CV-19: REMAINING ISSUES WITH SEISS FOR THE SELF-EMPLOYED

Today the Government website opens for the self-employed to claim the third Self-Employed Income Support Scheme (SEISS) grant.

Whilst this grant will be very welcome to those people eligible, there are a number of remaining problems by comparison to the Furlough scheme that have not been addressed:

• Two missing months 
• Applicable rates
• Frequency of subsequent payments
• What about the self-employed excluded from the earlier SEISS grants?

 

THE CORE PRINCIPLE OF COMPARABILITY WITH FURLOUGH SCHEME

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.", CJRS,  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 since CJRS started in March?

 

TWO 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.

 

SEISS1 and SEISS2 has been paid for two quarters, to cover the six months March to August.  As SEISS3 is for November to January, what has happened to September and October?

 

Two quarterly payments have been made for SEISS, for six months, compared to eight months for Furlough.  Two months lost by the self-employed.  A further payment needs to be offered to the self-employed for those adversely affected by COVID-19 in September and October.

 

 

WHAT RATES SHOULD BE USED?

 

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, for those adversely impacted by coronavirus in that period
  

 

FREQUENCY OF SUBSEQUENT PAYMENTS

We do not know how long the Furlough scheme will continue into 2021, and at what rates they will be paid.

Self-employed people will usually have their mortgage, rent and other major payments made on a monthly basis, just like employed people who have benefited from Furlough.

It has been announced that there will be a further payment of SEISS for February to April.  This would be more appropriate to be paid monthly.

WHAT ABOUT THE SELF-EMPLOYED EXCLUDED FROM THE EARLIER SEISS GRANTS?

Some 'self-employed' run a company, so are not technically self-employed for tax purposes, and therefore not eligible for the SEISS grants.

Those who are technically self-employed are not all eligible, either because they have been earning over £50,000 or started their business since 5 April 2019.  

These situations all have major practical issues to resolve, and the Government's answer has been they should claim Universal Credit if need be.

However there is one group whose exclusion from SEISS has never made sense, and could more easily be amended.  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.  Maybe something like 25% would be a more appropriate threshold for claiming SEISS?

 

IN CONCLUSION

The latest SEISS payment is very welcome to those who are eligible.

But there remains several issues for support to be comparable to the Furlough scheme, as the Government says is its intention:

• Payment should for be made for September and October for those adversely impacted by coronavirus in that period, at 70% and 60% respectively
  

• Everyone paid SEISS2 for June to August should have their payment topped up from 70% to 80%

• Payments for February onwards should be made monthly

• Those self-employed earning slightly less than 50%, say over 25%, who would otherwise be eligible, should be eligible for SEISS backdated to the first grant