Relief has been replaced with frustration as people digest the details of the “generous” plan the chancellor unveiled for self-employed people last night.
Rishi Sunak has announced a plan – “one of the most generous in the world” – to support people who are unemployed and suffering financially due to losing work or becoming sick during the coronavirus pandemic.
In the £3bn-a-month scheme, those who qualify will be set to receive a taxable grant worth 80 per cent of average profits, up to a maximum of £2,500 a month.
The plan was initially welcomed with relief by freelancers and the self-employed who had been screaming their concern about being left out of the plan to pay up to 80 per cent of of wages for workers at risk of being laid off due to the coronavirus pandemic.
But are you one of the special ones who even qualify for the scheme?
The plans leave out almost two million people – those who earn less than half of their income from self-employment, and people reporting self-employed profits above £50,000 a year.
There’s also the currently unknown number of people who have been trading for less than a year and therefore have not submitted their tax returns for the years 2018-19 so cannot have any entitlement calculated.
So if you only became self-employed this year, or make too little to play tax, this is not for you.
OK so, you qualify, you lucky thing.
But hold your horses there, you still won’t receive ANY financial support for two months.
Sunak suggested that in the meantime, those waiting until May, self-employed people can apply for Universal Credit. The Chancellor said that payments for Universal Credit will be raised so that the self-employed will receive £94.25 a week.
But there’s yet another catch, because of course there is.
As most self-employed people know, it makes sense to put aside a portion of earnings to pay tax and NI at the end of the year. But if you have savings above £6,000 your Universal Credit allowance will be reduced, and if you have over £16,000 in savings you will get a big fat nothing.
This will likely force people to dip into the money they have set aside to pay tax, and then be unable to foot the bill when it drops through their letter box next year.
So in summary, this is what Rishi Sunak is serving up for many freelancers and self-employed people for the foreseeable future.