SEISS extended, but Chancellor “ignores” contractors
The welcome news that the COVID-19 support for the self-employed has been extended until August doesn’t make up for the fact that hundreds of thousands of freelancers and contractors have been “forgotten”, experts say.
In a Coronavirus news briefing last Friday, the Chancellor of the Exchequer, Rishi Sunak, announced that the Self-employment Income Support Scheme (SEISS) will run for three further months as the Government continues to provide financial assistance to millions of self-employed workers.
To cover lost income for June, July and August, eligible self-employed individuals can claim 70% (down from 80%) of their monthly trading profits in the form of one taxable grant up to £6,570. The Chancellor said the Government’s “top priority has always been to support people, protect jobs and businesses through this crisis. The furlough and self-employment schemes have been a lifeline for millions of people and businesses. We stood behind Britain’s businesses and workers as we came into this crisis and we stand behind them as we come through the other side. Now, as we begin to reopen our country and kickstart our economy, these schemes will adjust to ensure those who are able to work can do so, while remaining amongst the most generous in the world.”
But whilst the extension of the SEISS was well-received by sole traders and some commentators on self-employment, the Government was criticised for continuing to overlook the needs of the reported 710,000 freelancers and contractors who work via their own limited companies.
IPSE’s Andy Chamberlain pointed this out, along with the fact that those new to self-employment also miss out. He said it’s “vital that the Government does not ignore the self-employed who cannot access this scheme. At the moment, groups like freelancers working through limited companies and the newly self-employed have patently been forgotten. We urge the Government to consider these groups and also help them through the coming months.”
Also quick to voice his concern was Qdos CEO, Seb Maley, who asked the Chancellor why he has “ignored” independent professionals. He added: “The longer the situation plays out, the worse things get. Many have had projects cancelled, told their contract won’t be renewed and are under pressure to reduce rates. But unlike employees and sole traders, they don’t qualify for substantial support.”
Maley is referring to the fact that contractors, as employees of their own companies, are eligible for the recently extended Coronavirus Job Retention Scheme, which pays 80% of PAYE earnings only (in September, the Government contribution will drop to 70% before decreasing to 60% in October). However, for most contractors, who pay themselves a low PAYE salary, this leaves them unable to claim substantial financial support, as this article explains.
As a result, Maley called on the Government to “rethink the support available to this vital sector” and offer the “financial lifeline” that many need. This was an opinion also held by IPSE’s Andy Chamberlain, who outlined the importance of significant help for the entire self-employed workforce: “The extension of SEISS will protect a large proportion of the self-employed sector, but after Coronavirus, the country will be looking to all of the UK’s 5 million-strong flexible workforce to get the economy back on its feet.”