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Self-employment support extended but contractors ‘forgotten’

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.”

By Contractor Weekly

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10 thoughts on “Self-employment support extended but contractors ‘forgotten’”

  1. Nev

    So contractors want to escape EMPE/EMPR national insurance by paying dividends and hence not paying in to the ‘social system’ like everyone else does. And then, contractors expect the social system to give them benefits based not on PAYE (like everybody) but their discretionary dividend payments. What Irony! “cake and eat it” comes to mind………

    • Jonny

      I couldn’t agree more with you Nev.
      Don’t treat me like an employee except when I want you to.
      Don’t expect me to pay money into government coffers but give me handouts.
      Let me charge as high a rate for my skills as the market will stand except when it won’t stand a high rate.
      Contractors shouldn’t be surprised that HMRC comes after them if they don’t operate like a company, don’t think like a company and don’t pay taxes due from a company.
      I’ve been contracting for over 10 years and currently have no contracts. The company hasn’t furloughed me and continues to pay me out of retained profits.
      Rough with the smooth.

    • IR35 Victim

      You clearly know nothing of contracting costs.

      I paid £56k to HMRC last year, pretty sure you didn’t pay that much.

      This year thanks to IR35 they will be lucky to get anything.

      But on the positive side HMRC know where you are and how much YOU earn and can adjust the tax system to make up the difference.

    • Andrew Harrison

      I am now retired but was a one man company. Yes Nev, spot on. Dividends should be a return on capital. I think my Company had £10 of my capital.
      The relative taxation of earnings from work and income from capital is a separate argument.

  2. Graham

    Contractors working through Ltd companies are employees of their company. They can access other government schemes accordingly. What this seems to be complaining about is that the Government isn’t bailing out dividend recipients, which would need to be set up for dividend recipients everywhere.
    We can’t have it both ways.

  3. Gavin

    Funny how the government perceives limited company contractors as disguised employees when it comes to their aggressive IR35 legislation, but now that there is money to be handed out we are suddenly deemed to be “proper” companies. But then next year we will not be proper companies again when the postponed IR35 legislation comes back in.

  4. IR35 Victim

    Funny that my role at a bank was terminated due to IR35, it should have run until the end of 2020.

    The last 3 months have seen HMRC miss out on VAT £6,825 dividend tax of £6,825 and personal taxes of another couple of grand.

    Makes the furlough money look pathetic, still when I sign on for UC, I can look forward to the permanent brigade screaming scrounger.

    The one good thing from this permanent staff will be cleared out soon as a lot of experts are available who can do the job quicker cheaper and with a smile.

    Careful what you wish for

  5. Eddy

    Some of these comments are unbelievable!

    Tax is tax…. never heard of the 7-32% dividend tax they make us pay? It levels out to the same as your employee income tax.

    Ok then lets play it this way. If I as an individual employee of my Ltd company only entitled to furlough based on my low PAYE income of £12k THEN
    my company that has been forking out dividends is also entitled to A GRANT NOT A LOAN to keep itself running.

    So I guess we are not “disguised employees” anymore otherwise pay us and treat us like others.

  6. Sick of Lefty Govts

    Am I the only one to have noticed that employees get hand-outs, no repayment required, while “self-employed” get loans?

    Loans!

    Many of the companies getting the handouts are mutinationals who will shift their profits elsewhere when the time comes.

    Get The Reform party up and running soon, Nigel!

    • Andrew Harrison

      Funny that, my wife is self employed and what she has just received isn’t a loan – it is taxable but that doesn’t seem unreasonable. The 80% of 3 months earnings is a “hand out”.

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