The Chancellor Rishi Sunak has made a historic intervention to prop up the livelihoods of the self-employed by matching the package of support offered to workers whose jobs were at risk due to coronavirus.
Mr Sunak announced today that those who work for themselves would be able to apply for taxable grants worth 80 per cent of their average monthly profits over the last three years, up to £2,500 a month.
The Chancellor said the move would cover 95 per cent of self-employed workers, but payments would not reach bank accounts until June.
The package comes after the Government came under sustained pressure as its initial package of financial support only covered employees.
And Shadow Chancellor John McDonnell said millions would suffer due to the wait for payments.
He said: “My worry is that if people cannot get access to the scheme until June it will simply be too late for millions. People need support in the coming days and fortnight.”
But Mr Sunak said the move was “unprecedented” and promised the self-employed that they were not being left behind.
The scheme is open to anyone with trading profits of up to £50,000 and will only be available to those who make the majority of their income from self-employment so only the “genuinely self-employed” benefit.
“And to minimise fraud only those who are already in self-employment who have a tax return for 2019 will be able to apply,” Mr Sunak said, however those who missed the January deadline will be eligible if they filed their returns within the next month.
But Mr Sunak also warned the measures came with tax implications, and said he would look to address an inconsistency in self-employed contributions in the future when working to “right the ship” after the crisis.
He said: “Rather than be too specific right now about future tax policy, it’s just an observation that there’s currently an inconsistency in contributions between self-employed and employed.
“And the actions taken today, which is very significant tens of billions of pounds of support for those who are self-employed treating them the same way as those who are employed, it does throw into light the question of consistency and whether that is fair to everybody going forward.”
Business groups and union leaders welcomed the package of measures.
Dame Carolyn Fairbairn, Director General of the CBI, said: “Many self-employed people across the UK will be hugely relieved tonight.
“These new measures will provide essential support to those facing significant uncertainty and loss of income.
“Given the complexity of the task, it’s understandable this will take time to deliver.”
Tim Roache, general secretary of the GMB union, said: “Millions of self-employed workers will sleep easier tonight.”
“Food, rent, utilities aren’t cheaper if you’re self-employed and for many work has dried up, so it’s right and welcome that support will now be put in place.”