self-employed person may not qualify.
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