Government support is "lifeline" for SMEs and freelancers

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Date: 2 June 2020

Rishi Sunak Covid-19

Chancellor Rishi Sunak's extension of the Self-Employment Income Support Scheme and the gradual tapering of the furlough scheme has been widely praised by business leaders.

Business groups have described the support as a "lifeline" for the UK's small businesses and self-employed workers. The news means that those eligible under the Self-Employment Income Support Scheme (SEISS) will be able to claim a second and final grant in August. The grant will be worth 70% of their average monthly trading profits, paid in a single instalment covering three months' worth of profits, and capped at £6,570 in total.

From 1 July 2020, businesses will be able to bring furloughed employees back part-time, under the Coronavirus Job Retention Scheme. This is a month earlier than previously announced; individual firms will be able to decide the hours and shift patterns their employees will work on their return and will be responsible for paying their wages while in work.

From August 2020, the level of government grant provided through the job retention scheme will be slowly tapered. It means that:

  • In June and July, the government will pay 80% of wages up to a cap of £2,500 as well as employer National Insurance and pension contributions.
  • In August, the government will pay 80% of wages up to a cap of £2,500. Employers will pay ER NICs and pension contributions.
  • In September, the government will pay 70% of wages up to a cap of £2,187.50. Employers will pay ER NICs and pension contributions and 10% of wages.
  • In October, the government will pay 60% of wages up to a cap of £1,875. Employers will pay ER NICs and pension contributions and 20% of wages.

Chancellor Rishi Sunak said: "We stood behind Britain's businesses and workers as we came into this crisis and we stand behind them as we come through the other side. Now, as we begin to re-open our country and kickstart our economy, these schemes will adjust to ensure those who are able to work can do so, while remaining amongst the most generous in the world."

Echoing the sentiments of all the leading UK business groups, Adam Marshall, director general of the British Chambers of Commerce (BCC), said: "The chancellor has listened to business communities and struck a careful balance that will help many firms bring furloughed staff back to work flexibly over the coming months."

On the furlough scheme, Edwin Morgan, director of policy at the Institute of Directors (IoD), said: "This is a much more gradual tapering than many were expecting, reflecting the concerns the IoD has raised. The ability to bring people back part-time is crucial, and we're delighted the Treasury has taken on board our members' calls to bring this in as soon as possible."

Mike Cherry, national chair of the Federation of Small Businesses (FSB), said that the package would give "certainty and support to millions." On the extension of the self-employment scheme, he said: "Our self-employed community will be greatly relieved to know that the income cliff-edge they were facing in two days' time has now been removed."

Andy Chamberlain, director of policy at the Association of Independent Professionals and the Self-Employed (IPSE), said: "It will be an overwhelming relief for many self-employed people that the government has heeded our calls and extended SEISS. The scheme is a vital lifeline for millions of people and it is absolutely right that the government keeps it running."

However, Chamberlain warned that many freelancers have not been able to access the support - including those working through limited companies and the newly self-employed - and he urged the government to help these groups in the coming months.

He said: "The extension of SEISS will protect a large proportion of the self-employed sector, but after coronavirus, the country will be looking to all of the UK's five million-strong flexible workforce to get the economy back on its feet."

Written by Rachel Miller.

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