Some hope for the self-employed
An amendment to the coronavirus bill has been put forward to cover the self-employed but although the direction this is heading in is welcome, the sparse detail begs more questions than it answers.
The amendment is here.
The relevant text is below:
- The Secretary of State must, by regulations, introduce a scheme of Statutory Self- Employment Pay
- The scheme must make provision for payments to be made out of public funds to individuals who are a) Self-employed or b) Freelancers
- The payments to be made in subsection (2) are to be set so that the net monthly earnings of an individual specified in subsection (2) do not fall below—(i) 80 per cent of their monthly net earnings, averaged over the last three years, or (ii) £2,917 whichever is lower.
- No payment to be made under subsection (2) shall exceed £2,917 per month.
At present, this might not be as helpful as it looks as most self-employed individuals operate through personal service companies and take their income as dividends. Depending on how the terms “freelancer” and “self-employed” are defined, this may not be covered by the above amendment and any contribution towards their salary under the Coronavirus Job Retention Scheme is likely to be 80% of a very low salary if they are drawing a salary within their tax free personal allowance.This is NOT law yet. It is only a proposed amendment to the Bill.
The reference income for the 80% payment is being suggested as being the average of the last 3 years. Presumably this will be the last three years of profits declared on tax returns for 2016/17, 2017/18 and 2018/19 as this is the only information that HMRC hold as 2019/20 tax returns will not have been filed yet.
We will wait for the formal announcement if this amendment is ultimately included in the Bill and will send a further update when more detail is known.