The support package outlined by Chancellor Rishi Sunak last night includes:

• Self-employed people can apply for a grant worth 80% of their average monthly profits over the last three years, up to £2.5k a month.
• A minimum of half their income is required to have come from self-employment as registered on the 2018-19 tax return filed in January – those that have missed the filing deadline have four weeks from now to get it done and still qualify.
• The scheme is open to those who earn under £50k a year but unlike the employee scheme, the self-employed can work as they receive support.
• The money, backdated to March, will appear in people’s banks accounts from HMRC, but not until June.
• These grants will be taxable and need to be declared on tax returns by January 2022.
• However those company owners who pay themselves a dividend are not covered.

Commenting on the package, Recruitment & Employment Confederation Neil Carberry described the chancellor’s support initiatives as the “big action businesses and self-employed people need”. 

“But to really work effectively and protect jobs, cash needs to come in quickly and be easy to access. The chancellor should now turn his attention to ensuring supported loans are quickly available, businesses receive furlough cash quickly and the self-employed scheme can pay out before June. We will be working to make sure that this package supports the UK’s full flexible jobs market, including one million temporary agency and contract workers.”

Meanwhile APSCo’s legal counsel and head of public affairs Tania Bowers said she was very pleased that the recruitment sector now has some clarity over how the Job Retention Scheme will work. 

“There is clear reference in the guidance to those working through an employment business, and the guidance clearly sets out how to calculate payments for workers whose pay varies (ie. zero-hours and agency workers). The other good news is that the grant will also cover the cost of NI and pension contributions. The cap is in respect of the employee’s salary – employers NI and minimum statutory pension payments paid in respect of that salary can be claimed back on top of the £2.5k.

“We also welcome the package announced for the self-employed, although contractors working through a PSC in the professional sectors served by APSCo members are unlikely to benefit as they will generally be generating profits above the £50k trading profits cap. 

“We noted the chancellor’s comment on the fairness of the differential rates of tax for the self-employed and how this could be subject to review. We have long called for a review of employment status for tax and rights, and a separate definition of independent professional for highly skilled contractors.”

Also commenting, Adrian Marlowe, chairman of the Association of Recruitment Consultancies, said: “The support will inevitably be different from that already announced for employees, and highlights status issues which have long caused conflict both in terms of tax treatment and employment rights. The different treatment is summed up by the chancellor’s statement. Support will be 80% of net profits, not 80% of income; no help for those that have not yet lodged self-employed tax returns; those paid through their own companies (PSCs) are excluded. The result – plenty of ‘self-employed’ workers will still fail to get any meaningful support because of their different status.

“The chancellor has also said that the handouts will justify a review of the tax treatment of the self-employed to bring them into line with the tax treatment of employees. This does not appear to be unreasonable. The UK has long permitted there to be a difference between employees, workers who are not employees, and the self-employed, who are not meant to be classified as workers because they are in business on their own account. Yet the tax treatment has lagged far behind the reality. 

“Those actually in business on their own account, taking risk and making investment, are likely to accept they should not receive benefits of this kind, relying instead on business interruption insurance. Others should not realistically expect the benefits if they don’t pay for them, meaning if they are paying lower NICs the trade-off is fewer government handouts. There is a logic to this which may cause individuals to view so called ‘gig’ status in a wholly different way in the light of the Covid experience.

“The statement flags that a status review will likely come to the fore very quickly once the emergency is over. This will have to consider employment status also. There is little chance that the now delayed new IR35 rules will be amended in principle, and Covid-19, which has already caused pause for thought in so many different ways, will seemingly engender far reaching and long-lasting change to our hiring mindset in the UK.”

Derek Cribb, CEO of IPSE (the Association of Independent Professionals and the Self-Employed), said he welcomed government’s heeding of their calls in actively working with IPSE in designing a historic lifeline of financial aid for the self-employed.  

“This will offer essential support to the many hard-working, self-employed people across the country who are losing projects and contracts because of the coronavirus outbreak.

“This is an unprecedented package and a very welcome response to our campaign for freelancers and the self-employed. While this assistance is practical and wide-ranging it does not, however, cover all self-employed people. We will keep working to fill in these gaps.

“With our mission to support and promote the work of independent professionals and the self-employed, we will keep striving to stop those in need from being left behind.”

Julia Kermode, FCSA CEO, said she welcomed the additional clarity: “There are lots of positives, and the government has listened to our lobbying that employers NICs should be reimbursed in addition to the 80% salary for furloughed employees. However there is still an enormous amount of detail that needs to be clarified before we can be certain how the scheme will interact with umbrella employment. We submitted numerous urgent questions to the government this morning, and we strongly urge for clarity to be given as soon as possible as there are at least 625,000 umbrella employees waiting for it.”

Dave Chaplin, CEO and founder of contracting authority ContractorCalculator, likewise applauded the chancellor’s package to provide financial support for the UK’s freelancers and contractors. 

“Just like employees, the UK’s flexible workers have had their lives and livelihoods turned upside down, and they have mouths to feed and bills to pay. They are the tax-paying flexible talent who provide essential skills and expertise to the UK economy and it is vital they are supported so that they are still there to help rebuild the economy as we emerge from this crisis. It is right and proper that they are not penalised and are supported through these unprecedented times.

“It does seem unjust that all employees can access the Job Retention Scheme, but there is a cap on the scheme for the self-employed. Also the delay until July could cause considerable cashflow problems for many.”

But Seb Maley, CEO of contractor insurer Qdos, said while the chancellor may have delivered for millions of self-employed workers, hundreds of thousands of genuinely self-employed individuals working through their own limited companies have been overlooked.

“Like employees, these people pay their tax, contribute billions to the economy and are helping the UK through this crisis. So it’s concerning that the government has ignored them when it matters most.

“While delaying IR35 reform last week was certainly the right thing to do, for the freelancers and contractors who have lost all income because of Covid-19, this delay will now feel meaningless for the time being.”

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