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Latest updates on SEISS, JRS and Universal Credit for the self-employed

• 06 Nov 2020
• Alasdair Hutchison

In a week dominated by news about the dramatic US Election and the ‘second national lockdown’ closer to home, many self-employed people could be forgiven for missing some of the important announcements affecting them that happened this week.

Over the last nine months, IPSE has been campaigning hard to make sure the voice of our members and the wider self-employed community has been heard in government amidst the coronavirus pandemic. As well as pushing for policy change, we have been doing our best to keep you updated with the latest news and information on the support available during the coronavirus crisis. The various schemes announced by government have shifted considerably in this time, particularly in the last few months as the trajectory of the virus has changed again.

To bring you up to speed, here are the most important measures announced this week and our take on them.

Self-Employment Income Support Scheme (SEISS) increased further

The government had previously announced in September that it would extend the SEISS for two further three-month periods, covering November 2020 to January 2021 and February 2021 to April 2021, respectively. The amount available was originally set at 20%, then increased to 40% and now – in order to broadly match the support being made to employees on furlough - the third grant for the period 1 November 2020 to 31 January 2020 will be increased to 80% of past trading profits, up to a cap of £7,500. This brings it back into line to the level it was originally set at back in March.

The online service for the next grant will be available from 30 November 2020. A fourth grant will be available February to April 2021, and the Treasury says it will keep the amount available under review for the final grant.

Regrettably, the eligibility criteria for these grants remains unchanged from the first and second iterations of the scheme. In other words, you must be a sole trader or partnership with at least a 2018/19 tax return, average annual trading profits below £50,000, and the majority of your income must come from self-employment. More information on applying can be found in our short guide here.

The only slight tweak appears to be a change in wording in the eligibility criteria that states you must now show your business has experienced 'reduced demand', rather than being ‘adversely affected’ by coronavirus as was the case with the previous SEISS grants. While we await some further guidance on this, this would appear to rule out being able to cite things like self-isolating or shielding as evidence for a claim and shifts the focus onto the direct economic impact on your business. Our advice would be to keep records of how and when your business has been affected.

For the last few weeks, IPSE has been adamant that if restrictions are reimposed then appropriate financial support should follow. While we are certainly pleased to see the Chancellor maintain the SEISS and increase the amount available to the generous level of 80%, so that recipients will receive broadly similar support to employees, we remain concerned about the gaps in support. We have previously estimated around a third of the self-employed workforce have been excluded from support, including the newly self-employed and limited company directors, and it is disappointing that these structural problems with the scheme remain.

Job Retention Scheme extended – and company directors can make use of it

Due to the recent increase in cases, the government has also decided to reinstate the original 'furlough' (Job Retention) scheme and extend this until March next year. The terms will however be reviewed in January.  

This extended Job Retention Scheme will operate as the original scheme did and will be open to limited company directors. The level of the grant will mirror levels available under the JRS in August, so the government will pay 80% of wages up to a cap of £2,500. The scheme will also be similar to the August version in that ‘flexible furloughing’ can take place, so that employees can continue to work some hours.

This also means that the roll-out of the Job Support Scheme, the intended replacement for the original furlough scheme which was due to have a different mix of employer and government contribution, has been postponed.

To make a claim under the December CJRS, an employee must have been on the PAYE payroll on or before 30 October 2020. The employer must have made a PAYE Real Time Information (RTI) submission to HMRC between 20 March 2020 and 30 October 2020, notifying a payment of earnings for that employee. Importantly, as a result you do not need to have been on furlough under the previous scheme to make use of the extension. This also means that limited company directors can make use of the scheme but with the same important caveat that existed in the JRS first time round that unfortunately only PAYE earnings will be considered, not dividend income.

It is welcome that the government has extended furlough on the same terms as were originally announced. This could be helpful for company directors, many of whom accessed the scheme first time round even though they could not make full use of it. However, IPSE is continuing to make the case for better targeted support for company directors. We will also shortly be updating our template furlough letter, available exclusively for members.

Important win for IPSE on changes to Universal Credit

Lastly, this week saw an important victory for IPSE on the issue of Universal Credit. At the outset of the pandemic, the government took the vital decision to suspend the ‘Minimum Income Floor’ (MIF) for self-employed UC applicants. The MIF hindered or prevented many self-employed from accessing UC in full on the same term as an employed applicant because of their often-fluctuating incomes. The MIF suspension was due to end on 12th November and would have result in a much less generous financial settlement for thousands.

IPSE wrote a letter to the Secretary of State for Work and Pensions Thérèse Coffey last week calling for the suspension of the MIF to be extended beyond 12th November in order to continue to support thousands of self-employed people and their families. 

Thankfully, this week the government has listened to us and has extended the suspension until April next year. We have welcomed this vital decision, which will provide some much-needed relief to the self-employed over the coming months.

Put together, these changes are broadly positive for the self-employed – and they show that government is listening to many of our asks. We will keep up the pressure for them to do more for those left behind in the months ahead.