Thursday, March 26, 2020

COVID-19 and Art #6: Financial support for self-employed artists and freelancers

Rishi Sunak, the Chancellor of the Exchequer, has just announced the nature of the support to the self-employed.

A lot of artists are seld-employed and others have a portfolio of income streams - with both employment income and self-employed income.

Only those whose earnings are predominantly from self-employment will be eligible for help.

I'm not going to deal with the support being provided for employment.

The Chancellor of the Exchequer at the News Conference which announced the Support Package

Features of the support on offer


The proposals are set out in the following: Chancellor gives support to millions of self-employed individual (News Release) - Rishi Sunak announces world-leading scheme to support the UK’s self-employed affected by the coronavirus outbreak.

According to Sunak, this was the most generous package made available by any country.
The scheme has been designed after extensive engagement with stakeholders including the TUC, the Federation of Small Businesses and IPSE - The Association of Independent Professionals and the Self-Employed.
This is his speech at the News Conference

UPDATE: Subsequently, HM Revenue & Customs published the Guidance: Claim a grant through the coronavirus (COVID-19) Self-employment Income Support Scheme. This sets out

  1. Who can apply
  2. How much you’ll get
  3. How to apply
  4. After you’ve applied
  5. Other help you can get

Below is my summary.

Key Features


A NEW Self-Employed Income Support Scheme is being introduced. It will be available to those who
  • earn up to £50K from self-employment annually as 
    • EITHER a trading profit of less than £50,000 in 2018-19 
    • OR an average trading profit over 3 years of less than £50,000 from 2016-17, 2017-18 and 2018-19.  
    • (i.e. there is a cap on the grant and those earning more than £50k on average will NOT be eligible)
  • whose income is predominantly from self-employment. (i.e. more than HALF their income must come from self-employment) The criteria covers 90% of the self-employed.
  • have submitted their tax return on time (although those who didn't have a "get out jail" card - and have four weeks to get their return in!) 
  • ONLY those who are already in self-employment AND meet the above conditions will be eligible to apply. 
Those eligible can apply for
  • a taxable cash grant worth 80% of their average monthly trading profit over the last three years.
  • up to £2,500 per month in grant
  • for at least 3 months. 
There is no suggestion that the support scheme will benefit those who consistently make a lot more money than this.

Amounts payable will be based on the last three years of tax returns. HMRC will determine the size of the grant by using the average trading profits from tax returns in
  • 2016-17,
  • 2017-18 and
  • 2018-19

Applying for the Grant


Individuals should NOT contact HMRC now. He said HMRC will know who is eligible based on the information contained in their tax database.

People will be sent a letter/email and be invited to apply - once the scheme is operational.

It's very likely that this communication will include a piece of information only known to you and HMRC (i.e. beware scammers)

Those who are eligible for the new scheme will be able to
  • apply directly to HMRC for the taxable grant, 
  • using a simple online form.
  • You will access this scheme only through GOV.UK (and your normal gov.uk account for your tax return)
The arrangements will have regard to fraud.

It's also important that you IGNORE all representations from those claiming to be HMRC - especially those asking you to pay HMRC money before you can claim.

Grant Payments


Grant payments will start in June. Before grant payments are made, the self-employed will still be able to access other available government support for those affected by coronavirus including:
  • more generous universal credit and
  • business continuity loans where they have a business bank account
The cash grant will be paid directly into people’s bank account.  You will recall we all give details of the bank account we use for tax payments on our self-assessment returns.


A maybe predictable corollary


The Chancellor made the point that the support being offered was equivalent to that being offered to those who are in employment

Working out the scheme had highlighted the discrepancies in contributions made by those in employment and those who are self-employed.

It was considered fair to make arrangements to
  • equalise contributions after the pandemic is over 
  • so that everybody makes an equal (prorata) contribution to the absolutely massive bailout 

Support for artists in Germany


Earlier the German government made announcements about how they intended to support those who worked in the cutural sector READ Germany Has Rolled Out a Staggering €50 Billion Aid Package for Artists and Cultural Businesses, Putting Other Countries to Shame The three-part package includes
  • up to €50 billion ($54 billion) in aid for individuals who are self-employed as well as for small businesses. It will come in the form of 
    • grants designed to help with overhead costs like venue rentals and artist studios. 
    • Loans will be available to help businesses bridge financial bottlenecks. 
    • funding will also support media enterprises, including newspapers.
  • social security (including unemployment insurance) will be made available to freelancers for a period of six months.
  • Loans may also be deferred. People can ask for a reduction in their payments or an advance on their tax refunds.

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