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Self-employed will be £780 a month worse off unless government acts now, charity warns

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23/03/2020
The average self-employed household will be up to £780 a month worse off due to the coronavirus outbreak – unless they receive extra help from the government, a poverty charity has warned.

Turn2us has reported a 1,800% increase in self-employed workers using its online benefits calculator in the last week since chancellor Rishi Sunak announced the Coronavirus Job Retention Scheme, where 80% of a worker’s wage will be guaranteed by government.

The scheme does not include support for self-employed workers, which means that many self-employed people in need of financial assistance currently have no other option than to apply for Universal Credit.

Universal Credit claimants typically have to wait at least five weeks to receive their first payment.

Analysis by the charity found on average, each self-employed household will see their take home pay reduced by £781 per month, if they have to claim Universal Credit, compared to an 80% wage guarantee.

A couple with no children would be £910 a month worse off than under the Coronavirus Job Retention Scheme.

The charity said 3.3 million self-employed households will have to make the decision between a huge cut in earnings or continuing to work and endangering the lives of vulnerable people in their local community.

The government is reportedly working on plans to include self-employed workers in the emergency measures.

David Samson, welfare benefits specialist, at Turn2us, said: “The exclusion from the Coronavirus Job Retention Scheme creates a huge disparity between salaried workers and the self-employed, penalising self-employed people by hundreds of pounds simply because of the nature of their employment.

“We urge the government to put in place measures to ensure self-employed workers are protected from the economic repercussions of coronavirus on an equal footing with employees. At this critical time our society needs to stand together and provide security for everyone”

Current coronavirus support announced for self-employed people:

  • Removal of the Minimum Income Floor within Universal Credit for the duration of the outbreak. This means that self-employed people will receive Universal Credit at a rate equivalent to Statutory Sick Pay. (The Minimum Income Floor meant that if you were self-employed and had low earnings your Universal Credit may have been calculated based on you having higher earnings than you actually earn.)
  • Deferral of Income Tax payments due in June 2020 to January 2021
  • Deferral of VAT payments, though most self-employed people earn below the £85,000 threshold to pay VAT in the first place.

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