Following Chancellor of the Exchequer, Rishi Sunak’s announcement on the (26/03/20) that a support package for the self-employed is to be set up, where contractors and freelancers will be able to claim 80 per cent of their earnings, a maximum of £2,500 a month from HM Revenue & Customs (HMRC), it has been revealed that this will only help 3.8 million of the 5 million self-employed workers in the UK.
This is according to Kingsbridge, a specialist insurance broker as it has warned that those who are self-employed working through a Personal Services Company (PSC) will not benefit.
Company owners who pay themselves a dividend will not be covered, also you are only eligible if you have a trading profit of less than £50,000 in 2018-19, or an average trading profit of less than £50,000 from 2016-17, 2017-18 and 2018-19.
Nicola Hayman, legal manager at Kingsbridge, said:
While the package for self-employed workers that the Chancellor has unveiled will no doubt be welcome news for many sole-traders, it is likely that over a million self-employed professionals across the UK will fail to benefit from the scheme – and that includes most limited company contractors.
Yes, those who pay themselves a PAYE salary will have 80 per cent of that covered by the Coronavirus Job Retention Scheme. But, in reality, that amount is often likely to be a small percentage of what these professionals need to sustain themselves and their businesses – particularly during this difficult time.
Once again, government policy has demonstrated little parity between how self-employed and employed individuals are assisted: employed individuals will benefit from government support regardless of their income or length of tenure, while self-employed individuals will have to hit strict criteria to receive a grant. As is often the case, the line which divides those who are genuinely in business on their own account is clear.