COVID-19 crisis: Government support for UK freelancers explained
Bob Cordran of the international law firm Dorsey & Whitney outlines the benefits (and possible downsides) of the UK’s new Self-employment Income Support Scheme.
On Thursday evening (26 March), the UK’s Chancellor of the Exchequer Rishi Sunak set out the additional financial measures that are being put in place to support freelancers and the self-employed during the COVID-19 pandemic.
The Self-employment Income Support Scheme (SEISS) is intended to provide a financial grant to support those individuals who have lost income as a result of cancelled projects and events.
The intervention potentially helps a huge swathe of the UK’s television production workforce, including those making sports programming.
But not everyone will qualify. And money won’t be available instantly.
Here, Bob Cordran, a partner at the international law firm Dorsey & Whitney’s London office in its labour and employment practice, explains the plusses and minuses of what was announced.
“The measures announced this evening provide valuable assistance to freelancers who had been complaining that they were not helped by the UK Government’s previously-announced scheme for employees.
“In some ways, this scheme is more favourable than the assistance for employees, since freelancers will be able to claim the grant but carry on working, whereas employees are only eligible if they are furloughed.”
What benefits are available?
“Freelancers will be eligible for cash grants of 80% of their profits, capped at £2,500 a month. This makes the scheme similar to the Coronavirus Job Retention Scheme, which pays 80% of wages up to a cap of £2,500 a month for employees who are furloughed during the outbreak.
“Both schemes will initially run for three months. Unlike employees, freelancers can claim and still work.”
Who is eligible?
“Freelancers with a trading profit of £50,000 or more will not be eligible and nor will those who derive less than 50% of their income from freelancing, for instance employees who freelance as a side-job.”
When will the money start to come through?
“Payments will not be made until the start of June at the earliest, so many freelancers will be concerned about cash-flow in the meantime.”
What is the overall verdict?
“The UK Government’s packages to help workers through this unprecedented event are huge and compare very favourably (they say) to the support offered in other countries.
“The hope is that it will put the UK economy in the best position possible to bounce back when the crisis has eventually passed.
“Amongst the good news, however, there was an ominous observation that in this new world of unprecedented state support, it is harder to justify the inconsistent tax treatment of freelancers and employees. The implication is that – in time – the tax and social security treatment of self-employed people may be brought more in line with that of employees.”
For more on the SEISS grant visit: https://www.gov.uk/guidance/claim-a-grant-through-the-coronavirus-covid-19-self-employment-income-support-scheme
For support specifically relating to the creative industries visit: https://bectu.org.uk/topic/covid-19-coronavirus/