22/10/2020 by Brealey + Newbury Accountants 0 Comments
MILLIONS of self-employed workers will be able to claim a grant worth up to £3,750 from the government, it's been revealed today.
Chancellor Rishi Sunak has confirmed he is doubling the support the government will give struggling businesses in an update in the House of Commons today.
The Treasury previously said it would cover 20% of average monthly profits, up to a total of £1,875, covering November to January next year under the self-employment income support scheme (SEISS).
But it will now increase this amount to 40%, meaning the maximum grant is now worth £3,750.
An additional second grant will also be available for self-employed workers to cover February 2021 to the end of April.
The government hasn't said how much this second grant will cover.
Today, the chancellor announced:
- Job Support Scheme (JSS) made more generous
- Workers must work minimum of 20% of hours to get JSS
- Businesses will pay 5% of wages of non-worked hours
- Grants for self-employed doubled up to £3,750
- New grants for businesses in high-alert area
Businesses can claim if they were eligible for the previous SEISS support, even if they didn't apply for the first two grants.
They must also be actively trading, even under a reduced capacity.
Speaking today, the chancellor said the additional support from the government was worth £3.1billion.
Mr Sunak said: "We are doubling the next round of the income support from 20% to 40% of incomes.
"We have now provided over £13billion support to self-employed workers. This government is on their side.
"This is our plan for jobs, for businesses, for regions, for the economy. A plan to support the British people."
The new support, however, will not extend to self-employed workers who are company directors or run their businesses as limited companies.
Start-ups also lose out, as to qualify you need to have submitted a tax return for the 2018/19 financial year.
Derek Cribb, chief executive of the Association of Independent Professionals and the Self-Employed, said: "It’s welcome that the government has doubled SEISS to 40% of previous income.
"However, there are still deep structural problems with the scheme, which the government must urgently address.
"A third of the self-employed – including sole directors of limited companies and the newly self-employed – are still completely excluded from SEISS."
Who can apply?
To apply for the scheme you must meet the following criteria:
- Eligible for SEISS under the old schemes - although, you don't have to have applied for previous grants
- Still be actively trading and intend to continue to trade
- Experienced reduced demand business due to Covid from November 1 until date of claim (for third grant)
The grant is non-repayable but it is subject to income tax and national insurance contributions.
The government hasn't said when applications will open for the new set of SEISS grants but HMRC will provide updates on the gov.uk website.
How did the self-employed grant scheme work before?
The first SEISS grant was worth 80% of three months' profits up to a cap of £7,500 in total, or £2,500 a month.
While the second grant covered up to 70% of profits over three months again, worth up to £6,750 in total.
Claims for the second grant closed this week, on October 19.
For these grants, only those who made less than £50,000 a year in profit between the 2016 and 2018 tax years were eligible to claim the funds.
What else did the chancellor announce today?
The chancellor confirmed he would make changes to the new Job Support Scheme (JSS) to help more firms that are staying open.
Currently, only closed businesses in Tier 3 are allowed to claim the government support, which pays up to two thirds of staff wages.
But now the programme - which will come into force on November 1 - will allow every business across the country which is still open to get similar help.
The government will pay 61.67% of employee wages if they're enrolled on the scheme, while businesses will pay just 5% of non-worked hours.
Employees will need to work 20% of their hours, rather than a third, to be eligible for support.
The chancellor announced that the furlough scheme will be replaced by the JSS from November 1.