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3m freelancers and contractors ‘wilfully ignored’ in new COVID-19 support

Industry bodies urgently call on government to stop ‘wilfully ignoring’ the 3million self-employed excluded from Coronavirus support

The Prime Minister has announced that the government will increase the financial support available to certain self-employed workers in November, during the second national lockdown in England, but continues to “wilfully ignore” millions of freelancers and contractors. 

The Self-Employment Income Support Scheme (SEISS) will be doubled from 40 per cent of average trading profits to 80 per cent. This will mean that those eligible can claim an average of 55 per cent of profits for the period from November to January, up to a maximum of £5,160.

Detailing the fourth set of changes to the economic support package on Twitter, Chancellor Rishi Sunak said the latest measures offer £4.5billion of support to self-employed workers for the next three months. 

3million small business owners remain excluded

Self-employed people eligible for the SEISS can apply for the grants from the end of the month, rather than mid-December. The Chancellor has also extended the deadline for businesses to apply for Coronavirus business loans to 31st January. But while the Treasury has said it has given £13.7billion of support overall for those in self-employment, it has not widened the eligibility scope of the SEISS.

According to the National Audit Office, nearly 3million freelancers, contractors and small business owners continue to be excluded from emergency Coronavirus supportAs a result, industry bodies and campaign groups are urging the government to stop “wilfully ignoring” this group, who are facing “serious financial uncertainty”.

It’s ‘deliberate, short-sighted and callous’

Derek Cribb, CEO at IPSE – the trade association for contractors and the self-employed, said: “The increase in SEISS is welcomed and will provide vital support for many of the UK’s struggling self-employed. However, it is deeply troubling that the government has still not fixed the devastating gaps in SEISS, despite urgent recommendations from the Treasury Select Committee. After so many calls to resolve the problems, it now looks as if the government is wilfully ignoring a third of the self-employed.”

Seb Maley, CEO at contractor insurance firm Qdos, called the move “deliberate, short-sighted and callous […] simply because [contractors] work via their own limited companies”.

Alongside IPSE and Qdos, the Federation of Small Businesses, the Institute of Directors (IOD), BackinBusiness, ExcludedUK and #ForgottenLtd (who penned this article in Contractor Weekly) are among the many experts urging the government to provide support for the newly self-employed and limited company directors, both of whom have had very little or no help at all since March. 

Government a ‘disgrace’

While the increase in SEISS will be a lifeline to many businesses, Liz Barclay, CEO at BackinBusiness, said for many it is too little too late:

“We have already seen nearly a quarter of a million self-employed people leave this sector and this will increase dramatically as we hit 2021. Many are facing serious financial uncertainty and for a Conservative government to leave them unsupported is a disgrace. We risk losing vital skills and resources the UK needs to drive our economic recovery.”

Qdos CEO, Maley, added: “The irony, of course, is that it will be these workers who the government needs most to kickstart the economy. It’s vital, therefore, that the Prime Minister tailors the support available to this key sector of the workforce before it’s too late.”

By Contractor Weekly

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9 thoughts on “3m freelancers and contractors ‘wilfully ignored’ in new COVID-19 support”

  1. Andrew Harrison

    I like a good slanging match and a punchy headline – ok got that.
    Let’s have some analysis – who is being ignored and why?
    (1) New start ups – yes – difficult case, on what should the support be based? Their business plan when they got their bank loan? At the start of any business there is a lot of hope and not much data. I don’t have any good ideas, but do agree that they are in a terrible position.
    (2) Previously profitable businesses with fixed overheads – again lots of sympathy and their accounts will show high turnover and high costs. What is harder to measure is how much of their costs are fixed and how much is going to drop with turnover. For that you need the accounts for the pandemic year(s) – not available yet but a promise of future support would at least show some concern.
    (3) profitable businesses where NI is avoided by paying dividends – see comments on previous articles.

    • Pickle

      @Andrew Harrison.

      Sooo directors pay themselves in a way that is legal which means they likely pay more CT and somehow that means they have not paid their dues so should not be supported ?

      I am playing devils avocado a smidge.

      I think the complaint that is not clearly stated is that these are companies like any other OR they are self employed – either way, they pay tax and a lot of it.

      They also provide a vital service after selling their employment rights down the river for a premium.

      Are you saying Andrew that this means they should not receive any fiscal support like a company or a self employed person?

      I hope all the PSC’s are making the most of the loans that are availabe that are being undrewritten by the Government and do not require assets to secure.

      • Andrew Harrison

        Ahh, you raise an Avocado (either devilled or pickled). A valid question, should dividend directors be denied support entirely?
        Nationally we have a lot of lost production – and it is going to get worse. How do we share the pain. No mechanism is going to be both practical and fair. Do we save Scout groups or zoos or hotels or airlines? How much do we support employees, shareholders *, the newly unemployed, the shielding?
        * If we look at shareholders what is our attitude to sole directors, overseas trusts, pension funds, hedge funds?
        I am sorely conflicted and don’t have defendable answers, worse I haven’t seen the question discussed.

  2. Graham

    Stop whining. You continually claim we are real businesses, yet as soon as there is difficulty, you want us to be treated like employees. It’s no wonder that real freelancers are being stuffed for IR35.
    If you’ve been paying a higher salary, you can benefit from the furlough scheme. If you have been paying minimum wage and then dividends, because you are a business, then you can take advantage of business schemes. You can’t have both.
    Really, you are making a laughing stock of us to the general public.

  3. Joe Biden

    Same arguments over and over again.

    Freelancers are FORCED to become LTD we would prefer to be self employed.

    As a legal entity we are ALLOWED to organise our tax as efficiently as possible.

    WE pay a HIGH amount of taxes already, MORE than an employee.

    Rishi (contract killer) Sunak, will not support us, but then states we need to pay MORE TAX.

    Rishi mate, you forget one simple fact, you (IR35) collapse the freelance market, HOW DO YOU EXPECT UNEMPLOYED PEOPLE TO PAY MORE TAX ?

    • Andrew Harrison

      Do contractors pay more tax than employees? For the same PAYE salary it seems to me that Employees NI and income tax will be the same. Employers NI will be the same but as an employee you don’t get to touch it before it goes to HMRC. VAT, for every £ a contractor hands over in VAT there is a corresponding reduction in the VAT of the company paying the invoice. Total VAT receipts by HMRC the same (again as an employee you don’t handle the VAT before it goes to HMRC).
      Presumably you only pay dividends instead of PAYE if it increases your take home cash so waiving divident tax and corporation tax as extra amounts means you aren’t counting the income tax and NI savings.

  4. XY

    The Treasury and HMRC cooked up a clever “rule” that to be a member of a PAYE scheme…

    And for JRS purposes they decided that you had to submit an RTI on or before 20/3/2020 IN THE PAYE YEAR 2019-2020.

    So… all those annual submitters, legitimately working to a deadline of 5/4/20 are excluded.

    They are simply waging war against small companies -,people who they forced into a Ltd Co situation, then proceeded to shaft them.

    • Andrew Harrison

      Agreed – seems a strange and unnecessary device in the legislation. I am genuinely surprised that there are people who only get paid once a year – how do they manage for the rest of the time? Before I retired I needed that monthly cashflow (1 man company – IT contractor).

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