Approximately 230,000 of Britain’s self-employed continue to be excluded from any Government support because they have had trading profits of £50,000 or more in the last three years.
Campaigners are calling on the Chancellor to step in and remove their exclusion from the Self Employment Income Support Scheme, when he makes a summer statement to the House of Commons tomorrow.
There are hundreds of thousands of sole traders that have not had any income since March, whereas employees on the furlough scheme can get up to £2,500 per month even if they earn more than £50,000 a year.
From plumbers to dentists, photographers to therapists, we spoke to some of those affected who have paid plenty of income tax in recent years, but now feel penalised while employees in a similar position are helped out.
Members of the Excluded UK non-profit NGO are urging Chancellor Rishi Sunak to readdress the schemes currently available to support small businesses during the coronavirus pandemic
When the Government launched the Self Employment Income Support Scheme for the self-employed, its eligibility criteria excluded those earning more than £50,000.
While this purported to focus the help on those that need it most, those suffering have highlighted unfair disparities surrounding the cap and are urging Chancellor Rishi Sunak to reassess the scheme.
For example, a couple earning more £49,500 each would be entitled to a SEISS grant of up to £7,500 each to cover three months lost earnings, while a single person earning £50,500 would not.
Anyone with more than £16,000 worth of savings is also unable to apply for Universal Credit, which would have been a potential option to help with financial aid towards living costs.
A quirk of this is that a sole trader keeping money aside in their bank account to pay their tax bill, could be unable to claim Universal Credit because of this. And while tax payments on account can be deferred, they are not cancelled and must be paid in the future.
‘I’m anxious for my industry’
Dimitri Kremmydas, 47, from London is a self-employed dentist who works for a private healthcare provider.
Prior to lockdown, he earned around £4,000 per month but this has fallen to practically nothing as his working hours have fallen dramatically and he is unable to access SEISS because his annuals earnings are more than £50,000.
Dimitri Kremmydas is living off his savings
‘Luckily I have savings but these will eventually run out as I have inflexible and essential outgoings such as paying my rent, alimony and maintenance to my ex-wife and son and business expenses.’
‘I have had to scale back everywhere I can but even so, I only have enough money to survive another four to five months.’
Dimitri said healthcare is going through a period of lower earnings across the board with high PPE costs, fewer patients because of restrictions and their own fears and strained finances.
He says dental practices are likely to be okay for another few months, but he’s anxious that the industry will be in trouble if there’s another lockdown as patients won’t be coming in.
‘I don’t feel good about the way the Government has dealt with self-employed workers, with its “middle of the ground” approach to lockdown which has meant workers haven’t been supported in terms of their health and safety but they haven’t been supported financially either.
‘Regardless of earnings, as tax payers, we deserve more support. We should be offered support similar to that which salaried employees are being offered through the furlough scheme.’
Being 47, Dimitri doesn’t see there being a lot of scope for him to find another job or make a career change, so should anything happen to his job, he’s likely to be stuck.
Together with two other self-employed small business owners, Sonali Joshi launched Excluded UK, a non-profit non-governmental organisation which serves as a support network for those entirely or largely excluded from any support measures.
Based on their own findings combined with Government and ONS data, the group believes there is close to three million people left behind by the Government – not to mention their dependents and others impacted by the knock-on effect.
Speaking to This is Money, Sonali said: ‘We see ourselves as a grassroots organisation, not a campaign group but a support mechanism. Ultimately we are about raising awareness.’
Excluded UK has found around three million people have been excluded from Government support – with around 230,000 of that being sole traders earning more than £50,000
Commenting on the group of people excluded by the £50,000 cap on the SEISS grant, Sonali said it is ‘an absolute cliff edge’.
‘There is huge disparity there. Salary limits to do not exist in the furlough scheme. We would like the Government to acknowledge that there are gaps in its schemes and to address those gaps.
This is a real hardship and livelihoods are at stake – Sonali Joshi, Excluded UK
‘It has been almost four months now. Time is pressing and the impact of exclusions are being felt deeply.
‘We conducted a survey with over 2,200 responses and 72 per cent are now on less than 20 per cent of their pre-Covid income.
‘These are people from all walks of life, employment status, background and industry. This is a real hardship and livelihoods are at stake.’
Many sole traders have been advised to apply for a Coronavirus Bounce Back Loan, however, amid so much uncertainty, it is understandable that many do not want to be saddled with debt that must in future be paid back, while others are being supported.
Raymond McClaren is a self-employed commission-only salesperson and does not qualify for SEISS because he has earned approximately £57,000 on average for the last three tax years.
His wife is still working but on a reduced salary and with her income he is not entitled to Universal Credit. He qualifies for a Bounce Back Loan but fears going into debt.
Sonali added: ‘We know of some that have ended up applying for a Bounce Back Loan but they struggled while having to wait weeks and weeks and some are still waiting.’
Should the self-employed get help?
More than nine million employees are having 80 per cent of their wages up to £2,500 a month paid by the taxpayer under the furlough scheme, with no limits barring high earners from help.
In contrast, anyone who is self-employed and has made more than £50,000 in recent years gets no help whatsoever.
Is that fair? On this podcast we discuss the issue and that of limited company directors who are also excluded from help.
‘Hit by a perfect storm’
Steven Gray works in TV as a director of photography but has had no work since March. The 54-year-old says the £50,000 threshold is ‘discriminatory’.
He said: ‘The parts of TV that I work in (commercials/online content/documentaries) have been hit by a “perfect storm” of insurance issues, social distancing issues, foreign travel problems and the financial hit from lockdown.
‘There is nothing in the diary. I think the best I can expect this year is a return to 10 per cent of normal activity and it will take much more than a year to get back to pre-Covid levels.
‘I would have come under the SEISS grant if it wasn’t for the divisive and discriminatory £50k cap. There is no cap in the Coronavirus Job Retention Scheme. Someone earning £200,000 still gets access to the maximum grant of £2,500.
‘I am not eligible for Universal Credit or Jobseekers’ Allowance and the Bounce Bank Loan does not apply for me as it is meant for business costs only and I don’t have any purchases to make for the business.
Photographer Steven Gray compares the stress and pressure of the current situation to previous jobs he has had working on the frontline in Iraq and in the frozen wastes of Antarctica
Steven says he is currently using his savings to pay for his mortgage and is unable to find any other employment such as supermarket or delivery work as he is home schooling his two children.
‘I have worked in some tough environments with my job, from the frontline of Iraq to the frozen wastes of Antarctica, and this situation is up there with those due to the massive uncertainty over finances.
‘I am not looking for any special treatment that others aren’t getting. For me, it is all about parity with the Job Retention Scheme. The SEISS should be opened up to all sole traders.’
‘Mentally, this is taking its toll’
45-year-old Anna Higo is a physiotherapist and runs Physiocure, a private clinic in North Leeds, with her business partner. She has already had to start making redundancies.
Anna Higo is a physiotherapist based in Leeds and is unable to access a SEISS grant
‘Not only have we had to completely shut down but the future is going to be so very different as we are such a hands on profession,’ she said.
‘We were hoping to access some kind of grant but couldn’t get anything as we rent the space in a Bannatyne Gym and I have earned between £50,000 and £60,000 over the last three years.
Anna believes the future of Physiocure is uncertain.
To cover costs the company needs to be at capacity but with new safety measures, appointments will need to be staggered and less people seen each day – and that’s only when they eventually reopen.
‘I have managed to get a six-month mortgage holiday but still have other bills. We have a five-year old son and my husband is also self-employed. He has managed to get a small SEISS grant but not enough to cover our outgoings.
‘We have both accessed Bounce Back Loans but to go further and further into debt is frightening. Mentally, the injustice of this is taking its toll on me.
‘The solutions are not complex’
Excluded UK was launched in May but has already built a community of thousands of UK workers that feel let down by the Government.
One of its founding members, Sonali Joshi, said the network does not want to create solutions but support the campaign groups and raise awareness.
‘The Government repeatedly claims everyone is being helped in one way or another but we know that is not true.’
Speaking at the Excluded UK APPG inaugural meeting today (7 July 2020), Sonali said: ‘Many have been paying tax for years, sometimes decades, and when they needed help the most, the safety net wasn’t there and they found that the Government had abandoned them.
‘£400 to £575 per month on furlough for a limited company director unable to work is not meaningful, £342 Universal Credit for a single person or worse still, £409 for a couple is not meaningful; deferring VAT or taking out a loan amid such uncertainty is not meaningful.
‘Redress is needed urgently. The disparities in the schemes need to be addressed, and support needs to be backdated and extended in line with the existing schemes. All exclusions need to be covered. The solutions are not complex.
‘We would like all these exclusions to be addressed urgently by the Chancellor. And we would also like to see a backbench debate.’
180 MPs from nine different parties have pledged their support for the three million people excluded by the Government support schemes.
Founder of the Excluded UK APPG, Jamie Stone MP said: ‘Today we created a significant force in Parliament.’
Small Business Essentials
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