Chancellor Rishi Sunak says self-employed people facing financial difficulties will be able to have 80% of their monthly wages covered by the government.
He says support will be capped at £2,500 per month, and will initially last three months.
Speaking at a press conference in Downing Street, the chancellor said the grant would be based on a self-employed person’s profits over the last three years.
He said he recognised people who work for themselves were “deeply anxious” as the spread of the virus shutdown businesses and said “you have not been forgotten”. Sunak said: ”To support those who work for themselves, today I am announcing a new self-employed income support scheme.
Sunak said the measures would be in place for at least three months and amounted to “one of the most generous packages in the world”.
The money will be paid in a single lump sum, but will not begin to arrive until the start of June at the earliest.
Prior to Thursday’s news conference, the government had been under growing pressure to support the self-employed with a similar package of measures as introduced for employed workers.
Last week, the chancellor promised to pay 80% of salary for staff employees who are kept on by their employer, covering wages of up to £2,500 a month.
Sunak said the “economic fight” against coronavirus had been drawn up with the help of businesses and unions and was a “coherent, co-ordinated and comprehensive plan” that was “already starting to make a difference”.
In all, 95% of people who earn most of their income as self-employed would be covered, the chancellor added.
Treasury officials are said to have been working around the clock this week to prepare a package for the self-employed – which the government has said is a more complex task than helping those on PAYE.
Mr Sunak has previously admitted the government “will not be able to protect every single job or save every single business” amid the economic crisis caused by the coronavirus pandemic.
The Chancellor also alluded to the fact that this move may well result in self employed paying more tax and national insurance in the future as a form of “natural justice”.
Speaking about the announcement Dame Carolyn Fairbairn, CBI Director-General, said: “Many self-employed people across the UK will be hugely relieved tonight.
“These new measures will provide essential support to those facing significant uncertainty and loss of income.
“Given the complexity of the task, it’s understandable this will take time to deliver. Fast clarity on how and when money will reach their bank accounts will help individuals to plan.
“The self-employed make an immense contribution to our society and across many industries. They will play a critical role in the UK’s recovery once we overcome the worst of the virus.”
Adding his thoughts on the announcement, Gerard Grech, Chief Executive, Tech Nation said: “Of the 2.93 million tech sector workers in the UK, the self-employed are a key part of the tech ecosystem.
Being able to tap into freelance user experience design or software programmer talent, for example, enables the continued growth of the industry.
The new Self Employed Income Support Scheme announced by the Government today will therefore be welcomed by the tech sector’s self-employed workforce, with a taxable grant worth 80% of average profits over the past three years, up to £2,500 per month, and according to the Treasury, benefitting 95% of the UK’s self employed.”