The Chancellor announced on Friday a long-awaited help package for the self employed.
The Government will pay self-employed people 80% of their average income over the last three years - up to £2,500 per month for at least three months. However it is not available to those with an income over £50,000 and those self employed for less than three years.
Other recently self-employed people could also miss out.
Keith Richards, chief executive of the Personal Finance Society, said Mr Sunak’s help for the self employed was a “huge relief” but some would not be supported.
He said: “The new self-employed income support scheme, which should be up and running by June, will offer a taxable grant worth 80 per cent of average profits over the last three years, something many had been calling for over the last few weeks.
“Coupled with the interventions made already for small businesses and employees, this offers an unprecedented level of support to financial advice businesses, at a time when many will be feeling the sharp economic effects of this crisis.
”The scheme’s £50,000 cap on profits, and its other exclusions, will mean that not everyone will be supported, and we understand the need for the government to target help for individuals facing extreme financial pressure.”
He said the PFS would continue to keep an eye on support for the self employed and raise issues with the government and regulators to ensure the Financial Planning profession remains on “policy makers’ radar.”
He said the PFS would do all it can to help those who are excluded from the scheme.
Accounting and tax advisory firm Blick Rothenberg said there would be “winners and loses” under the new self-employed support scheme.
Heather Self, a partner at the firm, said the Government and HMRC had been working “incredibly hard” to help the majority but some people would lose out.
She added: “The cut off at £50k is understandable – some of the most highly-paid will not need this support – but some will be hit hard.”
Blick Rothenberg warned:
- A family with one earner on £51,000 will get nothing, whereas one with two earners on £49,000 each will get two lots of full support
- Someone with a mix of self-employed and earned income may not qualify – for example, someone who is a part-time fireman on £10,000 but has self-employed income of £8,000.
- People with new businesses starting after 5 April 2019 will not qualify.
- Junior barristers – who are typically self-employed but often earn very little in their first year or two – are an example of new businesses who will be affected, as well as plumbers, hairdressers and others who started self-employment less than three years ago.
She also pointed out that the income has to be trading income - other income such as rent, or dividends will not qualify - and contractors who provide services through a company will also not qualify.
She urged anyone who had self-employed income in the year to 5 April 2019 but has not filed a tax return yet, to do so by 23 April to have any chance of qualifying for a grant.