Legal comment on the Self-Employed Income Support Scheme
Claire Brook, Employment Law Partner at legal firm Aaron & Partners said:
“Last night the government announced a much-needed Self-Employed Income Support Scheme, as well as introducing a number of updates to the Coronavirus Job Retention scheme that aim to provide more support and clarity for businesses and workers.
“Whilst recognising the need to support the UKs self-employed workforce during a press conference, the government also introduced a number of updates to the current employee scheme by way of an online update, aiming to provide more clarity for employers and employees in the UK.
“Eligibility for the scheme still appears to be creating a lot of confusion, but the government did provide more clarity on this, with it being confirmed that the scheme would not apply for any employee who was not on the employer’s PAYE payroll scheme prior to February 28, 2020.
“Further, the new guidance suggests that employers could elect to offer to re-employ ex employees who have been made redundant since 28 February, 2020 and place them on furlough leave.
“We have never seen a time where so many employment law changes have come into place so quickly, and we are seeing new developments each day. It’s been positive to see that during this challenging time the government has continued to assess and amend these schemes in order to provide the best outcomes for businesses and individuals.
“The announcement also saw a new minimum furlough period introduced. This follows numerous reports of organisations effectively planning to rotate their furloughed employees week by week. It has now been confirmed that employees must be furloughed for a minimum of three weeks to be eligible under the scheme. Whilst on furlough leave, employees may undertake volunteering. The latest guidance also confirms that employees may undertake some online training (although this may require top up pay to comply with NMW/NLW).
“Although this announcement goes some way towards providing clarity to both employees and employers, there still appears to be a lot of unanswered questions. With new updates being announced daily, we would always recommend seeking the advice of a qualified professional to understand the current landscape and how the new legislation applies to you or your business.”
Self- Employed Workers: The Self-Employed Income Support Scheme
“The Self-Employed Income Support Scheme was finally introduced following a huge spike in the number of people applying for Universal Credit, ending lots of uncertainty and providing much needed support for self-employed workers.
“Rishi Sunak stated that 95 per cent of people who were majority self-employed – meaning the majority of their income came from self-employment – would benefit from the scheme. Although this announcement has been welcomed by many, the Chancellor made it clear that the earliest HMRC would be able to process these new taxable grants, worth up to 80% of profits capped at £2,500 per month, would be June, meaning there is still little support for the self-employed in the short term. It is currently proposed that HMRC will make one lump sum payment.
“Although the scheme appears to be broadly similar to the financial support that furloughed employees are able to receive, the government has introduced eligibility criteria for this scheme. Firstly, you will only qualify if you have and intend to continue to trade, have lost trading profits due to Covid 19, have annual trading profits of less than £50,000 and more than 50% of income must be from self employment (calculated by reference to the average last 3 years of self assessment or trading profits for financial year 2018/2019 if there are no further years to average). Therefore any self-employed worker outside the criteria won’t qualify for this particular source of funding. However, unlike the employee scheme, those who do qualify are able to continue working whilst they receive support.
“Self-employed workers who are eligible for the scheme will be contacted directly by HMRC; though, they must have submitted a tax return for 2019. Anyone who has a late submission to file now has four weeks from March 26, 2020 to do so.”
