Support for the Self-employed affected by COVID-19

Thank you for contacting me about support for the self-employed.

As the MP for Penrith & The Border, I am doing everything I can in Westminster and Cumbria to address the concerns of my constituents.  I am feeding in requests to Government for support for all areas of our economy and community and will continue to do so. Equally, I am feeding in to Government regularly and pushing for more flexibility and breadth in the very welcome support schemes that the Government has introduced during this crisis

I welcome that measures have been announced to help self-employed people, many of whom are especially vulnerable during this time. 

These measures take the form of the Self-Employed Income Support Scheme (SISS), which seeks to match the support already afforded through the Coronavirus Job Retention Scheme (CJRS) by providing a taxable grant worth 80% of a self-employed person’s average monthly profits over the last three years, up to £2,500 a month.

Like the CJRS, the SISS will be open for at least three months and will be extended if necessary. 

It is important that this Scheme is fair and that it benefits those whose livelihoods are genuinely at risk due to the COVID-19 pandemic. I understand that to achieve this goal, the SISS has been limited to those who having trading profits of less than £50,000, as determined by the year 2018-19, or an average of trading profits in 2016-17, 2017-18, and 2018-19. These profits must make up over half of your income in 2018-19, or by an average of the past three years.

I should add that, based on my understanding, self-assessment income tax payments that were due to be paid in July can be deferred to the end of January 2021.

I hope that these measures come as a welcome relief to those in self-employment who have been put in a difficult position during this crisis, I will continue to communicate to the Treasury the plight of the self-employed during the COVID-19 outbreak, and follow this issue closely to ensure that the help promised is effectively delivered. (Please see below for my views on the most frequently questioned aspects of the Government support for the self-employed.)

I appreciate that this is a confusing, worrying and uncertain time; and that although the unprecedented measures introduced so far have been well-received, further clarification of the extent and application of these is still needed. I want to assure you that I will continue to monitor and highlight to Government the concerns brought to me, and to share any new information, as I receive it, via my website. In the meantime, I refer you to the following sites for the most recent Government advice:

I am regularly feeding in and flagging issues to Government Ministers with regard to its response to Covid-19 and receive regular briefings. Please know that the Government is listening and please be assured that the Government is doing everything it can at this difficult and unprecedented time.   

Thank you again for writing and please keep safe.

With best wishes
Neil

 

Further information

Qualification
I understand that both self-employed individuals and memberships of partnerships can apply. Applicants should have submitted their 2018-19 Income Tax Self-Assessment tax returns, continued to trade in the tax year 2019-20, be trading currently (or would be if it were not for the COVID-19 outbreak), intend to continue trading, and have lost trading profits due to COVID-19.

Timing of the Announcement
I recognise that the announcement of these measures took some time, and I am very sorry for this, but please understand these were complex measures and not easy to introduce quickly. My colleagues at the Treasury have assured me that this support will be backdated, and that the delay in its announcement was simply to ensure the support package was well-designed before its full announcement. 

Backdating and June Payment Date
I welcome that, so far as I understand, these grants will be backdated to March. I recognise that there is some frustration regarding the grant payment date of June, I will be speaking with colleagues at the Treasury to ensure that they have considered the assistance available to the many vulnerable self-employed people who will struggle during the meantime due to cash-flow. 

Higher Taxation
I am aware of speculation of changes to taxation for the self-employed, based on the Chancellor’s comments in his speech announcing the measures. I understand that this is not current Government policy, and that careful consideration will be given to any proposed amendments to current rates. It should be stressed that the Government keeps all taxes under review. I shall be following the developments on this issue closely, and I will ensure my colleagues at the Treasury are aware of the strength of feeling on this issue.

Other Welfare Available
I welcome the changes to the welfare system that mean that self-employed people can now have full access to Universal Credit. This will provide support of up to £1,800 per month. 

Directors of Small Limited Companies
I realise this may not be the response you wanted to hear, but I hope it comes as a reassurance that if you are paid a salary as a company director by PAYE, then you can be furloughed through the Coronavirus Job Retention Scheme.

Coronavirus - Dividend (Self-Employed)
I am sorry to say that people who pay themselves through a mixture of salary and dividends will find that dividends are not covered by the Self-Employed Scheme. I understand that it would be very difficult to know whether any dividend payments resulted from work or from passive investment. I realise this may not be the response you wanted to hear, but I hope its comes as a reassurance that if you are paid a salary as a company director by PAYE, then you can be furloughed for the Job Retention Scheme. 

Coronavirus – Earning over £50,000
Colleagues at the Treasury assure me that the £50,000 threshold was chosen after careful consideration, to ensure the help available is targeted at the most vulnerable individuals during this crisis. I realise this may not be the response you wanted to hear, but I understand that as help is available through Universal Credit, anybody who has not met the qualifying criteria for SEISS and is genuinely in need should be able to claim help of comparable value through Universal Credit.