New Government Support for the Self-Employed

J Finance Legislative Information

Details of the government package for self-employed and freelance workers during the Coronavirus crisis…

We have it on good advice that help is to be announced by the government later today for self-employed individuals, who will be entitled to up to 80% of their income under a new emergency package.

  • Five million self-employed and freelance workers in Britain will be entitled to up to 80% of their monthly net earnings averaged over the last three years, or £2,917, whichever is lower. This new package was added to the Coronavirus Bill on Tuesday.

Criticism had been levelled at the government over its lack of support for the self-employed, especially when it announced its package for private sector workers at the end of last week.

Freelancers were facing a total loss of earnings and a reliance on universal credit ‘in full’ at a rate equivalent to statutory sick pay of £94.25 per week. A trade union for self-employed workers – The Independent Workers Union of Great Britain (IWGB) – had proposed taking legal action against the government over its ‘failure to protect the wages and jobs of millions of workers’ during the Covid-19 pandemic.

  • The government has also pledged to postpone its IR35 reforms to April 2021, to help freelancers during the Covid-19 crisis.
  • Universal credit standard allowance and working tax credit basic element will also be increased by £1,000 per year for 2020/21.

The government has not yet revealed how they will process the payments or how those that have only recently become self-employed would apply for the grant. It is also not clear whether claims could be backdated to 1 March 2020 in line with previous measures.

This move is part of a series of extreme measures to support the economy following the spread of the Coronavirus across the UK. It was estimated that the government bailout of workers could cost £45bn, a bill that could rise and exceed the amount spent on bank bailouts in 2008, if the health emergency lasts longer than three months.

Self-employed workers represent approximately 15% of the total workforce and are a large part of the economic community, vital to keeping the economy moving as the Covid-19 pandemic progresses.

If you would like to discuss this subject or any other financial matter, please contact us on 01635 521 300 or email contact@jfinance.co.uk.