The Government yesterday provided an unprecedent package to compensation the self-employed who have lost out on the coronavirus pandemic. This package augments the financial-life line that was make available to employees in the previous week. The financial measures are to compensate the work force of the UK who have to self-isolate or have been prevented from working due to Government restrictions to help reduce the spread of the coronavirus also know as COVID-19.
The following are a list of questions and answers we have put together to help explain the Government’s ‘bailout’ for the 5 million self-employed workers who may be affected.
Who are the Self Employed?
The self-employed are people who work for themselves and are not employed by others. The most known self-employed professions are:
And many more
There has been a delay to get the compensation package to the self-employed as it is much more difficult to establish their average income as often is fluctuates from month to month or year to year than compared with employees whose income is more static over a period of time.
What is the Current Situation with the Coronavirus?
The coronavirus has caused a massive shutdown across the globe of numerous jobs and industries. In the UK alone, it is reported in the FT that millions of jobs are at risk in sectors exposed to the UK’s restrictions on social activities (such as restaurants, bars, clubs, theatres). This follows Boris Johnson’s decision to shutdown the country and limit the ways in which people can interact, aiming to slow the spread of the virus. It is estimated that around a quarter of the UK’s workforce is employed in sectors where demand has shrunk due to the lockdown, with 5 million working in retail and 2.5 million in food services.
Although a rescue package has been granted by the Government to support small business’, ensuring that employees are still going to receive a wage, along with promises of an enhanced statutory sick pay – where does this leave the nations self-employed workers, who are unable to claim these benefits?
There are more than five million self-employed people in the UK, earning an average of £781 a month. The number has risen fast since the financial crash of a decade ago. About 3.8 million of them may be covered by this scheme.
Roughly a fifth are in the construction sector, according to the Office for National Statistics (ONS), with hundreds of thousands of others working in the motor trade, professional services, and education.
I Am Self-Employed What Is Available?
The BBC in its article about claiming compensation for employees were more able to cope with self-isolation as they were informed they would received up to 80 per cent of their wages subsidised by the government, to a maximum of £2,500 but ministers were criticised for not going so far for the self-employed. Following on from these criticisms, Chancellor Rishi Sunak has now announced that the Government will be implementing measures for the self-employed.
Britain’s self-employed workers have been thrown a lifeline by the Government, with a plan named the “Coronavirus Self-employment Income Support Scheme”, this is accessible through the Government website by following the link below:
The Government’s comprehensive report on 26.03.20 was announced can can be found on the following website:
The Chancellor promised that self-employed were not going to be forgotten during the coronavirus pandemic, setting out that they would also be able to claim support worth 80 per cent of their average monthly profits.
How Much Compensation?
The Chancellor said that the unprecedented self-employed income support scheme, which is modelled on similar schemes in countries such as Norway, is worth up to a maximum of £2,500 a month and is estimated to cover 95 per cent of self-employed workers.
The scheme sets out that if a self-employed person has suffered a loss in income, there will be a taxable grant payable to them which can be worth 80 per cent of their profits.
The scheme will be open to those who were trading in the last financial year, still trading now and planning to continue trading this year. More greater the financial history you have filed on your tax return the easier it will be to claim your average income over the previous tax years.
However if the self-employed were earning more than £50,000 on average, they will not be entitled.
Those who are self-employed for less than a year, perhaps because they have just set out on their own recently, you may be forced to look at the benefits system such as universal credit.
Who Can Apply For the Compensation?
As per the Government website, you are able to apply for the scheme if you are a self-employed individual or a member of a partnership. You must also meet the following criteria:
• Have submitted your Income Tax Self-Assessment Tax Return for the tax year 2018 – 2019;
• Have traded in the tax year 2019 – 2020;
• Are currently trading at the point that you apply, or would be except for the coronavirus;
• Intend to continue to trade into the tax year 2020 – 2021;
• Have lost trading/partnership trading profits due to the coronavirus
In order to apply, your self-employed trading profits must be less than £50,000 and more than half of your income must come from self-employment.
Unfortunately, those who are recently self-employed and do not have a full year of accounts will not receive any help under this scheme. The chancellor said they would have to look to the benefits system for support.
Furthermore, any Self-employed people making more than £50,000 a year will not be able to benefit from the scheme. However, the Treasury has pointed to a range of other measures for these people to make use of, including interest- and fee-free loans, VAT deferral, business rates suspension, income tax measures and council tax breaks.
What steps Do I Need To Take to Claim The Compensation?
In order to claim the help, there will be an application that must be completed. HM Revenue and Customs (HMRC) will use existing information to identify those eligible and will invite applications. The application will require them to confirm that they meet the eligibility requirements and provide evidence in support of the same.
If not much evidence is available to show you are eligible, this does not mean you are completely on your own. The Communities Secretary Robert Jenrick asserted that even if self-employed workers are unable to provide “full financial records going back three years” that the government urges you people to give what evidence you have and the HMRC will see what they can do.
If you are eligible, the payment will be made straight into a bank account, which eligible taxpayers will need to confirm on their application form. As of the moment the scheme is not live, so you do not need to contact HMRC right now. If you are eligible, HMRC will contact you directly. Once HMRC has received your claim, and you are eligible for the grant, they will contact you to tell you how much you will get and the payment details.
Those who pay themselves a salary and dividend s through their own company are not covered by the scheme but will have 80% of their salary covered by the “Coronavirus Job Retention Scheme” if operating through PAYE.
How Long Will It Take To Claim My Compensation?
It is anticipated that the money paid to self-employed workers through the scheme will not arrive until June. Whilst the Government pledge to match the 80 percent of earnings has been widely welcomed, the chancellor is facing claims that many will struggle to wait until then.
Those struggling with the impact of coronavirus on their business will have to wait months and may potentially have to sign up for universal credit in the meantime, which involves a five-week wait for the first payment.
Coronavirus Compensation Scheme
If you have been forced to work by your contractor where they have failed to provide adequate protection to you at work for instance failure to keep workers 2 metres apart, and or a failure to provide personal protective equipment such as masks, a failure to provide any or any adequate washing facilities and similar you may be be entitled to claim under a coronavirus comepensation scheme if you contract the virus. If you are in any doubt contact our solicitors for COVID-19 claim who will help you further.