Volodymyr - stock.adobe.com
Financial technology (fintech) professionals have created a cloud-based tool using open banking technology to help self-employed people prove their income losses during the Covid-19 coronavirus crisis.
The service will access transaction data from the bank accounts of self-employed people, made possible by open banking regulations, and will be able to prove an individual’s earnings. It collects historic banking data from the last 12 months as evidence of past income and potential loss of income in the future.
Known as Covid Credit, the tool is in development and has not been given the green light by the government.
The concept was created by staff at fintechs including Credit Kudos, 11:FS, Coconut, Capital on Tap and TrueLayer. They are working on a proof of concept to support self-employed people prove their lost income to HM Revenue & Customs (HMRC).
The group said in a statement: “In 48 hours, a team from the fintech community got together and built a working proof of concept. It allows a sole trader in the UK to self-certify that they have lost income and prove their previous 12 months of income by connecting to their bank account.”
Chancellor of the exchequer Rishi Sunak has announced that the government will pay 80% of the wages, up to £2,500 a month, of those who cannot currently work because of the Covid-19 pandemic – but this was not guaranteed for self-employed workers.
There are millions of self-employed people in the UK who will not be able to work during the pandemic, and there is uncertainty about whether they will be able to claim relief from the government beyond basic sick pay.
Read more about open banking
- The government’s Competition and Markets Authority has requested feedback on proposals to increase competition in the UK banking sector.
- The Competitions and Markets Authority opens up the banking apps market following an investigation into how to create greater competition in banking.
- With the EU’s Payment Service Directive (PSD2) taking effect in January 2018, banks have no time to waste in preparing for the changes it will bring.
The Covid Credit team said the tool has been made possible by the UK banking system’s open banking regulations. “Recent transaction history provides proof that income has been affected recently and by the crisis,” the group said.
“Whilst the proof of concept is not publicly available, it works, and by creating something that works, the hope is to demonstrate that this service could help the five million self-employed through the Covid-19 crisis.”
The group urged the UK government to collaborate with the fintech community to help the self-employed community.
“We are here and we are able,” it said. “This service is ready to go live, but we are waiting on input and support from the UK government before we do so. Sole traders could use Covid Credit’s proof of concept to generate a self-certification of income loss to send to HMRC.”
Read more on IT for financial services
IR35 reforms: Chancellor slammed for dig at self-employed tax habits during coronavirus briefing
Coronavirus: How app developers large and small are working to help fight Covid-19
Coronavirus: IT contractors ‘left stranded’ by exclusion from support for self-employed
IR35 private sector reforms: Coronavirus prompts Treasury to delay start date to April 2021