Sunak doubles grants for self-employed after criticism

Sunak doubles grants for self-employed after criticism
 Rishi Sunak, chancellor of the exchequer. Credit: Toby Melville.

The government is to increase its support for self-employed workers amid the coronavirus crisis, branding the sector as the “dynamic entrepreneurial heart” of the economy.

Speaking in the House of Commons today (October 22), chancellor Rishi Sunak said the government would double the next round of the Self Employment Income Support Scheme to cover 40 per cent of profits.

The scheme currently covers 20 per cent of average monthly profits up to £1,875, but today’s announcement brings the maximum grant to £3,750 over a three-month period.

Provided through two grants, the scheme is only available to those who were continuing to actively trade but faced reduced demand due to coronavirus and those who were eligible for the original SEISS back in May.

The first grant will cover a three-month period from November 2020 until January, 31 2021, while the second will cover the period to April 30, 2021. The level of the second grant has not been announced at this stage.

The grants are taxable income and also subject to National Insurance contributions.

Mr Sunak said: “So far through this crisis we have provided over £13bn to self-employed workers.

“Sole traders, small businesses and self-employed people are the dynamic entrepreneurial heart of our economy and this government is on their side.”

‘Woefully inadequate’

The changes come after the support provided for the self-employed in the face of the ongoing coronavirus crisis was branded “woefully inadequate”, as fears resurfaced that self-employed workers are falling through the cracks.

Newly self-employed workers alongside limited company directors have fallen outside the government’s measures so far, and today’s announcement did little to bring them in from the cold.

Mr Sunak has previously maintained the SEISS would cover 95 per cent of the country's self-employed workforce but self-employed associations have disputed the claim.

Arguments over the tax levels levied against self-employed workers have also resurfaced amid the discussions over coronavirus support.

In a recent Treasury select committee hearing, tax specialists said the different tax rates levied on self-employed and employed workers were “hard to justify” and needed to be looked at to save “eroding public revenues”.

The issue was raised by the chancellor during the announcement of support for the self-employed at the start of the coronavirus crisis.

In March, the government bowed to pressure and brought the self-employed into its emergency response and pledged grants to cover as much as 80 per cent of their earnings, but with the caveat that it was “now much harder to justify the inconsistent contributions between people of different employment statuses”.

Mr Sunak added: “If we all want to benefit equally from state support, we must all pay in equally in the future.”

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