Home Self-Employed A third of self-employed ineligible for SEISS

A third of self-employed ineligible for SEISS

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Over a million people were left out of the government’s coronavirus financial support scheme for the self-employed, according to new statistics published by HM Revenue & Customs last Friday.

The Self-Employment Income Support Scheme (SEISS) was open to the approximately five million self-employed individuals who reported trading profits for the tax year 2018-19, but 1.6 million of those were automatically excluded from the scheme because they did not meet the eligibility criteria.

The vast majority of those who were excluded – 1.4 million, or eighty-eight per cent – were denied access to the grant due to having higher non-trading profits than trading profits, one of the key eligibility criteria.  Non-trading profits could include employment income or dividends.  0.5 million individuals, or thirty-three per cent, had trading profits of £0 or made a loss, and 0.2 million, or eleven per cent, had trading profits over the £50,000 threshold.

The 3.4 million self-employed who did meet the eligibility criteria were classed as “potentially eligible” for the SEISS scheme, because their business also needed to be “adversely affected by coronavirus” and still trading for them to be eligible for a grant.

By July 31, 2.6 million individuals, or seventy-seven per cent of those identified as potentially eligible for the SEISS scheme, had claimed a grant, with the value of these claims totalling £7.6 billion – an increase of 50,000 claims since June 30.  Applications for the first SEISS grant closed on July 13.  The average value per claim was £2,900, with grants being paid at eighty per cent of three months’ average trading profits, capped at £7,500.

Chancellor of the exchequer Rishi Sunak told the Commons’ Treasury Select Committee in July that neither the SEISS not the Coronavirus Job Retention Scheme (CJRS) would be extended to cover workers that had “fallen through the cracks”, telling the committee “it is not as if there is no support available for the group of people you have mentioned”.

However, Derek Cribb, chief executive of the Association of Independent Professionals and the Self-Employed, continued to urge the government to reconsider ways to support forgotten freelancer groups in light of the HMRC data, warning that the omission is behind falling numbers of self-employed individuals.

“The August SEISS statistics are a reminder that although the scheme continues to help a large proportion of the self-employed, over a million freelancers – including directors of limited companies and the newly self-employed – are not eligible for it,” he said.  “This is a stark omission that is devastating to hard working self-employed people across the UK.

“We are already seeing the consequences of the gaps in support in the steep drop in the number of self-employed people last quarter.  A second grant opened earlier this week, still without even a nod to these forgotten groups, who now face yet more months with no support.  With the threat of a second wave and further lockdowns looming, government must urgently consider ways to support these desperate forgotten freelancers.”

The HMRC data also revealed that around two-thirds of the potentially eligible population (2.3 million) were male, with less potentially eligible women claiming the SEISS (seventy-one per cent) than men (seventy-nine per cent).  The average claim for women was also lower at £2,300 compared to the average claim of £3,200 by men.

Around ninety per cent of claimants were aged between 25 and 64 and take-up of the grant in those age groups is at or above seventy-six per cent, with no one age group dominating and claims evenly spread.

The sector with the highest number of potentially eligible individuals and the highest proportion of claims was the construction industry. By July 31, construction workers had made 884,000 claims for SEISS totalling £3.1 billion.

Also the two regions with the highest number of claims were London (498,000) and the South East (379,000), reflecting their relative sizes.

27th August 2020.