Katy Balls

Rishi Sunak offers support for self-employed – but there could be a sting in the tail

Rishi Sunak offers support for self-employed – but there could be a sting in the tail
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After a week of speculation, the Chancellor used today's coronavirus press conference to unveil the government package to help the self-employed. Announcing the new measures, Rishi Sunak said that the reason for the delay had been the sheer complexity of having to come up with a new payment system that could cover such a diverse workforce and not fall victim to fraud. 

The new self-employed income support scheme means the self-employed can receive up to £2,500 per month in grants for three months. Sunak said the package covers 95 per cent people who receive the majority of their income from self-employment. Those who are not eligible include individuals with company profits over £50,000 and those are so recently self-employed they do not have a previous tax return. Those who are able to claim will have to wait until June to receive any funds (which will then be backdated) owing to both the decision to let people who have failed to file their tax return on time do so – and to allow time to get the system ready. The cost of the scheme is estimated at £3 billion a month.

Sunak described the offer as unprecedented and more generous than other countries. However, it could come at a cost to the self-employed later down the line. The Chancellor hinted in his statement that the self-employed could be forced to pay more in the future when it comes to tax contributions – stating 'we must all pay equally in future'. When asked in the subsequent Q&A whether this meant the self-employed could have to pay the same in national insurance payments as the employed, Sunak would not rule it out:

'I'm not anticipating future policy. I'm just making the observation that I think it is harder to sustain the observation that if you're employed and paying a higher rate of tax on the basis that you are treated differently and now we are treating everybody the same at a very very significant cost that we as a country and a society as we get through this and we figure out once we get through this how we ride the ship afterwards, this is an observation which I think is eminently fair to make at this point and then we can discuss in the future how best we all come together.'

As James writes in this week's Spectator magazine, the status of the self-employed is just one of several aspects of life in the UK that will likely change in the long term as a result of coronavirus.

Written byKaty Balls

Katy Balls is The Spectator's deputy political editor. She is also a columnist for the i paper.

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