The coronavirus pandemic has hit the UK, not only leaving many people worried for their health, but millions concerned about how the crisis could also have an impact on the finances. Today, national poverty charity Turn2us has reported a huge spike in self-employed workers using its online benefits calculator – a 1,800 percent increase from the week prior.
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Now, the charity is warning that current support will leave many substantially worse off than employees.
The surge in self-employed visitors came after Chancellor of the Exchequer Rishi Sunak announced that the Coronavirus Job Retention Scheme, where 80 percent of a workers wage up to £2,500 will be guaranteed by government, but this does not include support for self-employed workers.
As such, many self-employed people in need of financial assistance face no other option but to apply for Universal Credit.
David Samson, Welfare Benefits Specialist, said: “The removal of the Minimum Income Floor for self-employed claimants of Universal Credit is a welcome move to equalise the amount of support self-employed workers can receive to the same as Statutory Sick Pay.
“But the exclusion from the Coronavirus Job Retention Scheme creates a huge disparity between salaried workers and the self-employed, penalising self-employed people by hundreds of pounds simply because of the nature of their employment.
“We urge the government to put in place measures to ensure self-employed workers are protected from the economic repercussions of coronavirus on an equal footing with employees.
“At this critical time our society needs to stand together and provide security for everyone.”
The Turn2us analysis has shown that if self-employed households have to stop working due to Coronavirus, 82 percent would be better off if their income was guaranteed in same way as employees.
On average, each household will see their take home pay reduced by £781 per month, if they have to claim Universal Credit compared to an 80 percent wage guarantee.
This means that 3.3 million self-employed households may face the decision between facing a significant cut in earnings, as well as a five-week wait, or continuing to work and potentially endangering the lives of vulnerable people in their local community, Turn2us said.
The analysis found that for couples with a child dependant or numerous child depedeants – of which there are an estimated 1,105,000 self-employed households in this situation – 82 percent are estimated to be worse-off, by £800 per month.
What coronavirus support has currently been announced for self-employed people?
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During the pandemic, the Minimum Income Floor within Universal Credit has been removed for the duration of the outbreak, meaning self-employed people will receive Universal Credit at a rate equivalent to Statutory Sick Pay.
There has also been a deferral of Income Tax payments due in June 2020 to January 2021, and a deferral of VAT payments.
That said, most self-employed people earn below the £85,000 threshold to pay VAT in the first place, Turn2us said.
Following the analysis, Turn2us has released a number of recommendations, and this includes immediately ending the five-week wait for the first Universal Credit payment.
Turn2us coronavirus support recommendations:
- Put in place measures to ensure self-employed workers’ earnings are protected on an equal basis to employees under the Coronavirus Job Retention Scheme
- Immediately end the five week wait for Universal Credit by making advances non-repayable, or at the very least offering a 12 month repayment holiday.
Last week, the Chancellor Rishi Sunak announced an increase in the Universal Credit standard allowance of £1,000 over a year for 12 months, as an emergency measure during the pandemic.
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