Rishi Sunak announces new measures to boost self-employed
The Chancellor Rishi Sunak has unveiled a package of measures designed to support the economy, limit redundancies, and support small businesses and the self-employed during the ongoing coronavirus crisis.
New support includes an extension of the Self-Employment Income Support Scheme and a ‘Pay as you Grow’ scheme that will allow businesses to repay loans gradually over a period of up to ten years.
We’ve detailed some of the most important announcements below.
New Job Support Scheme for employers
The Chancellor announced a new scheme to protect jobs after the current furlough scheme ends on 31 October. It will open on 1 November and be available to all small and medium-sized businesses.
To qualify for the scheme, employees must be working at least a third of their normal hours and it will be up to the employer to pay staff for this time. For any remaining hours that the employee isn’t working, the state and employer will each pay a portion of the wages, but the government’s contribution will be capped at just under £700 per month.
Beneath this cap, an employee working a third of their normal hours will be paid 77% of their normal wage, with employers paying 55% of their total salary and the government paying 22%.
Extension of the self-employed grant
Rishi Sunak also announced that the Government’s Self Employment Income Support Scheme Grant would also be extended. However, this time the support from Government is less generous.
Eligible self-employed workers will receive a lump sum covering three months’ worth of profits for the period from November to the end of January 2021. This will be worth 20% of the average monthly profits, up to a total of £1,875.
An additional grant will also be made available to cover the period of February to the end of April. In two previous grants the government had paid out lump sums covering profits worth up to 80% and 70% of average monthly profits.
Lower taxes and deferrals
Any businesses in the hospitality or tourism industry will continue to benefit from the 15% VAT tax rate that was introduced earlier this year. This tax cut has been extended until the end of March 2021.
Businesses that have deferred their VAT bills will also be given more breathing space with an option to pay back deferred VAT in 11 interest-free installments, rather than in one lump sum at the end of March next year.
Self-employed people will also be able to benefit from a 12-month extension to their self-assessment tax returns. Self-assessors already had the option to defer their July 2020 payment until January 2021. Now, neither the July 2020 payment nor the January 2021 payment will need to be made until January 2022.
Flexibility on loans
Any businesses that took out a Bounce Back Loan will be given more flexibility over their repayments through a new Pay as you Grow system. This means that they will be able to extend the length of a loan from six to ten years, cutting monthly repayments by nearly half. Interest-only periods of up to six months and payment holidays will also be available to businesses.
Lenders involved in the Coronavirus Business Interruption Loan Scheme will also be able to extend the length of loans up to ten years and applications for the loan schemes will be extended until the end of November, meaning more businesses can benefit.
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