The Trials of Self-Employment during COVID-19
While those in full time employment will no doubt worry about their livelihood during the COVID-10 outbreak, wondering whether there will be work for them to do, how they will be expected to do it and if not, if their business is forced to stop running, will they be retained and return to work once the crisis is over. In most cases these people will find ways of working as their employers put measures in place to keep everyone safe and secure.
Spare a thought therefore for those people who are self-employed, working as their own boss, brought in by other companies as contractors with no long term safety net to keep them financially secure for as long as it takes to get back into a normal rhythm. For these people who are between contracts or aren’t able to do business, there is a great need for some form of financial aid to help them survive.
Last week the UK government introduced a grant scheme to help those self-employed workers struggling to make ends meet. The scheme will allow people to claim a taxable grant worth 80% of your trading profits up to a maximum of £2,500 per month for the next 3 months, extending in time if the crisis persists.
Other measures in place to help self-employed people get by include:
Deferral of Self Assessment income tax payments due in July 2020 and VAT payments due from 20 March 2020 until 30 June 2020
Grants for businesses that pay little or no business rates
Increased amounts of Universal Credit
Business Interruption Loan Scheme1
These various schemes will benefit those in self-employment, however due to the numbers involved and the time needed to put funds in place, a delay in payments is expected, potentially as long as three months. And for those not earning a regular monthly wage, this could lead to some uncertain and scary times as savings are dipped into for the essentials.2
In some cases though, these programmes could lead to a better financial quarter than expected had the outbreak not taken place. However, while the government is doing its best to ensure that no one is left behind or struggling to survive in these hard times, several think tanks are in agreement that many people, potentially millions, will be much worse off, or even miss out of receiving any financial aid.
Obviously people who have been sent home as their jobs are currently impossible to undertake are unlikely to receive full pay, with some taking pay cuts or receiving a flat 80% of their usual pay to help them pay bills and remain on the payroll. However, dependant on their field, some people will claim less than half of their income from self-employment, while those earning over a certain amount in a normal year will not be eligible for any benefits.3
Clearly these are difficult times for all of us and no household will be in the same boat as their neighbours due to differing circumstances. Therefore, it is key that we are able to work together to support each other whatever our situation.
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