Last week, the Chancellor of the Exchequer formally announced details of the government's Statutory Self-Employed Pay scheme (“SSEP”), which will provide millions of self-employed individuals in the UK with direct cash grants worth 80% of their average trading profit over the last three years, up to a limit of £2,500 per month. This is expected to cover 95% of those who receive the majority of their income from self-employment.
The announcement of the scheme is, on the whole, good news for the five million self-employed workers in the UK. Gambit’s review of the available details suggests that SSEP presents individuals with a number of areas which require prudent consideration:
- Those individuals that are working through their own personal service companies (“PSC”) will not qualify for support under the scheme. Instead, these individuals should pursue recourse through the Job Retention Scheme, which covers up to 80% of furloughed workers salaries subject to a £2,500 limit.
- The subsidy will not be formally available until June and with one in three self-employed people earning less than £10,000 per year, this is likely to be challenging. We would encourage the implementation of proactive plans under other live support schemes such as the ability to defer VAT payments and engaging funders with regards to the Coronavirus Business Interruption Loan Scheme to bridge any short-term liquidity requirements.
- SSEP is very much designed to help those with the simplest tax affairs, (i.e. sole traders submitting a self assessment tax return). Those with less simplistic tax arrangements may experience difficulties claiming a full entitlement under SSEP.
- There is a ‘hard’ cut-off at £50,000, therefore, if average trading profits are even a penny higher, help under SSEP is unavailable, despite the lack of any income limit on eligibility for the Job Retention Scheme.
- Workers paid under the Construction Industry Scheme (“CIS”) are covered by SSEP, but only if the CIS contractor does not operate via a PSC. Therefore, corporates should review their respective employment structures to ensure that they are optimised to receive the appropriate subsistence entitlement.
Gambit’s Human Capital and Debt Advisory teams are in constant and direct contact with key industry bodies, mainstream funders and alternative finance providers to understand the latest guidance and support available. We would be happy to speak with any companies that have concerns and wish to understand the options available to them.