COVID-19: WHAT ABOUT THE THIRD SEISS GRANT FOR THE SELF-EMPLOYED?

Today is 19 November.  That's exactly six months after the first SEISS grant was paid to eligible self-employed people in May.  The second SEISS grant was paid around 21 August.  In each case a few days after people made their claims.  The third grant, SEISS3, has been announced, but claims cannot yet be made.  What is happening?

The self-employed who have been paid one or both of the earlier quarterly grants are very grateful.  However there are several issues:

• Delay in third payment
• The period for SEISS3, and missing months
  
• Monthly rates
  
• Frequency of subsequent payments
  
• What about the self-employed excluded from the earlier SEISS grants?

 

THE UNDERLYING PRINCIPLE

The SEISS3 webpage says, officially, "The Government are providing the same level of support for the self-employed as is being provided for employees through the Coronavirus Job Retention Scheme." also known as the Furlough Scheme.  That has been the basic principle from the start.  So shouldn't this be honoured for all time periods?

 

WHAT HAS BEEN ANNOUNCED?

The SEISS3 webpage from 5 November says, amongst further detail:

• "The online service for the next grant will be available from 30 November 2020" having been brought forward from 14 December
  
• "The third grant will cover a 3 month period from 1 November 2020 until 31 January 2021"
  
• "The Government has already announced that there will be a fourth grant covering February 2021 to April 2021"

 So let's run through the issues that these statements disclose.

 

TIMING OF THIRD PAYMENT

The payment mechanism has worked well for two payments.  Why aren't claims being accepted now, for payment mid-November in line with the previous payments?  

Two more weeks to wait is a major issue for many self-employed who have had had little or no trading income over the summer and autumn, and are waiting on the third payment for survival.  The website for claims for SEISS3 should be opened immediately.

THE PERIOD FOR SEISS3, AND MISSING MONTHS

The Chancellor Rishi Sunak originally announced for Furlough "The Coronavirus Job Retention Scheme will cover the cost of wages backdated to March 1st."

 

When the SEISS was first announced, the web page said the payment "...will cover the three months to May.  That is consistent with the start date for the Furlough scheme. 

Then for SEISS2, it was announced it "will be extended", i.e. June to August.

 

So SEISS1 and SEISS2 cover the six months March to August.  If SEISS3 is for November to January, as announced, what has happened to September and October?

 

This omission clearly needs to be fixed for SEISS to be the same level of support as Furlough, as the Government have said above.  

There are two ways to do this:

• Re-designate SEISS3 as covering the months of September to November, or
  
• Add two months to the SEISS3 payment to cover September to October
  

The Government should do one or other for the level of support to be the same as for Furlough.

 

 

MONTHLY PAYMENT RATES

 

SEISS1 was paid at 80% of trading profits, subject to limits, to reflect the rate applying to Furlough CJRS.  SEISS3 is to be paid at 80% for the same reason.

However SEISS2 was paid at 70%, whereas Furlough continued at 80% for June to August.

The Furlough rates were as follows:

So to provide the self-employed with the same level of support as Furlough:

• Everyone paid SEISS2 for June to August should have their payment topped up from 70% to 80%
• Payment for September and October should be 70% and 60% respectively
  

FREQUENCY OF SUBSEQUENT PAYMENTS

Self-employed people are no different from anybody else in paying their main committed payments on a monthly basis, be that mortgage, rent, utilities and many other types.

Payment of SEISS should be changed from quarterly to monthly as soon as practicable, depending on how the missing two months is resolved.  That would make it similar to salaried employees in receipt of furlough monies.

 

 

WHAT ABOUT THE SELF-EMPLOYED EXCLUDED FROM SEISS GRANTS?

 

Some 3 million people who would regard themselves as 'self-employed' have not been eligible for SEISS grants:

• Self-employed for tax purposes:
• Average earnings over £50000, receiving nothing
• Started to be self-employed since 5/4/19, as no earnings history available
  
• Average self-employed earnings less than 50% of taxable income

• Owner/directors of limited companies
• For whom furlough has not been available
• Whether usually paid through the payroll and/or by dividend

The Government's approach has been to offer Universal Credit to any such person when in need. 

What's not clear is why those with slightly less than 50% of taxable income get no support.  For example I know a teacher who does some work for schools on their payrolls but bills nearly half her income directly to parents, self-employed.  So she has not been eligible for SEISS.  Presumably HMRC can see if total earnings are over £50,000.  Or maybe something like 25% would be a more appropriate threshold? 

IN SUMMARY

The Government has stated that they are "providing the same level of support for the self-employed as is being provided for employees through the Coronavirus Job Retention Scheme." also known as the Furlough Scheme.

For that to be the case:

• To resolve the missing two months, the next quarterly payment SEISS3 should either be:
  • To cover the months of September to November, or
    
  • Add two months to the payment to cover September to October
    

• Payment rates should be adjusted to be the same level of support as Furlough:

• Everyone who was paid SEISS2 for June-August should have their payment topped up from 70% to 80%
• Payment for September and October should be 70% and 60% respectively
• Note that if the SEISS3 payment is re-designated as September to November, anyone who also claimed for SEISS2 would receive the same amount of money, as the extra 30% for June to August would exactly balance out the 30% total reduction for September and October
  

• Payment should be changed from quarterly to monthly as soon as practicable, depending on how the missing two months is resolved.

• Payment should be provided to those whose self-employed income was less than 50% at some lower threshold, say 25% 
  

• Claims for SEISS3 should be opened as soon as possible, long before 30 November.  If necessary any other adjustments listed above can follow.