Currently, individuals operating via their own limited companies fall between the cracks of the Coronavirus support, with only PAYE salary considered in the Job Retention Scheme. This scheme does not take into account dividends, which often make up the majority of their income. Freelancers and the newly self-employed also fall outside the Self-Employed Income Support Scheme (SEISS).
The report, ‘Economic impact of coronavirus: Gaps in support’, unanimously agreed by members of the Treasury Select Committee, said the current support package is not enough since it misses out key groups such as freelancers working through limited companies and the newly self-employed. The report estimates that these groups, as well as new employees and others, make up over a million people who are missing out on support.
The report said: “The Government must assist these people if it is to completely fulfil its promise to do whatever it takes to protect people from the economic impact of coronavirus."
Picking up on evidence to the Treasury Select Committee by freelancer group, IPSE, the Report said: “The Government must find a practical solution to supporting the many limited company directors who are missing out on support because they pay themselves in dividends. IPSE has presented the Treasury with a ready-made solution and we urge the Government to accept and implement this proposal.”
IPSE - Sorely needed
Andy Chamberlain from IPSE said: “This report is timely and sorely needed by over a million struggling freelancers and others across the UK who have fallen through the cracks in the government support during Coronavirus. We are very glad the Treasury Select Committee listened to our evidence and warning about the freelance groups that have been left behind.
“There are over 710,000 freelancers who work through limited companies, most of whom are now burning through their savings to get by. This group in particular is a startling and glaring omission from the Government support. There are also hundreds of thousands of people who became self-employed just last year, who, in the early stages of their freelance career, are likely to be in a particularly precarious financial position. The Government has left these groups completely out in the cold.
“Recent HMRC data shows over million fewer eligible people than expected drew down on the Self-Employment Income Support Scheme. We urge the Government to turn these unused funds to help struggling, left behind freelance groups. We are far from the economy and the freelance sector returning to normal: as the Select Committee report highlights, these vital groups urgently need more support if they are to get through the coming months.”
Qdos - Rethink
Tax specialist Qdos, also called on the Government to act in response to the Treasury Select Committee report.
Qdos CEO, Seb Maley, said: “The Treasury Committee has sent a clear message to the Chancellor, who must plug this hole in the Coronavirus support and help 710,000 freelancers and contractors.
“Both the self-employment support and the Job Retention scheme have rightly been extended, but hundreds of thousands of independent workers have been left stranded. This is despite many freelancers and contractors facing tremendous difficulties, as projects get cancelled and they face pressure from clients to reduce their rates.
“With no clear end in sight to this crisis, it’s vital that the Government rethinks the support it offers freelancers and contractors, who will be instrumental in the UK's economic recovery.”
A Qdos survey, which over 1000 freelancer and contractors completed, showed:
- 28 per cent do not have any savings
- Over one-third have either had their contract terminated, told it will not be renewed or have been asked to reduce their rates
- 77 per cent do not think the Job Retention Scheme offers enough support, 17 per centare unsure, and only six per cent do.
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Susie Hughes © Shout99 2020