Coronavirus: UK government unveils aid for self-employed

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Media captionChancellor Rishi Sunak announced the grant

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.

Rishi Sunak told the self-employed: “You have not been forgotten.”

Plans for 80% wage subsidies for staff kept on by employers were announced last week.

The chancellor spoke after the total number of people in the UK to die with Covid-19, the disease caused by coronavirus, reached 475.

The government had faced criticism for failing to provide support for self-employed and freelance workers in its earlier huge package of economic measures.

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”.

Self-employed people will be able to apply for a grant worth 80% of their average monthly profits over the last three years, up to £2,500 a month.

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

The scheme does not cover people who only became self-employed very recently – they will have to look to the benefits system for support.

But in all, the chancellor said 95% of people who earn most of their income via self-employment would be covered.

“We have not left you behind, we all stand together. ”

The Coronavirus Self-Employment Income Support scheme is another extraordinary multi-billion pound support, reflecting the brutal economic impact of a shutdown designed to keep the pandemic in check.

It offers some parity with the employee scheme – 80% of profits up to £2,500 a month for three months initially. Unlike the employee scheme, the self-employed can continue to work. It is targeted at up to 3.8 million of the 5 million people registered as self-employed, who earn under £50k. The money, backdated till March, will arrive directly into people’s banks accounts from HMRC as a lump sum for all three months, but not until June. The grants will be taxable, and will need to be declared on tax returns by January 2022.

At least half their income needs to have come from self-employment as registered on the 2019-20 tax return filed in January, or averaged over the three previous years. Company owners who pay themselves a dividend are not covered.

In recent days, Treasury ministers appeared to be trying to dampen down expectations, telling MPs it was problematic to establish a fair scheme, and the employee job retention scheme would be the logistical priority. The government wants to set up the scheme to keep employed jobs as the priority first. So the banks will need to be relied on to support many of these self-employed with overdrafts to tide them over till the grant goes in their bank accounts in about 10 weeks’ time.

The sting in the tail? The chancellor said he can no longer justify, after things get back to normal, that self-employed people pay less tax than the employed. But that is for another day.

In the UK, more than 9,500 people have tested positive for the virus – although the actual number of cases is likely to be far higher.

The peak of demand for intensive care is expected to come in two to three weeks.

In other developments:

  • Clarence House said Prince Charles was “enormously touched” by the hundreds of get-well messages he received following his positive test for coronavirus
  • The UK has become the largest contributor to the international coalition to find a coronavirus vaccine after donating £210m in new aid funding, Downing Street said
  • About 170 Britons stranded in Peru have returned to the UK on the first government-chartered flight
  • Police will introduce checkpoints in North Yorkshire to check drivers’ journeys are essential
  • Number 10 insists the government is on course to test 10,000 people a day by the end of the week, despite testing just 6,643 on Wednesday
  • The government extends its target for volunteers to help the NHS to 750,000, after an “amazing” 560,000 people signed up since Tuesday, Downing Street says
  • In the US, the Senate has passed a $2tn (£1.7tn) disaster aid bill which includes $1,200 for most adults
  • Worldwide, there are more than 470,000 recorded infections, and more than 21,270 deaths