136,000 self employed in Northern Ireland offered help package- but timing is a concern
BUSINESS organisations have largely welcomed the scheme Chancellor Rishi Sunak unveiled on Thursday night to help the UK's five million self-employed workers, which includes 136,000 in Northern Ireland, or 15 per cent of the workforce.
But although described as "bold and comprehensive", there remain concerns with the time-frame.
Under the new arrangements, self-employed people will be able to apply for a grant worth 80 per cent of their average monthly profits over the last three years, up to £2,500 a month.
And unlike the employee scheme revealed a week ago, they can continue to work as they receive support.
The money is backdated to March and will land directly into people's banks accounts from HMRC, but not until June.
Ulster Bank chief economist Richard Ramsey said: “The self-employed cohort has been patiently waiting for support to match that for those working for employers, and while this package in many ways matched last week’s policy for employees, it was disappointing news for some.
“Self-employed workers who were working in 2018/19 and have submitted a tax return will be entitled to up to £2,500 a month, but if you were not working in 2018/19 (having a career break/maternity leave etc) you will receive nothing.
“The income support will be based on 80 per cent of the average of their last three years up to a maximum of annual profits of £50,000 per year. This encompasses around 95 per cent of the self-employed population.
“But there are some losers, because those self-employed on very low earnings who don’t submit a tax return will receive nothing.
“Those individuals who operated as companies and paid themselves dividends as opposed to earnings will also suffer as the support will not cover dividend payments.
“But perhaps the biggest challenge for many self-employed will be the timing of the payment, because those struggling today will have to wait another two months or so to receive income. They will have to avail of a range of payment holidays, rundown savings, resort to more borrowing (credit card / overdraft) and welfare benefits.”
FSB NI head of external affairs Roger Pollen said: “While what has been announced is not perfect and will not deliver for everyone, it does provide income for our most hard-pressed self-employed including taxi-drivers, hairdressers, plumbers, electricians and others who will have seen work disappear as people ‘socially distance’.
“This is an incredibly challenging situation for everyone. While the healthcare response is paramount, overcoming the economic disruption also requires a rapid response in the interests of jobs and future growth.”
The CBI described the package “likely to provide essential support to those facing significant uncertainty and loss of income” while Johnny Hanna, partner in charge of KPMG in Northern Ireland, described the package as “another landmark and welcome support measure aimed at preserving some of our most vulnerable businesses”.
KPMG is doing regular ‘what it means for business’ updates on each of the government’s new measures which go back to the first announcements. Details at www.bit.ly/3bts8EN