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Initial support for self employed individuals

The Government is planning on helping the UK’s millions of self-employed workers affected by the COVID-19 outbreak but there is concern it is not treating self-employed workers fairly and not providing them with the same support promised to workers who are employees.

The Government has introduced legislation and the key announcements that are relevant for the self employed were around the Universal Credit system.

There is pressure for the Chancellor to do more and an amendment by the Liberal Democrats has been tabled to the Coronavirus Bill. This would see the Government ‘top up’ self-employed workers’ earnings to up to 80% of their net monthly earnings averaged over three years, with a maximum monthly cap.

Edward Davey, from the Liberal Democrats, said "The five million self-employed people across the country are in real stress and deeply worried. In many cases, they are simply running out of money."

Until the legislation has gone through due process in Parliament, it remains unclear if the amendment will be passed.

However, there have been key announcements that have already been made which are relevant for the self- employed with regards to Universal Credit system. 

The Minimum Income Floor 

This currently means that benefits for self employed individuals are effectively capped at a level linked to minimum wage – which will be suspended from 6th April. This means that those on zero/low income can claim Universal Credit in the same way as someone who’s unemployed. 

Increase in Standard Allowance

From 6th April the Government will increase the standard allowance in Universal Credit and the basic element in Working Tax Credit by £20 per week on top of any planned annual increases. This increase will apply for a full year and all new and existing claimants will be eligible. 

Payments on Account Deferred

The Government announcements also included support for those self employed individuals paying income tax under self assessment. Payments on account due on 31st July 2020 will be deferred until 31st January 2021. No penalties or interest will be charged in the deferral period. 

This will be applied automatically with no application process required. 

What you should do now

Speak to your accountant to understand how these changes will apply and look out for further updates from us covering future Government announcements.

For our latest COVID-19 news and guidance for your business, visit our dedicated Coronavirus Hub.
We will be updating it regularly as we continue to monitor and digest all the latest information.

 

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