AAT’s Brian Palmer responds to chancellor’s announcement
Last night the chancellor, Rishi Sunak, announced a new package of measures to support people who are self-employed during the ongoing coronavirus (Covid-19) pandemic, including a direct cash grant of 80% of their profits.
In response to the announcement, Brian Palmer, tax policy expert, AAT, said:
“There is huge complexity in arranging a scheme of this type, particularly in such a short time period, and on balance what is on offer from the government is very generous indeed, particularly as those eligible will be able to continue working and yet receive the grant.
“However, there are still many pressing concerns for those who do not qualify due to being self-employed for less than a complete tax year and have not yet filed a tax return, therefore having no profits to average. Without the prospect of a direct grant from government, they risk being left to the mercy of an overstretched UK benefits system. Additionally, the three-month wait for funds for those who qualify will leave many in an increasingly precarious position.
“What’s more, when this is all over the chancellor has warned that the self-employed will be left facing the promise of a ‘levelling of the playing field’ that will inevitable result in raising self-employed people’s tax and National Insurance payments to match those on PAYE.
“Finally, there were also no crumbs of comfort for those who are self-employed from every perspective but provide their services through a limited company, many of whom draw a low salary and top up their income with dividends. They will not qualify as self-employed or for a significant payment from the Coronavirus Job Retention Scheme. Instead, they risk dropping through the cracks. In a time when large numbers of people – both self-employed and those working for larger firms – are already struggling financially, and with the situation likely to worsen over the coming weeks and months, we must ensure that everyone gets the support they need to stay afloat and that the UK economy is able to not only recover, but also to thrive in future.”
