Small employers welcome lifeline, but self-employed question exclusion from 80% wage commitment, as Chancellor unveils fresh measures

Press Releases 20 Mar 2020

The Prime Minister has this evening ordered a host of high street small businesses – including cafes, bars, restaurants, cinemas and gyms – to close.

The Prime Minister has this evening ordered a host of high street small businesses – including cafes, bars, restaurants, cinemas and gyms – to close.

Meanwhile, the Chancellor has today unveiled fresh measures to support small firms and employees impacted by coronavirus-linked disruption, committing to the:

  • Launch of a coronavirus job retention scheme, allowing any employer the opportunity to apply to HMRC to have up to 80% of a member of staff’s salary paid – capped at £2,500 a month – backdated to 1 March, running for three months (a time-scale which will be kept under review) with no limit on funding for the initiative.
  • Deferral of any VAT due for the next quarter, and a deferral of self-assessment sums due until January 2021, alongside suspension of the Minimum Income Floor for sole traders claiming Universal Credit.       
  • Extension of the interest free period for loans taken out through the business interruption loan scheme from six months to 12.  

Federation of Small Businesses (FSB) National Chairman Mike Cherry said: “The closure of thousands of small businesses on our high streets will threaten futures. It’s critical that the cash grants being made available to those in the retail, hospitality and leisure sectors reach them as swiftly as possible – and extension of their scope to other sectors given serious consideration. Insurers must stand ready to help those with business interruption policies.  

“The coronavirus job retention scheme marks an unprecedented intervention. Executed swiftly, it will protect livelihoods and the viability of small employers. Putting a straightforward application process in place for the scheme will be central to its success. Many small employers will today be breathing a huge sigh of relief.  

“However, the fact that it will not be operational for a month means many small employers are still presented with an immediate, potentially terminal cash flow crunch. Therefore it’s vital that banks play their part, and ensure that any small business owner seeking a 12 month interest free loan from Monday is helped immediately – there are no excuses.

“While it was encouraging to hear the Chancellor pledge his support for the self-employed today – with a commitment to defer self-assessment and VAT bills and suspend the Minimum Income Floor – this Government has a long way to go to show it’s on the side of our five million-strong self-employed community. Over the coming days, we need to see the Chancellor map out how he will directly support the self-employed in the same way as he has committed to directly support employees.

“The question at this point is – with firms being force to close – why have the self-employed been excluded from the commitment to pay 80% of earnings?

“It cannot be right that an employee currently earning £25,000 a year could access £20,000 per annum through the new job retention scheme, while someone who’s self-employed earning the same sum might only access around £5,000 worth of support.

“We need to see the Prime Minister’s ‘whatever it takes’ approach extended to the self-employed – that means following the lead of other nations by guaranteeing 80% of incomes for those who lose work.”  

About FSB

As the UK’s largest business support group, FSB is the voice of the UK’s small businesses and the self-employed. Established over 40 years ago to help its members succeed in business, FSB is a non-profit making and non-party political organisation that’s led by its members, for its members. As the UK’s leading business campaigner, FSB is focused on delivering change which supports smaller businesses to grow and succeed.

FSB offers members a wide range of vital business services, including access to finance, business banking, legal advice and support along with a powerful voice in Government. Each year FSB also runs the UK’s Celebrating Small Business Awards. More information is available at www.fsb.org.uk. You can follow us on twitter @fsb_policy and on Instagram @fsb_uk.

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