Mixed reaction from Thurrock's self-employed to aid measures offered by Chancellor

By Neil Speight 26th Mar 2020

The Chancellor delivering his message this afternoon.
The Chancellor delivering his message this afternoon.

THERE has been a less than totally enthusiastic welcome from some members of the Thurrock self-employed community after Chancellor Rishi Sunak's broadcast about aid for the sector this afternoon.

Self-employed workers will be able to apply for a grant of up to £2,500 a month to help them cope with the financial impact of coronavirus, the chancellor has announced.

The money will be paid in a single lump sum, but will not begin to arrive until the start of June at the earliest. Despite that, Mr Rishi Sunak told the self-employed: "You have not been forgotten."

Plans for 80 per cent wage subsidies for staff kept on by employers were announced last week. That prompted calls from the sel-empoyed about what would happen to them.

Today they got the government's answer. Mr Sunak said the steps taken so far were "already making a difference" but it was right to go further "in the economic fight against the coronavirus".

The package offers taxable grants of 80 per cent of average profits over the last three years, up to £2,500 a month.

Those who have more than £50,000 in annual trading profits will not be eligible, and the scheme is not expected to be up and running until June.

Mr Sunak said 95 per cent of those who make most of their earnings from self-employment will be covered, with those who miss out having incomes of more than £200,000 a year.

There will be a grace period of four weeks for people to file tax returns for the last financial year - without which they will not be able to claim.

Mr Sunak said the grants would be available to people across the UK for at least three months, and longer if necessary.

In all, 95% of people who earn most of their income as self-employed would be covered, the chancellor added.

But he went on to say the government "will not be able to protect every single job or save every single business" as the deadly disease brings the economy grinding to a halt.

Almost immediately some local self-employed took to social media to criticise the delay in making payments - and the methodology of the payouts.

East Tilbury resident Liam Judd, who is well known for his community work that runs along side his business, was less than impressed and fears he may get nothing because he is one of the 'five per cent' not included.

"It's not done a lot for us, it will be 'back to work' he said - but said the self-employed had no choice but 'see how next couple of months plan out.'

And a spokesperson for local taxi and private hire drivers commented that they had 'mixed reactions', saying: "Drivers think it's fair as it's equal to the employed but it should of come sooner.

"They are not very happy that they may have to wait till June 2020 but at least help will come.

"They are just worried how they will support their families till help arrives."

Leading accounting and tax advisory firm Blick Rothenberg was quick to comment, saying: "It is fantastic that the Government has introduced a scheme which puts the self-employed on a level playing field as the employed workforce.

"However, there are some notable differences and issues which may suggest that the scheme is not as generous as it first seems, and there are some slightly onerous requirements to navigate.

"Firstly, the scheme is only available to those self-employed persons with average business profits up to £50,000, whereas the furloughed worker scheme had no such cap.

"Also, the scheme does not recognise the fact that many self-employed persons operate their business through a company; this is not necessarily for any tax reason but for limited liability protection.

"It was always going to be difficult for the Chancellor to design a scheme for the self-employed because there are too many variables in play, and it appears that it was too difficult to consider those operating through a company. It's also another sign that the Government and HMRC do not favour self-employed persons using companies, and it follows the decision to delay the much criticised new IR35 rules.

"The Chancellor proclaimed that the self-employed 'have not been forgotten' but a reasonable proportion will not eligible because of the conditions around the scheme.

"There was also a suggestion by the Chancellor that the National Insurance ('NIC') position for self-employed persons could be 'levelled-up' in the future by harmonising the NIC rates. Currently, a self-employed individual pays 3% less NIC on profits up to £50,000 compared to an employee (but they also have to pay Class 2 NIC which is £158.60 a year).

"Given that self-employed individuals have been granted an almost identical package of support to the employed worker (albeit with some restrictions), this could be the pre-cursor opportunity for the Government to end the disparity in the two tax regimes, which it has been wanting to do for some time."

     

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