U-turn on penalty for 70,000 freelance mothers ‘unfairly’ left with less Covid-19 income support

Linda J. Dodson

Freelance mothers who were penalised and left with less state aid because they took time off to have children will now be able to claim what they are owed, after a Government u-turn.

It marks a major victory for campaign group Pregnant Then Screwed, with support from Telegraph Money, which called for changes to rules that left self-employed mothers worse off.

The policy was changed after the women’s interest group said it would sue the Government for discrimination and violations of the European Convention of Human Rights if the “unfair” quirk in the system affecting an estimated 70,000 women was not plugged. 

The state aid scheme allows struggling freelancers to claim grants of up to £7,500 to cover up to 80pc of normal earnings for income lost between March and June. The payouts are based on average profits over the past three years, but previously did not discount maternity leave. This meant women who had taken time off to have children from April 2016 were left significantly worse off. 

The maximum amount a self-employed mother can claim while on maternity leave is £151.20 a week.

One self-employed mother from Guildford, who wrote to this newspaper, said her maternity leave meant she had received £2,000 less than her husband, even though both worked similar hours as driving instructors. 

HM Treasury has now said self-employed parents whose trading profits dipped in 2018-19 because they took time out to have children will be able to claim.

New rules will ensure mothers who took time out to care for their children within the first 12 months of birth or adoption will now be able to use their 2017-18 or both their 2016-17 and 2017-18 self-assessment tax returns to calculate how much they can claim under the scheme.

However, the new rules will only apply to 2018-19. Anyone who took maternity leave in the two tax years prior to 2018-19 could still end up with less, as their lower earnings from the time will dilute their average profits when calculated over three years. 

The Government will reveal further details of the new regime with published guidance in July. 

Laura Suter of finance firm AJ Bell welcomed the change, but said: “We need to see the detail of these new rules before we know whether it will solve the problem for all those currently affected, or whether a smaller group will still be caught short.”

Freelancers still getting by on reduced incomes can claim a second round of grants in August. The new grants will provide self-employed workers with up to 70pc of their average profits to cover a further three months of lost income, up to £6,570.

So far 2.6 million freelancers have used the scheme, claiming £7.6bn in support.

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