Self-employed workers will be able to claim support worth 80% of their average monthly profits to cover the impact of coronvirus, but may not receive payments until June.
The chancellor said the move – worth up to a maximum of £2,500 a month – would cover 95% of self-employed workers.
The package comes after the government came under sustained pressure as its initial package of financial support only covered employees.
Rishi Sunak said the scheme will be available ‘no later’ than the beginning of June.
It is open to anyone with trading profits of up to £50,000 and will only be available to those who make the majority of their income from self-employment so only the ‘genuinely self-employed’ benefit.
‘And to minimise fraud only those who are already in self-employment who have a tax return for 2019 will be able to apply,’ he said.
‘95% of people who are majority self-employed will benefit from this scheme.’
The chancellor said ‘it provides an unprecedented level of support for self-employed people’.
Acting Leader of the Liberal Democrats, Ed Davey said that he is ‘hugely concerned about how long this will take to deliver’.
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‘Many sole traders like taxi drivers, hairdressers and cleaners will not be able to wait until June.
‘I also worry about people who have been self-employed for less than a year who seem to be forgotten by this scheme. Many will have risked their savings to get started and it looks like they will get nothing from the package.
‘The chancellor’s promise that the self-employed can access loans is also worthless to the vast majority who won’t be able to provide the personal guarantees banks are asking small businesses for.
‘Liberal Democrats will continue to listen to the self-employed, freelancers and agency workers and put forward their concerns so that people in a desperate financial situation get help as soon as possible, ensuring that no-one is left out.’
Labour shadow chancellor John McDonnell also added he feared the money would come too late.
He said: ‘My worry is that if people cannot get access to the Scheme until June it will simply be too late for millions. People need support in the coming days and fortnight.
‘Asking people to rely on Universal Credit when more than 130,000 people are queuing online will be worrying to many people, so there is a real risk that without support until June the self-employed will feel they have to keep working, putting their own and others’ health at risk.’
Roy Rickhuss, general secretary of Community said: ‘As a matter of priority, we urge the government to ensure the systems to deliver the self-employed income support scheme are ready and in place as soon as possible to ensure cash gets into the pockets of freelancers and the self-employed urgently.
‘With an increase in Universal Credit claimants higher than during any month of the 2008-09 financial crisis, it is crucial additional resources are provided by Government to process claims which will be a lifeline for many self-employed people during the months ahead.
‘The crisis has exposed the inequalities faced by freelancers and the self-employed, and we will continue to lobby for the support to be in place for as long as the effects of the crisis continues. Going forward it is clear we need long-term solutions to provide a safety net and additional protections for the self-employed and freelance community.’