COVID-19: Why isn’t the government doing more to help the self-employed?
While employees will naturally be anxious about their jobs because of the damage COVID-19 has done and is still likely to do, many of the UK’s 4.8m self-employed people (aka sole traders – about 15% of the UK workforce) are worried sick. You could be among them.
Self-employed people don’t ordinarily get Statutory Sick Pay, of course, so, getting sick or having to self-isolate would be a big concern. And in recent weeks, many self-employed people have seen their bookings, orders and sales fall, while the more unfortunate have had all future work cancelled.
Chancellor Rishi Sunak’s first package of COVID-19 business support (announced on 17 March) won’t have helped many self-employed people. Some organisations, chief among them IPSE (the Association of Independent Professionals and the Self-Employed), have been calling for much more government help for freelancers and the self-employed.
On 20 March, Sunak announced his second package of COVID-19 business support, which included a government promise to pay 80% of the wages of employees who would otherwise have been laid off because of COVID-19, up to a monthly cap of £2,500. Some believe it could save hundreds of thousands of UK jobs.
But – what about the self-employed?
1. The Chancellor has announced that “self-employed [people who have COVID-19 or who are self-isolating] can now access, in full, Universal Credit at a rate equivalent to Statutory Sick Pay.” SSP is paid at £94.25 a week and is payable from first day of sickness (in COVID-19 cases), not the fourth, as is usually the case. Normally payable for 28 weeks, in COVID-19 cases, it’s payable for two weeks maximum. And, according to government website gov.uk, SSP can be claimed by “individuals who are caring for people self-isolating in the same household and therefore have been advised to do a household quarantine.”
2. As reported by The Guardian: “The government will suspend the minimum income floor [ie assumed level of earnings], which is the amount the DWP uses to [decide] your Universal Credit payment each month.” Applying for Universal Credit will now be easier, says the government. If they’re self-isolating, people will be able to claim Universal Credit and get advance payments upfront without needing to attend a job centre.
3. According to the Understanding Universal Credit website: “If you and/or your partner are responsible for paying rent for the home you live in, or if you have a mortgage, Universal Credit may provide help towards the cost.”
And: “If you receive Universal Credit you may pay less in Council Tax, but you will need to apply for that separately. You can start the process to apply for Council Tax Reduction on gov.uk. You can apply for a Council Tax Reduction straight away.”
• The government operates a Universal Credit helpline on 0800 328 5644 (Monday to Friday, 8am to 6pm, charges apply). You can apply for Universal Credit online.
4. VAT-registered self-employed workers (aka sole-traders), contractors and freelancers (ie those earning more than £85k a year) may welcome the news that VAT payments are to be deferred for three months.
5. And “Income Tax payments due in July 2020 under the Self-Assessment system will be deferred to January 2021”, which may ease the cash-flow concerns of some self-employed people. As explained on gov.uk: “No penalties or interest for late payment will be charged in the deferral period.”
6. HMRC has also scaled up its Time to Pay scheme to “all firms and individuals who are in temporary financial distress as a result of Covid-19 and have outstanding tax liabilities.” That includes the self-employed.
Self-employed people who employ others can reclaim up to two weeks’ SSP per employee paid for sickness absence because of COVID-19. Business rate holidays and grants that have been announced will benefit few self-employed workers, with most working from home or remotely. Some self-employed workers may benefit from the new Coronavirus Business Interruption Loan Scheme, while others will be reluctant to take on more debt.
“Nowhere near enough” for the self-employed
IPSE has warned that the government’s COVID-19 response measures leave the self-employed “trailing far behind employees”. IPSE’s Andy Chamberlain commented: “The government has done nowhere near enough to support the self-employed.” In fact, he said, instead of supporting the self-employed to help them keep their businesses going, it is pushing them into the benefits system, where the amount of money available won’t cover their costs.
He continued: “We urge the Prime Minister and Chancellor to match the steps they’ve taken for employees and create a Temporary Income Protection Fund for the self-employed. This should give a temporary, targeted cash injection to the businesses that are struggling most – a financial boost to make up for lost income and keep them afloat.”
Talk is cheap – it’s time for action
The Federation of Small Businesses is equally unimpressed. A spokesperson said: “The question at this point is – with firms being forced to close – why have the self-employed been excluded from the commitment to pay 80% of earnings?
“It cannot be right that an employee currently earning £25,000 a year could access £20,000 per annum through the new job retention scheme, while someone who’s self-employed earning the same might only access around £5,000 worth of support.”
If the government does not act soon to help the self-employed, it is feared that many of their businesses will be among the victims of COVID-19.
Mark Williams is a freelance editorial consultant, editor, journalist and SME content specialist with more than 25 years’ experience. He has written for The Guardian, numerous leading brands and award-winning magazines and websites.