Financial experts explain who in the 5 million self-employed will or won't get help from the Government

Despite the long awaited plans by the chancellor Rishi Sunak for the self-employed outlined this week many will be left with nothing other than to claim benefits as business dries up.

The Government’s package promises to give the self-employed 80% of the their average monthly profits earned over the last three years up to £2,500. However those who have become self-employed in the last three years are left out, as are those in the gig economy and those on zero hours contracts but are effectively self-employed.

ICSM Credit’s Ian Carrotte said: “Nearly two million self-employed people will get no help from the scheme announced last night because they have only become self-employed recently such as those who own their own van or truck for deliveries. Start-up sign-makers and printers operating from a small business unit or even a lock-up are penalised as are a host of legitimate businesses who make up the backbone of the economy.”

Advice

The financial journalist and presenter of BBC Radio 4’s Moneybox programme Paul Lewis echoed Ian Carrotte’s words. He said: “It is wrong to say only 5% are left out. It is about a third including people who have started self-employment this tax year and those who make too little to pay tax.

“The Self-employed Income Support Scheme is based on profits not turnover. So people who have ploughed money back into capital expect to grow the business and taken little out as profits will get much less than those who have taken more out as profits.”

ITV

And the other Lewis, namely Martin Lewis of MoneySavingExpert.com  appeared on ITV’s The Money Show soon after the chancellor’s announcements to help explain the scheme. He said: "The profits are averaged over three years. That's up to the 2019 tax year - the one that ended in 2019. If your profits are over £50,000 on average - even £50,000 and a penny - you don't get anything. It's a cliff-hanger. You can still keep working during this time.”

"It's paid as a lump sum in June, but it'll be backdated for three months. So, effectively, you'll get March, April and May's money in June as a lump sum."

Unanswered questions

There were many unanswered questions in the package said Ian Carrotte. He commented: “Many businesses don’t have the reserves if they have only been trading a short while and these last few months have been a lean time for a huge chunk of the economy. To ask firms to wait until June or later this summer will mean more firms going into administration or simply shutting up shop for good. We accept it is a complex job but time is of the essence and unfortunately Governments and their civil servants don’t work under the same time pressures the commercial sector does.”

ICSM Credit

For details about ICSM Credit call 0844 854 1850 or visit the website www.icsmcredit.com or email Ian at Ian.carrotte@icsmcredit.com on how to subscribe and to join the UK’s credit intelligence network to avoid bad debts and late payers. Follow ICSM Credit on FaceBook, Twitter and YouTube and Ian Carrotte on LinkedIn.

To keep up to date subscribe to the FREE ICSM Credit Newsletter to hear all the latest insolvency news and to see who has gone out of business click on the orange panel on the top left of the home page of the website www.icsmcredit.com or send an email to Ian.carrotte@icsmcredit.com

For details for the work of the journalist Harry Mottram visit www.harrymottram.co.uk

Pic: Daily Express