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Self-employed Support Update: Australia, USA, UK (big move)

Friday, March 27, 2020

This is to give you an update on the support package available for self-employed, small business people, particularly if you are a sole trader.

On Monday we released this summary which has generated very high Internet traffic.

Updates are:
  • The Cash Flow Support (item 2) is definitely only available if you have employees. This is confirmed from a new ATO link that we reference in our summary.
  • Instant tax write-off (item 7) details are now available from the ATO.
  • State government support (item 9). We’ve inserted a summary.
Go to our updated summary here.

The upshot is that for self-employed people who don’t employ anyone the primary support is by immediate access to unemployment benefits (item 1).

If you are in need of accounting help, our referral accountants Fresh Numbers are flat out assisting their customers. If you’d like a referral, don’t hesitate to contact me: Ken Phillips 0412 393 692 or my direct email.

Big move in the UK for the self-employed

Last night (Thursday) the UK government announced a massive support package for Britain’s 5 million self-employed people, namely:
  • A guarantee of 80% of a sole trader’s income up to 2,500 pounds per month.
  • Applies for 3 months but may be extended.
  • But not available for people operating through a Pty and high-income earners.
Details here.

In addition, you may recall that earlier this month we put in a submission to the UK House of Lords inquiry into the ‘Off Payroll Tax’ rules (Youtube explanation).  We slammed the UK tax authority HMRC as being grossly incompetent. Well, last week the UK government announced a 12 month delay to implementing ‘Off Payroll.’

It seems that finally the government realised that the appallingly bad tax behaviour of HMRC was about to crush hundreds of thousands of self-employed people smack bang in the middle of the Coronavirus crisis.

United States moving hard for the self-employed

The massive $US2 trillion US stimulus includes major self-employed assistance.

In what has been described as ‘unprecedented’, the stimulus extends unemployment benefits to gig workers, freelancers and self-employed people who normally don’t qualify for the benefits. The benefit includes an additional $US600 per week for 4 months. Even songwriters are included. There’s also small business loans.

The US package is similar in design but more than twice the size of the Australian support.

The coronavirus crisis has triggered a massive rethink by government policy-makers on the importance of self-employed people in modern economies. The former US Deputy Secretary of Labor describes the opening of unemployment benefits to the self-employed as a “gigantic change”.

What has happened is a rapid realisation of the extent to which self-employed people are now a permanent, intricate and embedded part of the core guts of the economy. This is highlighted in the USA where a staggering 42 million people are self-employed—that’s 33% of the workforce. To allow this sector to collapse would surely trigger a deep US recession at minimum, where, just recently in February, the US unemployment rate was 3.5%.

To date, self-employed people have largely been viewed by the public policy bureaucracy as an annoyance and an administrative inconvenience. To tax authorities the self-employed have been seen as tax cheats, because we don’t easily fit their tax systems. The UK HMRC have been super bad on this score. Same with the Australian Taxation Office. But the USA has shown the way with the IRS.

The Australian Small Business Ombudsman, Kate Carnell on 19 March called for additional support for Australia’s 1.45 million self-employed sole traders. To let this group drop through the business support net risks significant recessionary outcomes.

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